The Senate passed a historic $2.2 trillion coronavirus stimulus package Wednesday, on a vote of 96-0. It will benefit low-income renters in several ways. It will provide direct financial assistance to people, expand and increase unemployment insurance, halt evictions in federally-backed rental housing and foreclosures on federally-insured mortgages. It will also provide billions of dollars in loans to help keep businesses afloat and stem job losses from the pandemic.
Called the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the bill is the largest economic rescue package in U.S. history. It is equivalent to 9% of the U.S. gross domestic product (GDP). The legislation took several days of intense negotiations before the final measure was passed.
Democrats had charged the original Republican bill was slanted towards big business. They argued for more measures that benefit workers and more restrictions on the business loans. Democrats were concerned about a repeat of the financial bailouts in 2008, where companies caused scandals by using taxpayer bailout money for CEO bonuses, stock buybacks and big dividend payments for investors.
Low-income renters will benefit most immediately from direct payments authorized in the bill. The bill provides $250 billion for direct payments to low- and moderate-income households hit hard by business closures during the pandemic. Every adult with income less than $75,000 will receive a payment of $1,200, with $500 more for each child. People earning between $75,000 and $99,000 will receive smaller payments on a sliding scale. People earning more than $99,000 will not receive any payments.
The income qualification for the direct payments will be based on 2019 tax returns, or 2018 tax returns if 2019 taxes have not been filed yet. Treasury Secretary Steven Mnuchin has extended the tax filing deadline from April 15 to July 15. The IRS will be sending the payments. It will also use other data, such as information from the Social Security Administration, to reach people who may not have filed taxes.
Secretary Mnuchin has said that the first payments should go to direct deposit accounts in three weeks. This may not happen so quickly. People who already filed 2019 taxes online and had direct deposit set up with the IRS will receive their payments most quickly. Many low-income renters do not have bank accounts. Processing and mailing paper checks will take the IRS more time. IRS staffing has also been affected by the coronavirus. It could be May before all the payments are sent out.
Also of special interest to low-income renters is the extension of unemployment insurance. The bill extends the unemployment insurance period by 13 weeks. It also allows a benefit increase of up to $600 per week for four months. The unemployment benefits are also extended to people who are self-employed, freelancers, and gig workers like Uber drivers. The week of March 21, 3.3 million people filed unemployment claims. This dwarfs the previous record of 695,000 claims set in October of 1982.
The CARES Act also institutes a moratorium on evictions and foreclosures in federally-backed properties. It provides eviction and foreclosure protections more widely than recent orders by the president and HUD Secretary Carson.
The legislation includes a 120-day moratorium on evictions in all federally subsidized housing and foreclosures on all federally backed mortgages. Renters in homes with federally-backed mortgages will also be protected from eviction for 120 days after the bill becomes law.
The moratorium will apply to federally subsidized apartments supported through HUD, USDA, or the Treasury Department, which oversees Low-Income Housing Tax Credits (LIHTC). This means that low-income renters with Section 8 Housing Choice Vouchers, those living in apartments with Section 8 Project-Based Rental Assistance, and those living in LIHTC properties will be safe from eviction if they suffer financially during the crisis.
The law also allows owners of multifamily rental properties with federally-backed mortgages to request forbearance on their loan payments for 30 days. Forbearance means they can temporarily suspend their loan payments if the property is financially distressed. Owners can ask for an extension of up to 60 days, and they cannot evict tenants during the forbearance period. This will help owners keep properties financially stable and reduce the risk of low-income tenants losing their homes.
In addition, the CARES Act will provide more than $12 billion to beef up HUD affordable housing programs. It will provide $4 billion extra in Emergency Solutions Grants (ESG). ESG supports shelters and services for homeless persons. People who are homeless are especially vulnerable to the spread of coronavirus. Shelters do not accommodate social distancing, and washing and sanitizing often are not easy when living on the streets.
The bill gives extra funding to key HUD rental assistance and subsidy programs. When tenant incomes drop because of the coronavirus outbreak, their contribution to rent decreases. This means HUD needs to provide more subsidy to make the full rent. The following HUD programs will receive additional funds to cover the extra cost of serving tenants during the health crisis:
- $1.25 billion for Section 8 Housing Choice Vouchers
- $1 billion for Section 8 Project-Based Rental Assistance
- $685 million for Public Housing
- $300 million for tribal housing
- $65 million for Housing Opportunities for People with AIDS (HOPWA)
- $50 million for Section 202 Supportive Housing for the Elderly
- $15 million for Section 811 Supportive Housing for Persons with Disabilities
The bill also provides $5 billion in Community Development Block Grants (CDBG) to state and local governments. CDBG is used for affordable housing, but also critical public infrastructure, economic development and local services like Meals on Wheels.
The rescue package features a $500 billion fund for loans to distressed businesses. Some of these funds have been set aside for specific industries that have been hit hard by the pandemic, like airlines. Loans cannot be for more than five years. Loans for mid-sized companies (500-10,000 employees) and nonprofit organizations would have no payments for the first six months after they are issued.
The legislation leaves a lot of discretion to the Treasury Secretary in making these loans. Democrats insisted on more restrictions and oversight to make sure the funds are not misused. The bill creates a new Inspector General at the Treasury Department and a congressional oversight panel to make sure the funds are spent properly.
Democrats also won restrictions on the businesses that receive rescue loans. These companies cannot do stock buybacks or pay dividends while the loan is outstanding, plus one year after that. For airlines, rescue funds cannot pay for CEO bonuses. Companies that receive rescue loans must maintain 90% employment through September 30, “to the extent practicable.”
The CARES Act bars the president, vice president, members of Congress, and executive department heads like cabinet secretaries from receiving these business loans. It also bars loans to their spouses and other family members.
The legislation provides more than $150 billion for the healthcare system. This will help with equipment shortages and other hospital costs stretched by the coronavirus outbreak. $150 billion will also go to state and local governments. These funds will help cover spending shortages due to the pandemic.
$350 billion has been targeted for loans to small businesses impacted by the pandemic. Some of these loans could be forgiven if the businesses keep most of their employees on through September 30.
Now that the measure has passed the Senate, the House will take it up. It is scheduled for a vote on Friday, March 27. The Democratic House leadership plans to hold a voice vote to adopt the Senate measure quickly. This means that only those members present in the chamber vote, and if most are in favor it passes without doing a full roll call of all votes. If one member rejects this, the House can still do a full roll call vote on the bill. Speaker Nancy Pelosi (D-CA) was confident the bill would have strong bipartisan support, and would pass on Friday one way or another.
