White House proposes $1 trillion coronavirus stimulus package
The White House is asking Congress for a $1 trillion coronavirus relief and economic stimulus plan that would include industry-specific bailouts and payments to individual taxpayers.
The big picture: This is more than the $900 billion that the U.S. government initially committed to bailouts in the 2008 financial crisis.
The proposal, penned by the Treasury Department, includes:
- Payouts to individual Americans: $500 billion.
- This would be done via two separate checks of equal amounts, one on April 6 and one on May 18.
- The specific dollar amounts would be means-tested, meaning it would be based on income level and family size.
- Each round of payments would be identical in amount, per the Treasury.
- Airline industry bailout: $50 billion.
- This would take the form of secured loans to passenger and cargo air carriers, with the Treasury to set interest rates and other terms.
- Limits would be placed on executive pay increases until the loans were repaid.
- Other affected industries bailout: $150 billion.
- Secured loans or loan guarantees would be extended to "other critical sectors of the U.S. economy experiencing severe financial distress due to the COVID-19 outbreak."
- Among the sectors raising their hands for bailouts, largely or wholly for the purpose of paying workers: Hotels ($150 billion requested), casinos, cruise line operators and shopping mall operators.
- Small business interruption loans: $300 billion.
- Employers with 500 employees or fewer would be eligible, and would have to keep paying all their workers for eight weeks from the date of the loan.
- The government would guarantee 100% of six weeks of payroll, capped at $1,540 per week per employee, with the Treasury to set interest rates and other terms.
Historical comparison: The amount budgeted in 2008 for TARP — the Troubled Asset Relief Program — was $700 billion. The money was aimed at bailing out big banks and auto companies. The same year, the government designated $200 billion to rescue Fannie Mae and Freddie Mac, the giant mortgage enterprises.
- In actuality, far less than the total $900 billion was spent.
- By the time the programs were declared ended in 2014, the government had actually turned a profit on those bailouts.
- According to ProPublica's Bailout Tracker, a total of $634 billion was spent on TARP and the Fannie and Freddie bailouts: "Money has been coming back in two ways: $390B of principal has been repaid, and the Treasury has collected revenue from its investments of $364B. ... In total, the government has realized a $121B profit as of January 31, 2020."
The bottom line: While there were big moral and ethical implications to the rescue of the banking and auto industries — which were seen as having largely caused their own problems — many of the companies that are currently foundering are blameless for their predicament.
- This will make it easier for the public to support sweeping federal appropriations.
- Public support will be public important if the coronavirus emergency drags on and forces even more federal expenditures and guarantees.