Coronavirus - U.S. Government Response

| March 27, 2020
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The President today signed into law the largest emergency aid package in US history.  The estimated $2.2 trillion stimulus spending bill is designed to battle the economic consequences of the Corona virus pandemic.

The spending package is in addition to Congress’ earlier $100 billion appropriation for employee paid leave expansion and $8 billion toward developing a Corona virus vaccine.

Highlights of the aid package are as follows:

  • Direct check payments to most Americans
    • $250 billion allocated to individuals and families
    • One-time checks of $1,200 per adult and $500 per children
    • Subject to Adjusted Gross Income caps
  • Significant expansion of unemployment insurance (UI)
    • $250 billion to increase state UI benefits by $600/week for four months
    • Up to 13 weeks of extended UI benefits
    • UI benefits to gig workers, freelancers and self-employed
  • Loans to large and small businesses
    • $350 billion of loans to small businesses
    • $500 billion of aid to large corporations
    • Corporate loans to be monitored by independent body
  • Extend resources to health care providers
    • $130 billion to healthcare system
    • $150 billion to state and local governments
  • Other provisions
    • Stock buyback ban on corporations receiving aid
    • Ban on aid to businesses controlled by the President, VP, cabinet members, Congress members and their families
    • Retirement account relief
      • Suspends 2020 required minimum distributions from retirement accounts
      • Allows up to $100,000 401k hardship withdrawal with no tax penalty if repaid within 3 years
      • Increases 401k loans to lesser of $100,000 or 100% of account balance

Separately, the Federal Reserve Bank has implemented unprecedented monetary policy actions this month.  Fed Chair Jerome Powell recently indicated he will do “whatever it takes” including “throwing the kitchen sink” at markets. 

Below are recent the Fed’s actions:

  • Slashed short-term interest rates to near-zero
  • Bought $700 billion of US Treasury and mortgage-backed debt securities
  • To purchase $100 billion of US Treasury and mortgage-backed securities this week
  • Agreed to unlimited purchases of US government debt, mortgage-backed securities, municipal and corporate bonds
  • Announced a Main Street Business Lending Program for small and medium-sized businesses
  • Relaunched 2008 Financial Crisis financing facilities for student, auto, and credit card loans backed by SBA
  • Coordinated with 5 foreign central banks to make US$ available overseas

 

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