President Trump signed into law on April 24 a $484 billion relief package passed by Congress earlier that week to provide additional financial relief to some of the most vulnerable individuals and businesses affected by the COVID-19 pandemic.
The legislation, considered Phase 4 in Congress’s response to the pandemic, will add hundreds of billions of additional funding to small businesses through the Paycheck Protection Program and provide tens of billions for disaster relief efforts, hospitals and COVID-19 testing. The relief, especially to small businesses, was considered critical as the PPP ran out of funding in mid-April.
This legislation puts federal spending for the response to the pandemic at around $2.8 trillion, a little over 10% of the nation’s Gross Domestic Product. The CARES Act, considered Phase 3 of the federal government’s pandemic response, was signed into law May 27. At $2.2 trillion, the CARES ACT was the most comprehensive and expensive program, providing hundreds of billions of dollars in funding for individuals, federal unemployment benefits that supplement state benefits, relief to distressed industries, funding to hospitals and more. The legislation also established the PPP to aid small businesses in the form of loans that could be forgiven if the businesses kept almost all their staff on the payroll. The PPP was initially funded at $250 billion.
The PPP was exhausted more quickly than Congress expected, as the funding dried up within three weeks. Senate Republicans and House Democrats tried to reach a deal two weeks ago to provide more funding for the program, but leaders could not strike a deal because of Democratic demands for further assistance to hospitals and states.
However, the combination of the PPP running out and the recent revelation that 26.5 million Americans had filed unemployment compensation claims since March 14—the highest number in modern history—forced Congress’ hand. Phase 4 places an emphasis on small businesses as it provides an additional $330 billion in loans to the PPP. In addition to the small business relief, the package also includes $75 billion to help hospitals, $60 billion in disaster relief loans and grants, and $25 billion to enhance coronavirus testing across the nation.
Congress has already begun work on a Phase 5 bill. Democrats are insisting that this new legislation focus on funding for state and local governments. They are near bankruptcy from the crisis, as tax revenues have plummeted as lost jobs and retail closures have led to drastically reduced retail activity. Another Democratic priority is a “Heroes Fund” to pay federally funded bonuses for essential workers.