I am not a big government supporter nor do I think that people should rely on the government for handouts and support for their lifestyle.
However, even I have to be careful in my effort to protect my values and recognize that what we are experiencing right now is an unprecedented event.
What we are witnessing is unlike anything we have ever seen in our history.
You hear many “experts” comparing this event to the Great Depression and other historic market events without consideration of the fact that this is not the same.
This market decline and economic slow down is not due to existing poor economic conditions but rather the government literally shutting the country down.
By declaring stay at home orders and forcing many businesses to close, the government has essentially closed the country down for business.
Like a light switch, the government’s effort to reduce the spread of COVID-19, essential closed businesses bringing the economy to a grinding halt.
Since the government has closed small business, they now have no choice but to feed those businesses with cash flow to ensure they are able to survive this shut down and reopen when this event passes.
If support weren’t given, many of these small businesses would close their doors and would be unlikely to reopen causing a surge in unemployment.
…Without small business there are no jobs.
The fallout from the government shutting businesses down, are the employees of these companies who are now unemployed and seeking support for funding their households.
You hear politicians argue about supporting small business or supporting the workers. The truth is they are both important…one cannot survive without the other.
So, the bipartisan stimulus bill totaling $2 Trillion just passed by Congress has support for both that includes the following:
Loans, guarantees and investments to large businesses and local government
The $500 billion in advances to large businesses and local governments includes $25 billion for passenger airline carriers, $4 billion for cargo air carriers, $3 billion for industry contractors and $17 billion for businesses that are designated as working in national security. It also includes restrictions on share buy-backs, dividend payments and executive compensation for those companies receiving assistance.
Small business assistance
The Small Business Administration, under the stimulus package, will oversee the Paycheck Protection Program, which will distribute $350 billion to small businesses that can be partially forgiven if the borrower uses them for payroll, rent and utilities, and does not reduce payroll.
Businesses can receive loans up to $10 million, based on how much the company paid its employees between Jan. 1 and Feb. 29. The loans will carry an interest rate up to 4%. The bill provides for an expedited origination process.
If the business uses the loan funds for the approved purposes and maintains the average size of its full-time workforce based on when it received the loan, the principal of the loan will be forgiven, meaning the company will only need to pay back the interest accrued.
There is also a 50% refundable payroll tax credit on worker wages will further incentivize businesses, including ones with fewer than 500 employees, to retain workers and a delay in employer-side payroll taxes for Social Security until 2021 and 2022
And sole proprietors and other self-employed workers could be eligible for the expanded unemployment-insurance benefits the bill provides
Direct payments to individuals and families:
The IRS, which will issue the payments, will look at your 2019 tax return for your filing status, AGI, and information about your children. If you haven’t yet filed your 2019 return (now due July 15), the IRS will go to your 2018 return for the necessary information.
The $290 billion being sent to households will be divided up by $1200 per individual. If you’re married and file a joint tax return, then both you and your spouse will get $1,200 (for a total of $2,400).
If you have children who qualify for the child tax credit (they must be 16 years old or younger), you get an additional $500 for each child. So, for example, a married couple with two children can get up to $3,400.
Payment will be phased-out for people at certain income levels. Your check will be gradually reduced to zero if you’re single, married filing a separate tax return, or a qualifying widow(er) with an adjusted gross income (AGI) above $75,000. If you’re married and file a joint tax return, the amount of your stimulus check will drop if your AGI exceeds $150,000. If you claim the head-of-household filing status on your tax return, your payment will be reduced if your AGI tops $112,500.
Payments will be sent out mid to late April while the IRS works through the tax returns and processes checks.
This federal benefit would provide $600 per week to individuals who are eligible for unemployment insurance. This complements existing state unemployment benefits, which typically covers a percentage of an unemployed individual’s previous salary.
This federal benefit would last for a period of up to four months through July 31 with extended state-level unemployment insurance lasting an additional 13 weeks from 26 weeks to 39 weeks.
Some have argued that this was a mistake and actually pays individuals more than if they were working giving them incentive not to work.
There are more details in the stimulus package but suffice it to say, this is an enormous bill. We will see how much of an impact this has on the economy and whether it is enough to keep our economy above water until this pandemic passes.