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Columbia Business Monthly

The Fiscal Stimulus Bill: What Happens Next?

Mar 23, 2020 03:54PM ● By David Dykes
As small businesses are pounded by the effects of the coronavirus, and layoffs mount, Congress is debating, but hasn't yet adopted, a fiscal stimulus bill that would provide relief.
Economist Michael Pugliese and analyst Hop Mathews of the Wells Fargo Securities Economics Group said in a commentary that although there is no official score from the Congressional Budget Office, the total size appears to be in the $1.5-$2 trillion range.
"Negotiations are still ongoing, and as a result what does or does not make it into the final bill remains fluid," they said. "But at a high level, the package has four core parts, based on our understanding."
First, it includes direct payments of $1,200 to individuals making $75,000 or less and $2,400 to couples making $150,000 or less, plus a $500 per child bonus, Pugliese and Mathews said.
The payments are slowly phased out past those income levels, with rebates not available above the $99,000/$198,000 threshold for single and married filers, respectively, they said.
"Paired with this would be a boost to unemployment benefits so that payments are larger (an extra $600 per week) and can be collected for longer (13 weeks past when state unemployment benefits run out)," Pugliese and Mathews said. "Second, there is approximately $350 billion of small business relief that attempts to make Small Business Administration (SBA) loans available to businesses in a way that, if the money is used for certain purposes such as keeping workers on the payroll or making mortgage payments, the loans will eventually be forgiven."
Third, the bill contains $500 billion for loans to larger businesses, such as airlines and other industries, adversely impacted by the measures taken to combat COVID-19, they said.
"It is this section of the bill that has become one of the main hang ups, as Democrats and Republicans spar over the terms of the program, such as what restrictions a multinational corporation should face if it participates in the lending program," Pugliese and Mathews said.
Fourth, they said, it appears the “Phase IV” supplemental appropriations bill is going to be rolled into this “Phase III” plan.
"Our understanding is that this section contains $242 billion in supplemental funding, such as $75 billion for hospitals, $20 billion for veterans’ health care, $20 billion for public transportation emergency relief and $25 billion for child nutrition and the supplemental nutrition assistance program (SNAP)," Pugliese and Mathews said. 
Where do things go from here?
"Despite the recent missteps, we believe that ultimately a stimulus bill along the lines of the one outlined above will be passed, perhaps by the end of the week," they said. "But, with each passing day, the economic damage mounts, economic policy uncertainty rises and the efficacy of the stimulus bill declines."
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