Our Take

The stimulus checks will provide some temporary relief for US individuals and families below the specified income thresholds. The enormous $2.2 trillion figure represents just a fraction of US consumer spending (personal consumption expenditure) of $14.6 trillion in 2019, and additional stimulus will be needed if businesses are unable to reopen and recall furloughed employees in a timely manner. Small businesses are also hard-hit by the coronavirus outbreak, and the rapid exhaustion of the loan program indicates that particular additional stimulus is needed in that category.

Stimulus Checks Started Rolling Out in the Week of April 13

CARES Act stimulus checks started rolling out in the week of April 13, with the following maximum benefits:

• $1,200 for each adult
• $500 for each child under 17

For example, a couple with two children would receive $3,400 (i.e., 2 x $1,200 + 2 x $500).

The following individuals and families are eligible:

• Individuals without children earning under $99,000 per year, and
• Married couples without children earning under $198,000 per year.

For individuals earning more than $75,000, heads of household earnings more than $112,500 and married couples earning more than $150,000 the benefits are reduced.

The US Internal Revenue Service used bank account information from prior tax returns (i.e., having filed for 2018 and 2019) and created a simple form for people whose income was too small to file a tax return.

These benefits are not taxable, and there are other mechanisms to identify and pay people receiving veterans benefits or social-security payments.

Breakdown of the 2020 CARES Act

The CARES Act provides $2.2 trillion in benefits comprising direct relief, loans and supplemental spending in the following categories (figures have been rounded):

Direct Relief Includes:

• Household payments $300 billion
• Unemployment insurance: $250 billion
• Tax deferral and deadline extensions: $220 billion

Loans Include:

• Businesses: $450 billion
• Small business loans: $350 billion
• US states: $150 billion

Supplemental spending includes $25 billion for public transit.

Despite the loans, the US Small Business Administration announced in mid-April that it had already exhausted the $350 billion in loans and was unable to accept new applications. Lawmakers are discussing increasing the program; however, one $250 billion proposal was blocked due to lawmakers requiring protections for small borrowers.