The Senate and the House have passed an additional $484 billion relief package aimed at refilling the exhausted small business loan program and providing help for hospitals to fund more coronavirus testing. The measure passed the Senate on Tuesday and heads to President Donald Trump for his signature after it was approved by the House. Trump has expressed support for the legislation and is expected to quickly sign it.
The nearly half-a-trillion-dollar relief package will provide $310 billion for the small business loan program, $60 billion for the Small Business Administration disaster relief fund, $75 billion for hospitals, and $25 billion for testing. Economists and health researchers have stated the $25 billion is only a fraction of the cost necessary for accurate testing measures. The previous small-business loan program of $2.2 trillion ran out quickly due to the flood of applications of US businesses just trying to survive the global pandemic.
Included in the relief package is a mandate that requires the Trump administration to establish a national strategy to help states outline their own plans for testing. This is a step in the larger plan to reopen the national economy as safely as possible. Although the package has a mandate for the Trump administration to develop a national strategy, this package does not allocate funds to states to help with reopening measures.
The biggest source of money for most states is sales taxes but with the economy essentially shut down, states are really feeling the hurt. Additionally, states’ second-biggest revenue source is personal income tax which started falling in March, when millions of Americans lost their paychecks and tax withholdings stopped. Adding to states’ money troubles, the tax filing deadline was postponed until July 15 which means states are not seeing the income-tax money. All these combined means each state is feeling the pinch and is more than eager to reopen. Senate Majority Leader Mitch McConnell has suggested that rather than looking to the federal government for help, states should consider filing for bankruptcy although that currently is not a legal possibility for states.
The additional relief package comes on the heels of updated unemployment numbers which claims an additional 4.4 million Americans filed for unemployment last week. In the last five weeks, a total of 26 million Americans filed for unemployment. Prior to the massive US economic shutdown on March 13, 7.1 million Americans were unemployed which leaves the US at a current unemployment rate of 20.6%— the highest level since 1934 which was 21.7%. Additionally, oil prices plunged to a negative $37.63 per barrel earlier this week signifying there is almost no market for oil currently and sellers must pay to store crude oil supplies. The plunge symbolizes the abrupt decline in global demand for oil as the pandemic discourages auto, air, and other travel. However, more recently US oil prices have slightly bounced back with a 25% surge due to tensions in the Middle East.
It can be difficult to make sense of all the new legislation passed in the wake of COVID-19. Contact us to help you navigate through this pandemic and check out our COVID-19 Resources page for more information.
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