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
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
"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
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
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
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 House of Representatives last week passed a bill to extend
the timeline of the Paycheck Protection Program and increase the
eligibility of small businesses after several businesses said the
program was ill-suited to their needs. The Senate attempted to pass
the bill on Wednesday, but the bill was blocked by Sen. Ron Johnson
(R., Wis.), who said the proposal had technical errors. Some
Republican senators also expressed concern that the bill changes
the program's focus, from a short-term solution to keep people on
payroll to a longer-term measure.
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
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 email@example.com and Paul Kiernan
(END) Dow Jones Newswires
June 03, 2020 16:51 ET (20:51 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.