Covid-19: The Largest Stimulus Bill Proposed by Congress
This $2 trillion package from Congress is set to be used to “issue direct checks for American families, bailouts for the airline industry and a $350 billion loan program for struggling small businesses. The other $4 trillion, will allow the Federal Reserve to make huge emergency bailouts to whatever entity it chooses — a measure that was used to prop-up Wall Street firms from collapse during the 2008 financial crisis.”
Proposed Stimulus Bill Terms
While the final terms of the bill are incomplete, the legislation is expected to provide for a one-time direct deposit worth $1,200 to many Americans, with $500 available to children, with the payments capped above certain income levels. Under the plan as it is being negotiated, individuals who earn $75,000 in adjusted gross income or less would get direct payments of $1,200 each, with married couples earning up to $150,000 receiving $2,400 and an additional $500 per each child. The payment will scale down by income, phasing out entirely at $99,000 for singles and $198,000 for couples without children.
Negotiated Stimulus Bill Plan
These payments will be in addition to a broad expansion in unemployment benefits, which would be extended to non-traditional employees, including gig workers and freelancers. The agreement is also set to increase current unemployment assistance by $600 a week for four months. Negotiators also discussed providing four months of unemployment benefits, extending to self-employed workers.
The Senate is also poised to approve $350 billion in loans to small businesses in an effort to keep Americans on payrolls as economic activity across the country comes to a standstill. Also, the bill would ensure the Small Business Administration could serve as a guarantor for loans of up to $10 billion for small businesses to ensure they can maintain their payrolls and pay off their debts.
A major challenge in the negotiations was roughly $500 billion in corporate aid, much of which will go toward backstopping Federal Reserve loans. The Treasury Secretary will have the authority to directly lend a slice of those funds. The agreement will create a new inspector general and oversight board to monitor the aid. The legislation included a ban on stock buybacks for any company receiving a government loan from the stimulus package. The ban lasts the term of the government assistance plus one year.
Boeing has been seeking at least $60 billion in public and private aid for itself, its suppliers and the broader aerospace industry. There was intense partisan debate over the $500 billion proposal to provide loans to distressed companies, with $50 billion in loans for passenger air carriers. These distressed companies will have strings attached to the aid they receive. In addition, the bill would provide a major amount of funding for hard-hit hospitals of $130 billion as well as $150 billion for state and local governments that are cash-strapped due to their response to combat coronavirus.
We Can Help
Consider leaning on your CPA for cash flow guidance, tax deadlines, and help in completing SBA loan and the new PIDA loan applications. Our CPAs are available, and we have the knowledge, skill, and information that you need right now to properly address your financial needs in a timely fashion.
Maria is a partner at Wilke & Associates servicing closely-held businesses in manufacturing, real estate, transportation/logistics, and technology industries as well as high net worth individuals and executives in delivering effective tax strategies.