Explain Like I’m 65: "The CARES Act"

Table of Contents:

  1. The CARES ACT
  2. Aid to Small Businesses
  3. Aid to Big Businesses
  4. Aid to Taxpayers
  5. Expansions to Unemployment
  6. What’s Next?

Some people act like they know it all. Our new series Explain Like I’m 65 is for the rest of us. It will provide clear, digestible summaries to help seniors sort through the noise and get the factual information they need. From political buzzwords to household how-tos, we’re here to provide accessible guides and informative answers.

This week, we’re examining the massive stimulus bill that President Trump just signed into law. What does the CARES Act say and what will it mean for you?

The CARES ACT

On March 27th, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. It had passed through Congress earlier that morning and received a unanimous ‘Yes’ vote in the Senate on the 26th. The historic bill devotes $2 trillion in funding to mitigating the impact of the ongoing COVID-19 outbreak.

Senate Majority Leader Mitch McConnell describes the CARES Act as more an “emergency relief” effort than a traditional stimulus package. The bill devotes billions to public health efforts and demands that all private insurance policies cover COVID-19 testing and treatment. That’s just one component of this massive bill’s sure-to-be immense impact.

Aid to Small Businesses

Small businesses across the country saw their prospects take a grim turn when state governments began issuing stay-at-home orders. While some businesses (bars and restaurants, for example) can sustain themselves by offering delivery and take-out services, many local businesses risk extinction. Even those that have kept their doors open have had to contend with a harsh new reality.

Through The Paycheck Protection Program, The CARES Act sets aside $367 billion in government-backed loans for businesses that promise not to lay off workers during the COVID-19 crisis. Available until the end of June, these loans will be forgiven if the business continues to pay its employees throughout that period. The maximum loan amount is currently $10 million dollars and interest rates are capped at 4%.

Aid to Big Businesses

The CARES Act includes $500 billion in loans for struggling corporations. In addition to a $425 billion fund controlled by the Federal Reserve, $75 billion is set aside to relieve specific sectors. Notable among these are the airline and hotel industries.

This enormous sum was a point of contention for Democrats in Congress. While they were able to secure concessions — including the creation of a board to monitor the fund — some Democrats were still unhappy with the legislation they sent to Trump’s desk.

Representative Alexandria Ocasio Cortez, one of the House’s most notable progressives, called the CARES Act “shameful.” She preempted the March 27th vote by suggesting, “There should be shame about what was fought for in this bill, and the choices that we have to make.” She characterized it as “one of the largest corporate bailouts with as few strings in American history.”

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In addition to the oversight committee, updates to the CARES Act ensure that President Trump, members of his administration, and sitting members of Congress cannot benefit from the corporate bailout. Companies are also barred from making stock buybacks for the term of their loans plus an additional year.

Who will get a stimulus check from the government?
Will you receive a stimulus check in the mail? Read on to find out.

Aid to Taxpayers

The IRS will begin issuing stimulus checks over the next several weeks. Since Tax Day was pushed out to July, the organization will use both 2018 and 2019 returns to determine payment amount.

All Americans — regardless of age or employment status — who make less than $75,000/year ($150,000 for joint returns and $112,500 for head of household returns) are eligible to receive a stimulus check for $1,200. Households will receive an additional $500 for each child. The total payout will decrease by $5 for every additional $100 earned. Individuals who earn at least $99,000 and couples who make at least $198,000 combined will not receive stimulus checks.

The bill states that stimulus checks will go out “as rapidly as possible.” Anyone who has used direct deposit services for their tax refunds (around 60% of Americans) should expect one within the next several weeks. Paper checks could take significantly longer to arrive.

What about seniors who didn’t file in 2018 or 2019? Though there’s been some back and forth, the Washington Post reports that Social Security beneficiaries will receive payments without filing. This reverses a statement the IRS made on April 1st, which suggested that Social Security recipients and other non-filers would need to complete a “simplified tax form.” It’s not clear why the IRS has reversed its decision.

Expansions to Unemployment

The CARES Act makes significant updates to unemployment assistance, both upping benefits and expanding eligibility. State policies will continue to vary, but federal payouts will increase by $600 for the next four months.

Typically, self-employed Americans can not draw unemployment benefits. The bill creates a new way for them to do so if they’ve lost work as a result of the crisis. Its Pandemic Employment Assistance program will provide aid to freelancers and contractors through 2020.

Expansions to unemployment were another controversial aspect of the CARES Act throughout its gestation. Nebraska’s Ben Sasse proposed an amendment that would eliminate them and drew the ire of progressive presidential candidate Bernie Sanders. The Republican Senator argued, “Unless the bill is fixed, there is a strong incentive for employees to be laid off instead of going to work.” He went on to call this incentive “perverse.” Shortly before voting began, Sanders criticized Sasse and his conservative colleagues in a fiery speech. “These very same folks,” he said, “had no problem a couple years ago voting for a trillion dollars in tax breaks for billionaires and large profitable corporations.”

Sanders managed to shoot down Sasse’s amendment and, like Representative Ocasio-Cortez, somewhat begrudgingly voted ‘Yes’ on the bill.

What’s Next?

In addition to stimulus checks, seniors should expect more news as COVID-19 continues to spread and the government continues to mount a response. As always, take care to practice social distancing and good hygiene both inside and outside of your home.