As businesses are forced to close due to state mandates and residents' social distancing during the coronavirus outbreak, the White House is weighing putting forth a plan for as high as a $1 trillion stimulus package.
On Wednesday, March 18, President Donald Trump said that "airlines would be No. 1" in terms of bailout funds, adding that hotels and cruise ship companies could be included in receiving government assistance. But a big chunk of the president's entire stimulus plan could end up in the hands of everyday Americans.
Trump and Treasury Secretary Steve Mnuchin have echoed the proposal of U.S. Sen. Mitt Romney, R-Utah, to send American adults $1,000 each during the coronavirus outbreak. During his run for the Democratic nomination for president and before the coronavirus spread across the nation, entrepreneur Andrew Yang made the idea for such a payment the cornerstone of his campaign.
Here's what we know about the proposed stimulus checks:
Are we really getting stimulus checks?
The Trump administration's proposal includes $500 billion going to individual Americans in the form of two separate checks. The administration is being forward with a push for the plan about saying their initial idea for elimination payroll taxes would take too long to get into place.
“We’re looking at sending checks to Americans immediately,” Mnuchin said on March 17. “And I mean now, in the next two weeks.”
The Treasury secretary told Fox Business on March 19 that the plan would include $1,000 per person, $500 per child or $3,000 for a family of four. Should the plan pass through Congress, the first checks could be sent three weeks from now, possibly on April 6.
Mnuchin told the broadcast that if the president still has a national emergency, another round of checks would be sent out on in mid-May. Both checks would be for equal amounts.
Who qualifies for a stimulus check?
Direct payments would go to U.S. citizens only. The total amount would most likely vary based on income level and family size
Senate Republicans are looking at income thresholds of $75,000 for individuals and $150,000 for couples to become eligible for the payments, according to The Hill. However, as of this writing, such a proposal by Congress by the White House was still being negotiated.
Are small businesses eligible for more money?
Trump's proposal includes $300 billion for small businesses. The Small Businesses Administration is currently making loans available.
Have stimulus checks been sent out before?
During the Great Recession between 2007-09, both the Bush and Obama administrations took similar measures in the form of tax rebates.
In 2007, the Bush administration's tax rebate program include $600 going to individuals and married couples getting $1200. Couples with children were given $300 per dependent. The rebate was capped $75,000 for individuals and $150,000 for couples.
In 2009, Obama's $787 billion stimulus plan included payments of $250 each were made to certain veterans and others on Supplemental Security Income and Social Security income.
Do stimulus checks reduce the risk of recession?
For some, such money is spent quickly, resulting in a short-term lift. But with several businesses closed and social interaction outside the home being minimal, an immediate boost on a local economy to be minimal.
“When people are afraid, they don’t spend,” chief U.S. economist of Oxford Economics Gregory Daco told USA Today.
Consistent cash flow is more valuable. Congress' passage of a bill that expands unemployment benefits and paid sick leave could prove more valuable should a recession become a reality.1 of 29 2 of 29 3 of 29 4 of 29 5 of 29 6 of 29 7 of 29 8 of 29 9 of 29 10 of 29 11 of 29 12 of 29 13 of 29 14 of 29 15 of 29 16 of 29 17 of 29 18 of 29 19 of 29 20 of 29 21 of 29 22 of 29 23 of 29 24 of 29 25 of 29 26 of 29 27 of 29 28 of 29 29 of 29
How bad could this recession be?
With several businesses pulling back on hours and others being forced to close, the total effect on the economy is predicted to be wide.
Even with a trillion-dollar stimulus package, economic research firm Pantheon Shepherdson projects there will be a 10% second-quarter drop in gross domestic product, according to the USA Today. That would be the biggest quarterly decline since 1958 in the US.
Economists also say layoffs could be rise to as high as 1 million job losses by the middle of 2020. Mark Zandi, chief economist for Moody’s Analytics, told USA Today the unemployment rate could rise to 5% by next year.
Is there any good news?
Despite the current state of things, the U.S. economy as a whole is on far more solid footing than it was during the Great Recession of 2007-09. That economic crisis lasted for 18 months and resulted in nearly 9 million job losses.
Americans, on average, are also saving about 8% of their income now. In late 2007, it was less than half of that with an average of 3.6% of incomes going to savings.
Nate Chute is a producer with the USA Today Network. Follow him on Twitter at @nchute.