By Kate Davidson and Paul Kiernan 

WASHINGTON -- Nine weeks after Congress approved its largest-ever economic relief measure to counter the coronavirus pandemic, most of the direct cash assistance aimed at keeping the economy afloat has been spent or committed.

The so-called Cares Act included a projected $1.2 trillion in direct aid, ranging from expanded unemployment benefits and forgivable business loans to cash payments for households, hospitals, cities and states. Congress topped up that sum in April with an additional $400 billion for small businesses and hospitals.

Of the total $1.6 trillion in aid, roughly $1.12 trillion, or about 70%, has been distributed, according to a Wall Street Journal analysis of government data and estimates by the Committee for a Responsible Federal Budget, a bipartisan nonprofit group.

"This fiscal stimulus has spent out very quickly relative to reasonable expectations, certainly relative to historical expectations, which is to the credit of the administration," said Ernie Tedeschi, an economist with Evercore ISI who served in the Treasury Department under President Obama. "In terms of the core assistance to households and businesses, we're already past the peak," Mr. Tedeschi said.

Direct cash assistance is just one form of coronavirus-related spending; but some economists say it has the biggest impact because it is intended to fill the void in economic activity created by social-distancing measures.

"We're getting most of the benefit from that stimulus right now," Mr. Tedeschi said. "Virtually everything is committed, and a great deal of it has gone out the door already."

The pace of spending and its impact are at the center of a debate over how much more money is needed to support economic recovery, alongside judgments about how quickly lockdowns should be eased, the progress of the disease and prospects for developing a vaccine.

All told, Congress has passed four pieces of emergency legislation authorizing about $3.3 trillion in new spending and tax breaks. Aside from cash assistance, Congress approved measures to make coronavirus testing free, increase health-care funding for states and subsidize paid sick leave for workers affected by the virus. It also allocated to federal agencies more than $330 billion that doesn't have to be spent until the end of 2021 or later, including funds to the Department of Health and Human Services for researching treatments and a vaccine.

Another $500 billion went to the Treasury Department to support Federal Reserve emergency lending programs, which are just getting under way.

House Democrats say all that isn't enough. Last month they approved a $3.5 trillion bill that includes additional safety-net spending, another round of payments for Americans and roughly $1 trillion in aid to state and local governments.

"We think this is a major investment in the lives of the American people and in the budgets of our states and localities," Speaker Nancy Pelosi (D., Calif.) said of the House bill.

Republicans and White House officials have argued instead for a pause in further spending to assess the impact of existing measures, though many acknowledge that more legislation may be needed. Some of the president's advisers are concerned about the ballooning budget deficit.

"You can make a pretty strong case that before we rush out and do another spending bill we actually let some of this stuff go to work and understand the consequences of what we've already done," Sen. Pat Toomey (R., Pa.) said at a May 18 Senate hearing.

Trump administration officials, including National Economic Council Director Larry Kudlow and White House economic adviser Kevin Hassett, are focusing on reopening the economy and offering tax and regulatory incentives to help spur growth. White House officials are set to meet with Mr. Trump as soon as this week to discuss options for another legislative package.

By the fall, "all the signs of economic recovery are going to be raging everywhere," Mr. Hassett said on CNN's State of the Union on May 24.

The nonpartisan Congressional Budget Office said the existing legislation "will partially mitigate the effects of the deterioration in economic conditions," with the biggest boost coming in the second and third quarters of this year.

The CBO projects the economy will begin to recover in the second half of the year as lockdowns are lifted. Even so, it expects the economy will be smaller at the end of 2021 compared with the end of 2019, and the jobless rate will be more than twice as high.

Meanwhile, government spending to replace lost personal and business income is running out.

The Treasury Department said Wednesday that the Internal Revenue Service has made 159 million stimulus payments totaling more than $267 billion, reaching everyone for whom the government has enough information. The CBO has said consumers may be slow to spend that money as long as social-distancing measures keep many people at home and businesses closed

The Small Business Administration allocated all of the $349 billion initially appropriated for forgivable loans under the Paycheck Protection Program. Lawmakers in April passed a second round of funding, bringing the total to $660 billion. Of that, $510 billion, or 76%, had been committed as of May 30.

The Senate on Wednesday approved a bipartisan bill to extend the timeline of PPP and increase the eligibility of small businesses after several businesses said the program was ill-suited to their needs. The bill, which passed the House last week, now heads to the president's desk.

A separate, $32 billion payroll-support program for the airline industry is almost exhausted. The Treasury has approved $30.5 billion in grants and loans to 197 companies, including American Airlines Group Inc., Delta Air Lines Inc. and Southwest Airlines Co.; only $12.5 billion had been disbursed as of May 26.

As of May 20, the Treasury had disbursed $144.3 billion of the $150 billion Coronavirus Relief Fund, created to help states, territories and tribal governments offset expenses stemming from the pandemic.

Donald Schneider, an economist at research firm Cornerstone Macro, said not all of the assistance money had worked its way into the economy. Some states have been slow to pay out the weekly $600 in enhanced jobless benefits that Congress authorized. The benefits, worth nearly $270 billion, are meant to last at least through July, and in some cases until the end of the year.

Some states haven't yet decided how to spend the grants they received to cover costs related to the virus. And it isn't clear how many businesses that received payroll protection loans are spending the money, Mr. Schneider said.

Still, the remaining funds aren't likely to have a large economic impact, he said.

"I don't think there's some big boost in growth waiting in the wings because relief hasn't been disbursed yet," said Mr. Schneider, a former GOP House aide.

Write to Kate Davidson at kate.davidson@wsj.com and Paul Kiernan at paul.kiernan@wsj.com

(END) Dow Jones Newswires

June 03, 2020 20:40 ET (00:40 GMT)

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