When Do Government Stimulus Programs End?

When Do Government Stimulus Programs End? The COVID-19 pandemic hurt the global and United States economies so severely that Congress passed several bills to address the financial burden affecting residents and businesses.

Anyone doubting the adverse effects only needs to look at the documentation provided by the federal government. According to Congress:

• The country’s gross domestic product fell more than it has since the Great Recession.
• About 20.5 million people filed for unemployment by May.
• Consumer spending in March, which marked the beginning of the pandemic for many people, fell 7.3%.

The economy suffered further effects as states and cities were forced to close non-essential businesses. Closing businesses helped curb the spread of coronavirus, but it also pushed many businesses – especially small businesses – to the brink of failure.

How the Government Stimulus Package Helped Curb Economic Destruction

As of June 2020, Congress passed five stimulus bills designed to support consumers, businesses, and other parts of the economy. The CARES Act stands out as the most notable attempt because it pumped an estimated $2.2 trillion into the U.S. economy.

Some of the most important parts of the CARES Act included:

• One-time stimulus payments of $1,200 per adult and $500 per dependent (as long as individuals made less than $99,000 or couples earned less than $198,000 in 2019).
• An eviction moratorium that prevented evictions of families living in federal insured homes.
• Lower stimulus payments to high-income earners.
• $25 billion to support airlines during the lockdown.
• $659 billion in forgivable loans for small businesses that used most of the money to pay employees and avoid cutting wages.
• Freezing student loan payments.
• Payroll tax deferrals to delay costly payments by employers.
• About $150 billion to help fund state, local, and tribal governments burdened by the pandemic.
• An additional $600 per week for people receiving unemployment checks for their states.

While these measures helped to protect the economy from a more severe recession and gave many businesses opportunities to tread water while they waited for the economy to reopen, Congress’s stimulus packages do not last forever. In fact, many of the benefits have specific dates when they will end.

When the Current Stimulus Package Benefits End

Unless Congress acts before its recess in August, the following current stimulus package benefits will end on the following dates:

• July 24 – The date that the eviction moratorium will end, potentially putting millions of people on the streets and in danger of spreading COVID-19 throughout their communities.
• Late July – The approximate time when the federal government will stop adding $600 weekly payments to unemployment insurance, which could mean that millions of families will find themselves in dire financial circumstances.
• August 8 – The final day for small businesses to apply for Paycheck Protection Program (PPP) forgivable loans.
• September 30 – The last day that passenger airlines will receive support.
• September 30 – People with student loan debt must start repaying their loans, again.
• December 31 – The final day for businesses to request payroll tax deferrals.
• December 31 – The last day for businesses to apply for Employee Retention Tax Credits.

What Will the End of Government Stimulus Programs Mean for the Country?

It’s nearly impossible to determine precisely how the end of government stimulus programs will affect the U.S. A few consequences, however, are almost certain.

Ending the Moratorium on Evictions

When the moratorium on evictions ends, millions of people will not have safe places to quarantine. Some of them may move in with friends or relatives. Others may find alternative forms of housing.

Unfortunately, many homeless shelters are reluctant to accept new residents because they do not want COVID-19 to infect the population.

Some families facing eviction will end up in homeless camps, where they will live in close proximity to other people. The situation could make it impossible for family members to socially distance themselves from potentially sick members of the camp.

Ending $600 Weekly Unemployment Payments

Unemployment insurance does not pay people their full wages. Instead, unemployment insurance pays a percentage of a person’s normal wage. The specific percentage varies from state to state.

States also have weekly maximum benefits. In Alabama, total weekly benefits may not exceed $275. In Massachusetts, total weekly payments may not exceed $1,220.

Alabama residents who usually earn $1,000 per week will suddenly see their unemployment benefits drop from $875 to $275. Without assistance from the federal government, it will take nearly a month for these people to earn what they typically make in a week.

Many people, therefore, will discover that they cannot afford their current standards of living. They may fall behind on mortgages, need to sell vehicles, stop saving for retirement, and even pull their children out of private schools or colleges.

There is significant concern that losing the $600 federal payment will lead to a mortgage crisis.

Ending PPP Prematurely Could Lead to Future Layoffs

Many small businesses have already expressed concern over accepting PPP loans. The loans come with numerous stipulations that can make small business owners nervous. If they fail to meet the requirements, then they could owe the government thousands of dollars.

Perhaps even more concerning, ending PPP could mean that many small businesses are forced to layoff more employees. If this happens, states – which are already struggling to keep up with unemployment payments – will find themselves in an even worse situation.

As of June 2020, many states were already painfully close to reaching historical unemployment highs. Losing PPP could push those numbers over the current records.

No one knows how states will handle such an onrush of unemployment applications, or where states will find money to write unemployment checks.

Will Congress Pass More Stimulus Packages?

It seems likely that Congress will need to pass more stimulus packages to keep the U.S. economy afloat. Unfortunately, the Senate, House of Representatives, and The White House have different ideas about what they want included in future packages.

President Trump has demanded a payroll tax cut that would save employers billions or trillions of dollars. The cut would also lower the federal government’s 2020 revenue by the same amount. It’s unclear how the president plans to fund future programs without collecting payroll taxes.

Within Congress, many Republicans do not want to give state and local governments more money, presumably because states have mismanaged money in the past and may use federal funds to pay for expenses like pension plans.

On July 21, Majority Leader Mitch McConnell laughed and said, “No,” when asked whether he expects a bill to pass by a deadline set by Secretary of the Treasury Steven Mnuchin.

Senator McConnell’s remark makes it seem unlikely that Americans will receive any assistance until after Congress returns from its break in September.

Meanwhile, the House of Representatives wants to pass a stimulus package that would cost $3 trillion. The package would include a second round of stimulus payments to individuals, mortgage and rent assistance, and an extension of the $600 unemployment benefit. It’s unlikely that the Senate or White House would agree to a bill with such a high price.

At this point, it does not look promising that the federal government will solve upcoming economic and financial problems before the fall season arrives. How its inaction will affect people and businesses is unknown.

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