How the CARES Act Helps the Economy
The coronavirus pandemic has forced an unprecedented economic slowdown as we work to slow the spread and flatten the curve, with millions filing for unemployment.
The CARES Act, which was signed into law three weeks ago, will help the economy stay afloat during this uncertain time, and help pave the way for an eventual economic rebound by providing resources to track the spread of cases so we know it is safe to reopen our businesses.
Specifically, the CARES Act will support the short-term and long-term health of the economy through:
Providing Economic Relief to Individuals
- The government is in the process of mailing checks of $1,200 for individuals making less than $75,000 per year. Couples making less than $150,000 will receive $2,400.
- Families with children would be eligible for an additional $500 per child.
- This means the average family of four will receive approximately $3,400 through the CARES Act.
- The first round of payments has already started to go out to people who filed taxes with the IRS in 2018 or 2019.
- Seniors are eligible to receive these benefits even if they are on Social Security and did not file taxes in 2018 or 2019.
- Senator Portman worked with the Treasury Department to ensure that these Social Security beneficiaries would be included in this rebate program
- Social Security recipients should expect to receive their payments via direct deposit starting as early as next week.
- For all other individuals including those who haven't typically filed taxes, the IRS website has a tool that enables individuals to provide information to receive their payment quicker
- The IRS also has a "Get My Payment" tool that allows individuals to track the status of their direct payment if they have yet to receive it
- CARES also includes a four-month, historic increase in unemployment insurance benefits to help Ohioans make ends meet during this difficult time.
- The CARES Act provides approximately $250 billion so state unemployment programs can offer full wage replacement to low- and medium-income individuals who lose their jobs through no fault of their own.
- For the first time, the bill expands unemployment insurance benefit eligibility to cover almost self-employed workers and individuals with minimal earnings history.
- The bill also provides for federal reimbursement for government workers and nonprofit employees who apply for unemployment.
- It also covers an additional $600 per week in unemployment benefits on top of what states already provide, and offers an additional 13 weeks of benefits.
Keeping Businesses Open and People Employed
- CARES provides $350 billion in small business loans for companies with under 500 employees that effectively become grants if those loans are used to keep workers on payroll, make rent and mortgage payments, or pay utilities.
- It also allocates $450 billion to allow Treasury and the Federal Reserve to establish funds that provide low-interest loans to distressed businesses that have been affected by the crisis so they can keep workers on payroll and jobs here in the U.S.
- Just last week, Treasury used $75 billion of this fund to establish the Main Street Business Lending Facility, which will provide favorable direct lending to businesses with fewer than 10,000 employees or $2.5 billion in revenues.
- In addition, the Treasury Department also set aside $17 billion in lending capacity to help businesses, and in particular manufacturing businesses, that are critical to our national security.
- CARES includes $500 billion in immediate tax relief for businesses of all sizes, including provisions such as payroll tax deferral, an employee retention tax credit, and the ability to immediately monetize tax losses.
Bolstering the Coronavirus Health Response
- Health care entities, like hospitals, are among the largest employers in Ohio. Supporting our health care system is not only good for public health but is also good for jobs in Ohio.
- Ohio’s providers, like those across the country, have suspended elective procedures in order to conserve valuable PPE and to ensure that resources can be fully devoted towards the coronavirus response. This however, has led to a precipitous drop in revenue for hospitals.
- CARES provides about $150 billion for hospitals and all health care providers to support our hospitals through this difficult time.
- $100 billion will go to the Department of Health and Human Services to help our hospitals during this crisis. These funds are flexible and can be used to support access to supplies and equipment and to ensure that our hospitals have the finances and resources to stay open.
- $30 billion has already gone out the door to hospitals and more is on its way.
- About $50 billion in supplemental payments in Medicare will be used to immediately inject additional dollars into our hospitals.
- This comes on top of an additional $50 billion in increased federal dollars for state Medicaid programs to support additional relief for hospitals and beneficiaries during this crisis.
- CARES provides accelerated payment opportunities, i.e. loans from Medicare, for hospitals supporting vulnerable populations.
- This will help children’s hospitals, rural hospitals, and specialty cancer hospitals like Ohio State’s The James maintain cash flows while they voluntarily suspend elective procedures to conserve personal protective equipment for providers treating COVID-19 patients.
- These funds can serve as an immediate relief to hospitals so that they can stay afloat, as they await their respective allotments from the $100 billion fund.
- CARES provides an additional $4.3 billion to the Centers for Disease Control and Prevention (CDC), and $1.5 billion of those funds will be further distributed among state-level departments of health. This will help ensure that state and local health departments can continue to monitor and respond to the virus for the duration of the pandemic while transmitting necessary data to the CDC to implement a national tracking system of daily new cases.
- We can only reopen our economy once we have the diagnostic testing capabilities to support our ability to track and monitor the pandemic. If we know where the virus is, and if we have the ability to do rigorous contact tracing to identify outbreaks and clusters, we can safely begin to relax the social distancing rules.
NOTE: This is the latest in a series of policy summaries about how the CARES Act will help Ohio during the coronavirus crisis. Previous summaries detailed how it will help individuals and families, small businesses, hospitals, veterans, seniors, rural communities, manufacturers, students, and nonprofits.