The Coronavirus Aid, Relief, and Economic Security Act or CARES Act was introduced by Senate Republicans on Thursday in an effort to combat the economic impacts that our nations is feeling from coronavirus. The current proposal has sections providing for loan guarantees to impacted businesses, direct cash payments, increased testing, and vaccine development resources.
The next step in the passing of the bill will be negotiation with Senate Democrats. Democrats fully support the need for emergency assistance, but a number of Democrats have criticized various aspects of the plan, primarily its focus on helping corporations, rather than individuals and small businesses. Ideally, an agreement will be reached by the end of next week says Senate Majority Leader, Mitch McConnell (R-KY).
In CARES current form, the cash payments can be as much as $1,200 per person and twice as much for a married couple. Individuals who have an adjusted gross income less than $75,000 or couples with a joint filing less than $150,000 will qualify for the full payment. For every $100 the individual filer or joint filers goes over these numbers, they will receive $5 less than that amount. Any individual with earnings higher than $99,000 or couples with greater than $198,000 are not qualified for any relief.
Loan guarantees for specific industries
Currently, the bill includes up to $208 billion in loan guarantees for various industries deemed most impacted by coronavirus. This is a major area that Democrats argue is unfair to the individual and small business needs. For example, the bill enables $50 billion for airlines, $8 billion to cargo moving carriers, and $150 billion to miscellaneous industries that qualify.
To address small-business needs, any business with less than 500 employees may apply for loans up to $10 million. This could be used to cover business expenses such as rent, employee salaries, and some other debt obligations. Small businesses that keep their employees on payroll between March 1, 2020, and June 30, 2020, would have money for those payments and preexisting debt forgiven. This area has received criticism in the fact that it damages companies that fall slightly above the 500 employee limit, but do not fall within the specific industries targeted for loan guarantees.
The bill will benefit various areas of the health care industry as well. CARES will require that insurers fully cover COVID-19 testing and vaccines as they become available. Additionally $1.32 billion will be allocated to community health centers. The last provision within this category is that the bill requires the FDA to prioritize and speed-up the development of new drugs.
Other key provisions
There are a few other areas to note in this bill. This legislation would establish the moving of the tax-filing deadline from April 15 to July 15 for the majority of filers. People who are currently paying back federal student loans can defer them and current university students may keep their Pell Grants.
Opposition to the current bill
Senate Minority Leader Chuck Schumer expressed his disappointment that Democrats had not been involved in the drafting of the bill, but clarified that they have every intention to work with the Republicans to quickly pass a bill for this situation. Schumer and House Speaker Nancy Pelosi stated that the bill “must include new, strong and strict provisions that prioritize and protect workers, such as banning the recipient companies from buying back stock, rewarding executives, and laying off workers” if Republicans expect their support.
Sen. Richard Blumenthal (D-CT) called the airline specific loan a “blank check bailout” that lacks protections for the individual workers. Blumenthal declared that a focus on small business is the appropriate route to go, he said:
“This proposal totally fails to prevent the corporate excesses and abuses that followed past taxpayer bailouts, instead of corporate welfare, there should be grants and loan forgiveness for small businesses, which are the job creating backbone of our economy.”
Sen. Patrick Leahy (D-VT) declared a need to add sufficient funding for first responders and medical professionals. Leahy said:
“It inadequately funds federal, state, and local efforts on the ground to blunt the spread of this disease and prevent our health care system from being overwhelmed. . . It fails to invest in programs the American people will rely on during this crisis, which have already begun to reach a breaking point.”
This bill proposal came one day after two Congress members tested positive for COVID-19 and another relief bill had been signed in to action that provides expanded unemployment assistance and paid sick leave. Republican, Mitch McConnell claimed that negotiations with Schumer would start on Friday, March 20, and the goal is to pass a final bill by the end of next week.