The United States Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act last week and President Donald Trump signed it into law, marking the massive third phase of an economic stimulus plan aimed at cushioning Americans and the U.S. economy from the crisis caused by the coronavirus pandemic. The $2.2 trillion law is an amalgamation of various spending provisions. The feature the news media focused on most is the cash payments of $1,200 directly to U.S. citizens who earned less than $75,000.
The CARES Act extends state unemployment benefit programs an extra 13 weeks to 39 weeks total. In a historic addition, it also makes contractors and gig workers eligible for unemployment benefits of an extra $600 per week for 4 months through the Pandemic Unemployment Assistance program. On public health, the law allocates $100 billion for hospitals dealing with the coronavirus, as well as $11 billion for diagnostics, treatments, and vaccines, $4.3 billion for the Centers for Disease Control, $20 billion for veterans' healthcare, and $16 billion for the Strategic National Stockpile to boost the supply of equipment like masks and ventilators. The CARES Act also bolsters the safety net with $15.5 billion for food stamps, $8.8 billion for school child nutrition programs, $450 million for food banks, and a whopping $339.8 billion for state and local government programs.
But by far the most controversial and opaque provision of the CARES Act is the so-called corporate bailout. Congress appropriated at least $360 billion to help struggling small businesses and nonprofits. Most of that funding will go to businesses with up to 500 employees in the form of low-interest loans to pay workers, mortgage interest, and rent. The extra benefit is that small businesses can see their loans forgiven if they keep employees on payroll. But the main bailout is the Treasury Department, overseen by Secretary Steven Mnuchin, will create a fund worth at least $500 billion to loan to businesses and industries hit by the pandemic. The Treasury will also give $46 billion in direct financial assistance, including $25 billion to airlines and $17 billion for national security. Democratic lawmakers fought hard to add oversight provisions to the law, so an appointed Inspector General and Congressional oversight panel will review how Mnuchin doles out the funds. The law also contains language prohibiting businesses controlled by Trump, Vice President Pence, Mnuchin, or heads of executive departments or their family members from receiving the fund's loans.
Although the CARES Act has already become public law, it will remain politically contentious for months in the future, thanks to the $500 billion corporate bailout provision that makes Mnuchin arguably the country's most powerful Treasury Secretary ever. Trump sparked concerns about separation of powers arose when during the law's signing, he issued a statement arguing he believes the Inspector General who oversees the fund will need his supervision for certain activities like reporting information to Congress. It is unclear whether Trump's interpretation will lead to more lawsuits between Congress and the White House. But Congress will have a lot of work on its plate after the recess, with talks of a fourth phase of relief focused on infrastructure investment.