Money falling from the sky seems like something from a dream. But this is what the government is proposing as part of a Coronavirus stimulus package. To help ordinary Americans, the Trump Administration is proposing sending checks for $1,000 to everyone. This massive stimulus has been dubbed “helicopter money.” Other proposed ways of limiting the COVID-19 impact and boosting the economy include tax cuts, increased public spending, and free cash for everyone.
President Trump is quoted as saying about a potential stimulus package that “it’s going to be big, it’s going to be bold.” It looks like it could be one of the most extensive family-level stimulus packages in U.S. history. The White House is reportedly looking for between $850 billion and $1 trillion to offset the impact of this pandemic.
How will the Coronavirus stimulus affect the average Joe and Jane citizen in the U.S.? Unlike the financial crisis of 2008, the government wants to help more than just large companies. If the stimulus program gets passed, it should help almost every person in America — the workers who are keeping the country running.
After the financial collapse in 2008, workers on low and middle incomes only received $600 in tax rebates. But hundreds of billions of dollars were pumped into large companies to help them survive. However, in 2020, all countries in the world face a crisis from almost every angle. There is a threat to the economy, citizens’ health, education, jobs, and businesses — large and small. So, this time, it appears the government wants to help those hit the hardest by the global pandemic.
Why Coronavirus Stimulus Packages are Necessary
It’s a no-brainer that the country needs a whack of cash to stop the virus from crippling everyone economically. But hard, cold facts underline just how necessary big incentives are. Here are some facts and figures about the impact of COVID-19 and some predictions:
- In the week since declaring a national emergency, a poll found that 18 percent of households had at least one person laid off.
- Thousands of layoffs are expected in the entertainment, tourism, and airline industry.
- A report predicted that losses in the travel industry would cause economic damage of $809 billion.
- Unemployment is set to rise to 6.3 percent.
According to some estimates, all of this could have a dramatic effect on everyday people. According to Treasury Secretary Steven Mnuchin, unemployment could top 20% if nothing is done to stimulate the economy.
Coronavirus Stimulus Packages
So, how is the $1 trillion of proposed financial help going to be divided? Are you going to get any of it? Let’s look at some of the proposals that have been suggested.
CNBC reported that relief packages could include the following:
- Up to $550 billion in direct payments to individuals and some of these could be made immediately.
- Up to $300 billion to offset the Coronavirus impact on small businesses.
- Between $50 billion and $100 billion to help the airline industry.
The money could be distributed via direct payments, payroll tax cuts, small-business lending, and credit facilities for larger businesses. It also seems unlikely that the extremely well-off, such as millionaires, won’t receive any financial help. Which, even in a crisis, seems logical.
In addition to what the White House administration is proposing, other senators want other stimulus packages to limit the impact of COVID-19. On March 16, 2020, senator Chuck Schumer wants those who are already in dire financial straits protected. He proposed that $750 billion be used to address the following:
- Make healthcare more affordable for more Americans.
- Provide forbearance on federal loans.
- Temporarily prohibit evictions and foreclosures.
- Offer emergency child care for hard-up families.
- Give financial assistance to small businesses.
Aid Through the Families First Act
Apart from the proposed financial packages to plow money back into the economy, new laws should help to ease the impact on low- and middle-income families. The Families First Act has four main areas to help people affected by COVID-19. These are:
- Paid sick leave — Workers who are off sick are entitled to two weeks of paid sick leave and up to 12 weeks of paid family and medical leave.
- Free COVID-19 testing — No one in the U.S. has to pay to get tested for the virus. Also, you don’t need a referral from your healthcare provider to get the test done.
- Food security — The food assistance programs are extended to help more poor, homeless, and unemployed folks get food. Kids who get school meals continue to get fed.
- Unemployment insurance — Rules around claiming unemployment benefits are relaxed to allow more laid-off workers to get cash.
What About Family-Level Helicopter Money?
The idea of “helicopter money” is a better financial option than just cutting payroll taxes. Direct cash transfers help everyone — employed and unemployed people alike. For many people already struggling, getting a cash payment could be the difference between paying rent or becoming homeless.
The concept of “helicopter money” to help recover from a crisis is nothing new. American economist Milton Friedman in 1969 coined the phrase. He based the idea of what it would be like to drop money from the sky. So, rather than financial help being given to specific groups, everyone could benefit.
As a Coronavirus stimulus, many people are putting forward the idea that each taxpayer in the country gets a check for $1,000, and every child gets $500. CNBC reported that a precedent for this is the Hong Kong response to the pandemic. Every citizen over 18 received HK$10,000 (approximately US $1,280).
The Financial Times quoted Steven Mnuchin as saying that, “Americans need cash now and the president wants to get cash now. And, I mean now — in the next two weeks.” However, there is no concrete plan on how much everyone could get, if it would be a split payment, or would the government use other options.
The Coronavirus Stimulus: A Takeaway
Working-class folks are usually the ones who take the brunt of any crisis — financial, health, or any other type. The stimulus packages to offset the impact of the Coronavirus pandemic should provide some help for everyday people.