MONEY JUNKIE MADNESS: U.S. FEDERAL RELIEF PROGRAM


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Last week, President Donald Trump signed into law the $2.2-trillion Federal Relief Program, the biggest money-pumping scheme in history.
Following is our analysis of “what’s in” and “what’s not.”
On 29 March, three days after the plan passed Congress, Treasury Secretary Steven Mnuchin declared, “We’re going to kill this virus, reopen the economy, and in the third quarter the economy will bounce back.”
“Bounce” might be an optimistic term.
Moody’s Analytics forecasts the package will limit the second quarter’s economic contraction to 17 percent instead of the 30 percent that would have resulted without Congress’s action.
TREND FORECAST: Although the rescue plan is larger than the three stimulus bills Congress passed during the Great Recession, we forecast, at best, it will only temporarily mitigate the economic crisis created by politicians in the war against COVID-19 in which they have essentially shut down the nation’s economy… as have politicians of other nations across the globe.
The global economic clampdown is unprecedented in world history. Claims by “experts” of when and how much economies will fall and rise over the coming months are absent from geopolitical and socioeconomic implications and ramifications.
Freefall
In the retail, real estate, travel-tourism, hospitality, live entertainment, and tourism sectors, we forecast depression-level declines.
For example, after being forced to close 500 of its stores, yesterday, Macy’s fired some 130,000 employees.
Adding to the avalanche of retail layoff, Simon Property, the largest U.S. mall owner, announced today it would be laying off 30 percent of its workforce.
These numbers are unprecedented, and the corporate and personal implications of economic pain and hardship will be disastrous.
It should be noted that at the outbreak of the coronavirus hysteria launched by the media, while the Trends Journal assessed the socioeconomic and geopolitical consequences of government actions, they were, until recently, absent from mainstream coverage.
The Government Bailout
Here’s what the new plan offers:

  • Individuals making less than $75,000 a year will be paid $1,200 each; married couples making $150,000 or less will receive $1,200 per adult.

The payments scale back by $5 per additional $100 of income, with no payments for individuals making more than $99,000 and couples bringing in $198,000 or more.

  • Each child 16 and younger is worth $500.
  • The federal government will add an additional $600 a week to state unemployment benefits for four months. Congress also added 13 weeks to the length of time states will pay unemployment benefits, which ranges by state from 12 to 28 weeks. Gig workers and self-employed people also will be eligible. A handful of Republicans in Congress complained that some workers could collect more in the combined unemployment payments than they made at their jobs.
  • The treasury department will disburse $500 billion in loans, loan guarantees, and investments, including grants of $25 billion for passenger airlines, $4 billion for air freight carriers, and $3 billion for contract companies that load baggage and clean airplanes. Another $25 billion for passenger carriers and $4 billion for freight flyers is offered as loans or loan guarantees.

Democrats successfully fought to include provisions that no elected federal officials (read “Trump family”) or politically appointed cabinet officials can benefit from the funds. They also erased a provision that would have allowed companies to keep their participation secret for a period of time. The provision was intended to keep the details of companies’ straits from being known until their recovery was further along.

  • A portion of the treasury’s bailout fund is targeted as loans up to five years to businesses with 500 to 10,000 employees. No payments are due for the first six months of the loan period. The businesses have to keep 90 percent of their 24 March number of employees through 30 September and can’t pay dividends for a year after the loan period ends.
  • More than $150 billion is being channeled to the national health care infrastructure, with $100 billion going to hospitals and $1 billion to the Indian Health Service.
  • State and local governments will share $150 billion to use as they choose to address economic damage done by the virus pandemic.
  • Businesses with fewer than 500 employees can apply to a pool of $367 billion for loans and grants. Some of the loans could be forgiven under certain conditions.
  • The defense department is being given $1.2 billion but is banned from transferring any of the money for payments to build the Mexican border wall. Another $17 billion is allotted to companies working in national security.
  • Foreclosures and evictions related to federally-backed mortgages are suspended for 60 days, as are late payments and interest.
  • The federal agency that supports food banks is receiving $350 billion to buy food and $100 billion to distribute it, and $100 billion to get food to Indian reservations.
  • The U.S. Department of Education will suspend payments and interest on student loans through September 30.
  • People under age 59.5 can withdraw up to $100,000 from IRAs and 401(k) plans without the usual 10-percent penalty for early withdrawals. Retirees will not be required to take 2020’s mandatory distributions from their retirement accounts.
  • The law bans elected federal officials and their immediate families from taking advantage of the provisions of the relief program.

The program will be overseen by an inspector general. Congress and the Trump administration have tussled over which will control the inspector general and reports the inspector’s office generates.
Those who will be helped the least are the working poor who have had their work hours cut or otherwise lost income from the government lockdowns of business.
While some states have blocked evictions, the federal relief bill does not forestall landlords from evicting tenants. As the evictions are deemed as unwarranted in this time of economic crisis, however, landlords, like their tenants, must still pay utility companies and other creditors who expect to be paid now when the bill is due… and for workers, even though unemployment benefits won’t begin for weeks and federal relief checks could be a month or more away.
TRENDPOST: It should be noted that the media is hyping how businesses such as supermarkets, big drug store chains, and Amazon are looking for hundreds of thousands of workers to fill jobs as the public in panic rushes to stock up on food and drugs.
Entirely missing in all the coverage is that none of these jobs pay living wages. And, these are among the 40 percent of America, who, according to a 2008 Federal Reserve report, cannot pay an unexpected $400 expense when the economy was growing… before politicians created the Economic Corona Calamity.  

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