CARES Act
The Coronavirus Aid, Relief, and Economic Security Act,[b][1] also known as the CARES Act,[2] is a $2.2 trillion economic stimulus bill passed by the 116th U.S. Congress and signed into law by President Donald Trump on March 27, 2020, in response to the economic fallout of the COVID-19 pandemic in the United States.[3][4] The spending primarily includes $300 billion in one-time cash payments to individual people who submit a tax return in America (with most single adults receiving $1,200 and families with children receiving more[5]), $260 billion in increased unemployment benefits, the creation of the Paycheck Protection Program that provides forgivable loans to small businesses with an initial $350 billion in funding (later increased to $669 billion by subsequent legislation), $500 billion in loans for corporations, and $339.8 billion to state and local governments.[6]
Not to be confused with various laws called CARE Act.Long title
To provide emergency assistance and health care response for individuals, families, and businesses affected by the COVID disease.
CARES Act
March 27, 2020
The original CARES Act proposal included $500 billion in direct payments to Americans, $208 billion in loans to major industry, and $300 billion in Small Business Administration loans.[7][8] As a result of bipartisan negotiations, the bill grew to $2 trillion in the version unanimously passed by the Senate on March 25, 2020.[9][10] It was passed by the House via voice vote the next day, and was signed into law by President Donald Trump on March 27. It was originally introduced in the U.S. Congress on January 24, 2019, as H.R. 748 (Middle Class Health Benefits Tax Repeal Act of 2019).[a] To comply with the Origination Clause of the Constitution,[11] the Senate then used H.R. 748 as a shell bill for the CARES Act,[12] changing the content of the bill and renaming it before passing it.[13]
Unprecedented in size and scope,[9] the legislation was the largest economic stimulus package in U.S. history,[14] amounting to 10% of total U.S. gross domestic product.[15] The bill is much larger than the $831 billion stimulus act passed in 2009 as part of the response to the Great Recession.[15] The Congressional Budget Office estimates that it will add $1.7 trillion to the deficits over the 2020–2030 period, with nearly all the impact in 2020 and 2021.[16]
Lawmakers refer to the bill as "Phase 3" of Congress's coronavirus response.[17][18] The first phase was the Coronavirus Preparedness and Response Supplemental Appropriations Act that provided for vaccine research and development. The Families First Coronavirus Response Act, which focused on unemployment and sick leave compensation, was phase 2. All three phases were enacted the same month.[17]
An additional $900 billion in relief was attached to the Consolidated Appropriations Act, 2021, which was passed by Congress on December 21, 2020, and signed by President Trump on December 27, after some CARES Act programs being renewed had already expired.
Legislative history[edit]
Initial criticism and negotiations[edit]
The House initially passed a tax cut bill in mid-2019 and sent it to the Senate, which then used it as a shell bill and added an amendment in the nature of a substitute, fulfilling the constitutional requirement that all bills for raising revenue must originate in the House. After the new bill was released by the Senate, Speaker of the House Nancy Pelosi (D-CA) issued a statement that read in part: "We are beginning to review Senator McConnell's proposal and on first reading, it is not at all pro-worker and instead puts corporations way ahead of workers."[105]
Senate Minority Leader Chuck Schumer (D-NY) criticized the fact that Democrats were not involved by Republicans in drafting the bill.[106]
Among Senate Republicans there was "significant debate and disagreement" regarding "Donald Trump's proposal to provide most Americans with $1,000-plus checks to boost spending and stimulate the economy".[105] Senator Richard Shelby (R-AL), the Republican chair of the Senate Appropriations Committee, stated "I personally think that if we're going to help people we should direct the cash payments maybe as a supplement to unemployment, not to the people who are working every day, just a blank check to everybody in America making up to $75,000."[105]
Early procedural votes[edit]
On the evening of Sunday, March 22, 2020, Senate Democrats blocked the bill in a key procedural vote; the vote was 47–47, while 60 votes were needed to proceed.[107] Immediately thereafter, "Dow futures hit their 5% 'limit down' overnight, and were off 600 points at one stage Monday morning."[107][108]
In response, Mitch McConnell announced the second key procedural vote on the CARES Act, a cloture vote to end debate, on Monday, March 23; 60 votes were needed, but it failed 49–46.[109][108] Both procedural votes were on a "shell" bill framed to repeal an Obamacare tax which passed the House on July 17, 2019.[110] For procedural reasons, the text was replaced by the new language passed by the Senate.[111][112]
Procedural votes for the bill were made more difficult by the fact that five Republican Senators were in self-quarantine: Senator Rand Paul, who had tested positive for COVID-19, as well as Senators Mike Lee, Mitt Romney, Cory Gardner, and Rick Scott.[113]
Nancy Pelosi indicated that the House would prepare its own bill, expected to exceed $2.5 trillion, as a counter-offer,[114] which was criticized by Republicans as "a progressive wishlist seemingly unrelated to the crisis".[115]
Senate agreement[edit]
Early in the morning of Wednesday March 25, Senate leaders announced they had come to an agreement on a modified version of the CARES Act,[116] the full text of which exceeds 300 pages.[117] Mitch McConnell "announced news of a breakthrough on the Senate floor shortly after 1:30 a.m. Wednesday".[116]
Senator McConnell said on the floor, "[we have] reached a bipartisan agreement on a historic relief package for this pandemic ... this is a wartime level of investment for our nation."[118] McConnell continued the analogy to war by saying the CARES Act would provide "ammunition" to health care workers who are the "frontline heroes who put themselves at risk to care for patients" by providing them "the ammunition they need".[119] Chuck Schumer stated on the Senate floor, "Like all compromises, this bill is far from perfect, but we believe the legislation has been improved significantly to warrant its quick consideration and passage, and because many Democrats and Republicans were willing to do the serious and hard work, the bill is much better off than where it started."[118]
Commentary[edit]
Bipartisan passage[edit]
Congress passed the CARES Act relatively quickly and with unanimity from both parties despite its $2.2 trillion price tag, indicating the severity of the global pandemic and the need for emergency spending, as viewed by lawmakers.[149] Writing in The New Republic, journalist Alex Shephard nevertheless questioned how the Republican Party "... had come to embrace big spending" when, during the Great Recession, no Republicans in the House and only three in the Senate supported President Barack Obama's $800 billion stimulus, known as the American Recovery and Reinvestment Act of 2009 (ARRA), often citing the deficit and national debt.[150] Shephard opined that, unlike CARES, much of the media attention to ARRA focused on its impact on the deficit, and he questioned whether Republicans would again support a major spending request under a hypothetical future Democratic president.[151]
Donald Trump remarked upon passage of CARES in the Senate that "The Democrats have treated us fairly ... I really believe we've had a very good back-and-forth. And I say that with respect to [Senate Minority Leader] Chuck Schumer".[149][152][153]
Economic impact[edit]
In mid-April, a survey released by the James Beard Foundation and the Independent Restaurant Coalition indicated that 80 percent of restaurant owners (representing roughly half a million businesses which employ eleven million people) did not believe that their businesses were likely to survive, despite the CARES Act and the PPP.[154] Advisors nominated by the White House to their Great American Economic Revival Industry Group for the food industry included 23 celebrities and executives of large chains, but no small business owners.[155]
In a release dated April 16, 2020, the Congressional Budget Office estimated that the CARES Act "will increase federal deficits by about $1.7 trillion over the 2020–2030 period."[156] Part of the reason this is less than the $2.2 trillion included in the CARES Act is that income and costs as part of the Treasury's emergency lending program are expected to offset each other.[157]
Following the passage of the CARES act, real disposable personal income jumped to over 17,200 billion of chained 2012 dollars from a previous 15,200 billion of chained 2012 dollars in January.[158]
Political impacts[edit]
The passage of the CARES act occurred during the 2020 election year, giving President Trump political capital for his reelection campaign. President Trump lost the 2020 election to former Vice President Joe Biden.[159] Trump's gain from his 2016 election performance has been partially credited to the economic impact of the CARES Act. For example, a voter in Rio Grande Valley "appreciated getting a pandemic stimulus check bearing Mr. Trump’s signature, which showed he cared."[160]