cares act
Updated November 06, 2020

Putting the CARES Act in Perspective


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With stimulus checks slated to begin going out this month, the historic Coronavirus Aid, Relief, and Economic Security (CARES) Act is a piece of legislation everyone is interested in learning more about. And with good reason — at $2.1 trillion dollars, it has the largest price tag of any economic relief package in U.S. history.

Considering that just a few months ago, corona was a word many people equated with beer, not disease, and the U.S. economy was going strong — it’s a bill no one could have foreseen. But, with a tight timeline and despite squabbling on both sides of the political fence, this bill was quickly rolled out by American leaders to help citizens and business owners throughout the country.

Let’s take a closer look at this ground-breaking and history-making legislation.

How Was the Dollar Amount Decided?

By factoring in the immediate needs of the American people and the country’s business world, the country’s leaders came up with the $2.1 trillion package after rounds of negotiations. But it’s likely that more is on the way.

The $2.1 trillion amount wasn’t intended to solve all the country’s financial issues — it’s just the first step that was needed to address immediate needs. This amount is enough to help the economy for up to three months if the coronavirus continues to shut down the country as we know it.

How much is this amount when compared to the wealth of the country? It represents about 10 percent of the gross domestic product of the U.S.

The gross domestic product shows the total dollar amount of goods and services provided in the U.S. for a single year.

Policymakers look at that number to gauge the health of the economy and keep an eye on inflation or recession threats.

Could the CARES Act cost less than 2.1 trillion? It’s possible.

The possibility exists because the act includes a lot of money for grants and loans. If people don’t apply for those, the act could cost less.

But it’s not likely based on how quickly applications have been filing in and the immediate discussion for a new package so soon after the first one passed.

But, one thing that will lessen the cost to the country, is that some of the package is earmarked for loans. Some of these loans will be paid back, and some will be forgiven based on the rules of the business loans.

While that doesn’t affect the total of the package offered, it does impact how much of it will be shouldered by the government.

Who Gets What?

Stimulus packages get everyone excited because they automatically wonder how big their piece of the pie will be. Everyone wants to know how packages like these will affect their bottom lines.

Let’s look at where the benefits will go.

  • Stimulus payments to households: $301 billion.
  • Loans to corporations: $454 billion.
  • Small business loans: $349 billion.
  • Tax deferrals and extension of the tax deadline: $221 billion.
  • Insurance for unemployment: $250 billion.
  • State aid: $150 billion.
  • Assistance for hospitals and veteran care: $117 billion.
  • Loans and grants for airlines and cargo: $61 billion.
  • Public transit support: $29 billion.
  • Miscellaneous costs: $198 billion.

How Will Individuals Benefit?

When looking at benefits, people instantly wonder how much money will be sent to them in the form of the ever-popular stimulus check. These checks can help keep people afloat during tough times, especially if they don’t qualify for some of the other benefits included in the stimulus package.

Here is how individuals may fare when looking at the CARES Act.

  • If you’re single and earn an adjusted gross income (AGI) of under $75,000: You’ll receive $1,200.
  • If you’re married, filing jointly, and earn an AGI of under $150,000: You’ll receive $2,400.
  • If you make more than that: You’ll receive reduced benefits if you are single but make less than $99,000 or are married but make less than $198,000.
  • If you have children 16 or younger: You’ll get $500 per child.
  • If you’re on Social Security: You are still eligible to receive $1,200 per adult in your household. Yes, even retirees will receive stimulus money.

If you are laid off and file for unemployment, you’ll receive additional help from this package. You’ll get the regular unemployment benefits you would normally receive if you lost your job or were laid off.

But there are additional safeguards in the CARES Act to protect your finances as well.

The Pandemic Unemployment Assistance is there for people who can’t work due to the coronavirus pandemic. This assistance covers gig workers, independent contractors, the ill, and caregivers.

If you are laid off or let go and qualify to receive unemployment assistance in your state, you’ll get an extra $600 each week on top of your other benefits. The extra $600 kicks in for up to four months if need be, with a cut-off date of July 31 at this point.

There is no waiting period to receive this money. If you face a one-week layoff, you can apply immediately.

How Does This Stack Up Other Government Spending?

The U.S. government is used to making big, costly moves such as stimulus packages and wars. How will the CARES Act compare to other huge expenditures made by the government throughout history?

The CARES Act is the largest package ever approved for economic stimulus. But, to put it into context, the coronavirus is regarded as the biggest health challenge the world has faced in modern times.

Here are some sobering statistics that underscore the plight many Americans are facing.

  • In early April, over 6.6 million U.S. residents lost their jobs.
  • The two-week period before that saw an additional 10 million residents losing their jobs.

And before this pandemic is over, it’s likely another coronavirus stimulus package will be passed as legislators are already in discussions for one. So, how big the cumulative coronavirus stimulus package will be hasn’t been revealed yet — only time will do that as lawmakers see how long the crisis lasts.

What we do know is that it already dwarfs the past stimulus bills the country has seen. Let’s look at some of the aid the country has delivered in the past.

The American Recovery and Reinvestment Act (ARRA)

This package was pushed through by President Barack Obama and was approved by Congress in 2009 as a solution for ending the Great Recession. All three of its categories tallied up to a $787 billion aid package.

The key features of ARRA included:

  • A $288 billion tax cut.
  • Rolling out $224 billion in education, health care, and extended unemployment benefits.
  • Earmarking $275 billion in federal grants, loans, and contracts.
  • Under ARRA, most tax payers didn’t receive stimulus checks — they got tax rebates. Only those participating in particular federal programs such as Railroad Retirement Board, Department of Veterans Affairs, Social Security, and Supplemental Security Income received a stimulus check for $250.

The Stimulus Checks of 2008

When George W. Bush was president, he also attempted to fight the Great Recession by sending out stimulus money in hopes of spurring spending.

These stimulus checks cost the government $120 billion. Individuals were eligible to get $600 each, with married couples potentially getting $1,200. Parents received $300 for dependent children.

As with the CARES Act, the checks were reduced for people earning more than $75,000 as individuals and more than $150,000 as couples.

The Cost of Wars

Wars have cost the U.S. dearly in its history.

  • America has been in various wars in places such as Iraq, Afghanistan, Syria, and Pakistan since 2001. Since that time, the country has spent about $6.4 trillion on those military action and wars overseas.
  • World War II was one of the costliest wars ever for the U.S., with the country spending an estimated $4.1 trillion (when measured in today’s dollars) on its efforts.

What Further Impact Coronavirus Might Have on Spending

The true cost of the coronavirus pandemic will only be known later. With more stimulus packages sure to be on the way to tide Americans through this crisis, the cost will keep growing.

And with many experts saying the U.S. was woefully prepared for a pandemic, it will likely cost more as the country enacts additional public health measures to be better prepared for the next time we find ourselves in this type of situation.

Shannon Serpette

Shannon is a mother of two and an award-winning journalist and freelancer who lives in Illinois. She obtained a bachelor’s degree in English from Illinois Wesleyan University before beginning her 20-year career in newspapers. When she’s not spending time with her children, she is often pursuing her favorite hobbies — running, metal detecting, kayaking, and reading about personal finance.

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