A Wharton expert examines $900 billion coronavirus pandemic relief bill
Richard Prisinzano of the Penn Wharton Budget Model breaks down what’s in the bill, what it means, and explains why many experts don’t think that it will be enough to stave off an economic slide in the long run.
Congressional leaders on Monday reached a deal on a $900 billion COVID-19 economic relief package that includes $600 direct payments to Americans and $300 in enhanced unemployment for the next 10 weeks.
The $600 checks will only go out to individuals making less than $75,000 a year or couples making less than $150,000. Similar to the CARES Act, individuals making between $75,000 and $100,000 will receive gradually smaller payments while individuals making $100,000 or more will not receive a stimulus check. The treasury secretary may get these checks out as early as next week.
The measure will help jobless workers by adding 11 weeks to the unemployment programs that are now set to expire by the end of December. The Pandemic Unemployment Compensation (PUC), which had provided $600 a week to jobless workers until it expired in July, will be renewed with weekly benefits of $300.
The deal includes more than $284 billion more in loans for businesses struggling to pay rent and workers, vaccine distribution funds, and $82 billion in funding for colleges and schools. It also includes the Democrats’ priority of $25 billion in rental assistance and an extension of the eviction moratorium.
Lawmakers on both sides of the aisle say the bill is a good step, but Penn Wharton Budget Model Director of Policy Analysis Richard Prisinzano says it’s worth looking at what has happened to American families in the time since Congress passed the last aid bill almost nine months ago.
Do economists believe these stimulus checks and unemployment benefits are enough to get Americans through the winter?
Whether this bill is ‘enough’ to get folks at risk through the winter depends on the path of the virus. If infections are still increasing daily, lawmakers may be compelled to return to a full shutdown. If this is the case, folks will need additional support.
We know the local and state governments were not included in the bill. What about the small businesses, schools, and the transit systems? Are economists or state leaders calling for another spending bill immediately in 2021?
The Biden administration has called this bill a ‘down payment’ on relief [and] seems to be pushing for more relief early in the administration. While this bill has $300 billion for small businesses, $45 billion for transportation, and $80 billion for schools, state and local governments were not included. An additional relief bill would likely include state and local governments since many have seen a drop in revenue over the last nine months and will need money to maintain normal operations.
Is the big concern still about layoffs?
Layoffs are still the big concern. Many small- and medium-sized businesses are still struggling. At some point it will be necessary to lay off workers. Hopefully this new round of PPP [Paycheck Protection Program] will allow these businesses to avoid further job loss.
When do economists expect the U.S. to get back to pre-COVID levels? Are we looking at another year from now realistically?
The U.S. economy is going to track with the pandemic. Once the pandemic is under control through vaccination and testing, I expect the economy to recover. If vaccine distribution takes into the summer, the economy will recover late 2021 or early 2022. If it takes longer to get the pandemic under control, a true recovery will be delayed further.
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