On December 27, 2020, President Donald Trump signed the second economic stimulus package to address the economic fallout from the coronavirus pandemic. Dubbed the “CARES Act 2,” the $900 billion stimulus package provides financial aid and financial relief to individuals and businesses struggling to stay afloat amid the pandemic and the accompanying recession. This marks the second major economic stimulus package passed since the start of the pandemic in March 2020.
The CARES Act 2 builds upon the first round of stimulus passed, which provided a one-time $1,200 payment stimulus check to qualifying individuals, in addition to enhanced unemployment benefits. Even with President Trump’s signing of the CARES Act 2, the fate of the proposed third round of stimulus is still up in the air. Many members of Congress have expressed their desire to pass a more robust economic package given that the CARES Act 2 falls short of what is needed to totally revive the economy.
In this article, we will discuss the details of the second stimulus package, as well as provide insight into what this means for individuals, businesses, and the overall economy. We will also explore the possibility of a third economic stimulus package and what that might entail.
Summary of the Stimulus Package
The second stimulus package, officially titled the “Consolidated Appropriations Act of 2021” and also known as the “COVID relief bill,” consists of $900 billion in federal spending for individuals and businesses. It puts much-needed money into people’s pockets and businesses’ cash registers during the pandemic. Here is a summary of the key components of the stimulus package:
• Enhanced unemployment benefits-The second stimulus package resurrects the enhanced unemployment benefits from the CARES Act from March 2020. It is estimated that those who are receiving federal unemployment benefits will receive an additional $300 a week through March 14th, 2021. This should help to provide some additional financial relief for those who have been out of work or working fewer hours due to the pandemic.
• Stimulus Checks-Individuals who make less than $75,000 a year as an annual salary are eligible to receive a one-time stimulus payment of $600. Married couples who make a combined $150,000 are eligible to receive $1,200. The same qualifications apply to people with dependent children-those who meet the criteria can receive an additional $600 per qualifying child.
• Small Business Assistance-The second stimulus package provides additional support for small businesses, such as restaurants and live venues. They can apply for additional Paycheck Protection Program (PPP) loans, as well as tax credits for qualified wages paid over the last year. This relief package should help buoy many small businesses that are on the brink of bankruptcy.
• Rental Assistance-The second stimulus package also provides rental assistance to people who are struggling to make ends meet. It provides an additional $25 billion in rental assistance to help offset the costs of rent payments. Additionally, the stimulus package provides an additional $25 billion in assistance to prevent evictions. It also provides an additional $15 billion in assistance for those individuals and families who might otherwise be homeless.
• Federal Mortgage Relief-The second stimulus package also provides assistance for those who are struggling to make their mortgage payments. It provides $25 billion for mortgage assistance for those behind on their payments. It also provides an additional $2.2 billion for those who need assistance with their FHA payments.
• Student Loan Forgiveness-The last major provision in the second stimulus package is the provision for student loan forgiveness. The package provides an extension of the existing payment freeze for all federal student loan borrowers, in addition to an additional six months of forbearance for all federally-backed loans. This gives individuals with federal student loan debt a much-needed reprieve from their student loan debt.
Impact on Individuals and Businesses
As we have seen, the second economic stimulus package provides much-needed aid and financial relief to both individuals and businesses struggling to stay afloat during the pandemic. With the additional money being pumped into individuals’ pockets and businesses’ cash registers, it should provide a much-needed economic lifeline to those who have been affected most.
For individuals, the second stimulus package provides much-needed financial support by putting more money into their pockets. The extra $600 in stimulus checks, along with the extended unemployment benefits, should help to provide a substantial economic boost to individuals who have been hardest hit by the pandemic. Additionally, the additional rental assistance should help to offset the costs of rent in the midst of an already tumultuous housing market.
For businesses, the second stimulus package provides some additional breathing room, thanks to the PPP loans, the tax credits for qualified wages paid in 2020 and 2021, and additional mortgage relief. These programs should help to provide much-needed financial support to businesses that are on the brink of bankruptcy, allowing them to stay afloat during the pandemic.
Impact on the Economy
The stimulus package signed by President Trump should also have a positive impact on the overall economy. While many economists have noted that the CARES Act 2 falls short of what is needed to completely revive the economy, it should still provide a much-needed economic boost in the near-term. The influx of cash into individuals’ and businesses’ pockets should help spur consumer and business spending and create additional economic activity.
It should also have a positive impact on the housing and employment markets. Additional rental assistance and extended unemployment benefits should keep more people in their homes and provide some additional job security in the near-term. This in turn should spur consumer spending, helping to drive economic activity and providing a much needed boost to the economy.
Overall, the second stimulus package should be a net positive for the economy. While it may not provide the long-term solutions necessary to revive the economy, it should at the very least provide a short-term boost during these trying times.
Possibility of a Third Stimulus Package
Even with the signing of the CARES Act 2, there is still a possibility of a third stimulus package. Many economists and members of Congress are pushing for a more substantial stimulus package, arguing that the $900 billion allotted in the second package is simply not enough to truly revive the economy.
The need for a third stimulus package boils down to the dire economic circumstances that continue to prevail throughout the country. Stimulus checks alone are not enough to revive the economy, and it is clear that the government needs to do more.
At this point, it remains to be seen if and when a third stimulus package will be passed. The timing of any additional economic support is dependent on the success of the vaccine rollout and the state of the economy in the coming months.
The second economic stimulus package signed by President Trump provides much needed assistance to individuals and businesses struggling to stay afloat in the midst of the pandemic and the accompanying recession. While it falls short of the total economic overhaul necessary to revive the economy, it should provide a short-term boost and provide much needed financial relief during these trying times.
Additionally, there is still the possibility of a third stimulus package. While the exact timing of such a package is uncertain, it is clear that additional economic support is needed if the economy is to make a full recovery. This should be a priority for the Biden administration, as the economy remains in a fragile state in the wake of the pandemic.
Ultimately, time will tell if and when the government will pass a third economic stimulus package. Until then, the second stimulus package should provide some much needed financial relief for those struggling to stay afloat amidst the financial chaos of 2020.