Advantages and Disadvantages of Trump’s Coronavirus Relief Package

The unprecedented outbreak of the coronavirus pandemic has brought the entire world to a standstill. Countries like the United States of America, China, Italy and Spain to name a few have seen a colossal loss of human lives to the disease. We are witnessing world leaders and decision-makers trying to mitigate the situation in the best possible way. The current President of the United States, Mr. Donald J. Trump has attempted to make history by introducing a $2 trillion coronavirus relief package to provide economic aid to the people of the United States during this devastating crisis.

EFFECTS OF THE CORONOVIRUS OUTBREAK

The coronavirus disease 2019, commonly known as COVID-19, is a respiratory illness caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The alarming spread of the disease has seen over a million cases in 180 countries and 200 territories. The United States is the world’s hardest-hit country with over 240,000 confirmed cases and over 5,900 deaths. The effects of the coronavirus outbreak include severe socio-economic impact due to a shortage of medical supplies, closure of educational institutions, and indefinite shutdown or closure of various businesses. It has additionally created fear among consumers leading to panic buying. The uncertainty of the impact has also caused major cultural, religious and sporting events to be canceled or postponed. Therefore, this outbreak may lead to a global recession that has never been experienced before.

WHAT IS TRUMP’S CORONAVIRUS RELIEF PACKAGE?

On 27th March 2020, President Donald Trump signed into law a $2 trillion coronavirus relief package to fight the spread of the coronavirus disease. It provides for emergency assistance to individuals, families, and businesses affected by the coronavirus outbreak. This is the third legislative package succeeding an $8.3 billion package for health-care resources as well as a $100 billion package for COVID-19 testing and paid leaves. The CARES Act, short for the Coronavirus Aid, Relief, and Economic Security Act is intended to accelerate relief across the American economy. This includes $300 billion in cash payments to individuals, educational relief to students, and $150 billion in public health assistance. It has also earmarked $350 billion for loans to small businesses, and $500 billion loans to companies and grants to states and municipalities among other tasks. This is estimated to backstop U. S. economy for three months at least.

Advantages and Disadvantages of Trump's Coronavirus Relief Package
President Donald J. Trump along with Vice President Mike Pence at the coronavirus (COVID-19) update briefing on Thursday, March 26, 2020.

ADVANTAGES OF TRUMP’S CORONAVIRUS RELIEF PACKAGE

Direct Cash Payments

Disasters like the coronavirus outbreak gravely affect individuals and families. Trump’s economic relief package estimates $300 billion in direct cash payments to individuals. Individual adults who have a gross income of up to $75,000 will receive a one-time payment of $1,200. Married couples without children who have a gross income of up to $150,000 get $2,400. In addition to this, a payment of $500 will be given for every child.  The checks phase out for people making more than $99,000 and couples with more than $198,000. The Internal Revenue Service (I.R.S) will either do a direct deposit transfer into the individual’s bank account or send in a paper check. For this purpose, no application has to be made by taxpayers. This can result in eliminating difficulties for the beneficiaries. Tentatively, the taxpayers will begin receiving payments within three weeks of the signing of the relief package.

Respite for Small Businesses

Small businesses run on smaller revenue but bigger risks. Small-sized businesses struggling because of coronavirus will receive emergency grants of up to $10,000 to cover interim operating costs. To facilitate loans of up to $10 million per business, the CARES Act has allocated $350 billion to the Small Business Administration (SBA). This feature helps companies with 500 employees or less than 500  employees. Also, businesses with existing loans get relief cover for the next 6 months. This will help small businesses pay for rent or existing debt, give salaries to their employees and keep their business afloat till the pandemic subsides.

Unemployment Benefits

The coronavirus relief package has allocated $260 billion in funds as unemployment benefits. Millions of Americans have filed for unemployment this week as a result of which this figure could be subject to change. This is a dramatic expansion of the benefits by adding $600 per week to the base amount that the worker already receives from the government. This is a guaranteed provision for 4 months. The legislators have also added 13 weeks of unemployment insurance for old and new filers. This will ensure economic guidance and security for out of work Americans.

Assistance to Freelancers

Freelancers and gig-workers work independently and they do not come under the unemployment insurance (UI). They are directly hit by the coronavirus pandemic because there is no safety net to their jobs.  Trump’s coronavirus relief package has tried to bring a solution by setting up a temporary Pandemic Unemployment Assistance program. Hence, individuals that are self- employed, seeking part-time employment or are not eligible under the unemployment insurance (UI) can now benefit from this program.

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DISADVANTAGES OF TRUMP’S CORONAVIRUS RELIEF PACKAGE

Insufficient Relief

The provisions given in the coronavirus relief package seems insufficient. The U.S. government has indicated that direct cash payments will begin within three weeks from the signing of the CARES Act. Taxpayers are not required to file an application to receive these cash payments. However, individuals who do not typically file returns are required to submit tax returns to get the economic impact payment. There has been no clarification about the procedure of how each U.S State will be carrying out this exercise. This could lead to fear and confusion among the masses who will be relying on these handouts for survival. These payments also can only be availed by people who are Social Security beneficiaries. Hence, undocumented informal and taxpaying workers cannot benefit from the relief package. There is a requirement for additional funding for people in the front lines.

No Protection to Dependents

A dependent adult cannot claim for direct cash payment under Trump’s coronavirus relief package if they are claimed as a dependent on a tax return. Students under twenty-four years of age are seen as dependents by the U.S taxing authorities if at least half of their expenses are paid by their parents. Therefore, these adults between seventeen and twenty-four years of age do not get the opportunity to utilize this economic protection.

Advantages and Disadvantages of Trump's Coronavirus Relief Package

Corporate Bailout

The largest economic package in U.S. history includes a $500 billion fund for big corporations/businesses. The mechanism of oversight for this funding has been a point of debate for the Democrats. During the 2008 financial crisis, George W. Bush had given similar bank bailout to corporates which created a lot of controversy. In order to avoid repeating history, there has to be a stricter vigilance. The airline industry has been allocated a loan of around $58 billion. Such industry-specific handouts must also properly scrutinized to avoid mismanagement.  The future of the U.S economy rests on how the government decides to go ahead and utilize these funds. Sound provisions, as well as the intended implementations of legislations in place, are the only way to combat global pandemics.

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Pros and Cons of Trump’s Economic Relief Package

PROS

CONS

Direct Cash Payments

Insufficient Relief

Respite for Small Businesses

No Protection to Dependents

Unemployment Benefits

Corporate Bailout

Assistance to Freelancers