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How does the CARES Act save the U.S. economy during the epidemic?
The Coronavirus Aid, Relief, and Economic Security Act, commonly referred to as the CARES Act, is a landmark legislation passed by the U.S. Congress to counteract the economic fallout from the COVID-19 pandemic. Signed into law by President Donald Trump on March 27, 2020, this $2.2 trillion stimulus package aims to support individuals, businesses, and communities across the United States during an unprecedented time of crisis.
Expand cash payments
An important component of the CARES Act is to provide cash payments to American taxpayers. The bill allocates $300 billion to give most adults $1,200 in direct payments, with families receiving larger payments based on the number of children they have. These cash payments are intended to help families maintain basic living needs, including paying rent, credit cards and other daily expenses.
The purpose of these direct payments is to stimulate consumption to prevent further reductions in economic activity.
Enhance unemployment benefits
An additional $260 billion in unemployment benefits will provide greater protection for workers affected by the epidemic. That includes an extra $600 a week in federal unemployment benefits and an extension of benefits for unemployed people so they can make ends meet even during shutdowns.
Small Business Loan Program
The CARES Act also introduced the Paycheck Protection Program (PPP), initially providing $350 billion in forgivable loans to small businesses to help them stay operational during the pandemic. The program was later increased to $669 billion to support small businesses facing hardship. The main purpose of these loans is to preserve jobs and cover rent and other expenses.
This program is critical for small business owners because it not only provides funding but also protects the paychecks of millions of employees.
Support for state and local governments
The CARES Act allocates $339.8 billion to state and local governments to help them deal with the budget crisis caused by the epidemic. Many local authorities are responsible for delivering essential services and the allocation of this funding will ensure the continued operation of these services.
Health care assistance
In the context of the epidemic, the support of the medical industry is also crucial. The bill allocates $130 billion for medical institutions, including hospitals, manufacturers and distributors, to purchase much-needed equipment and resources to respond to the epidemic.
The investment of these funds not only ensures the normal operation of the medical system, but is also crucial to the fight against the epidemic.
Bart’s impact on business
The CARES Act not only targets individuals and small businesses, but also provides up to $500 billion in loans and financial support to large companies. The funds are intended to stabilize affected industries, such as airlines and hotels, and prevent widespread job losses and business closures.
Subsequent impact
Although the introduction of the CARES Act is only a temporary solution, it is one of the important steps for the US economy to deal with the impact of the epidemic. According to projections from the Congressional Budget Office, this bill could add $1.7 trillion to the deficit between 2020 and 2030.
Future challenges
With some aid programs expiring at the end of 2021, challenges remain in fully reviving the economy. There is a growing debate over the need for further stimulus measures.
How to balance spending with the need to rebuild the economy in the face of a changing economic environment?
