During the early weeks of the COVID-19 pandemic, most affected countries imposed severe restrictions on residents’ movements and activities. As a result of these measures, global economic growth ground to a halt in 2020. Many countries tipped into recession, and some remain in negative-growth territory into 2021.
In the United States, federal policymakers recognized the gravity of the situation once it became clear the country was dealing with an uncontrolled epidemic.
All significant U.S. coronavirus relief measures — past, present, and proposed — are listed and summarized below, along with general guidance on what the moves mean for American workers, consumers, and small-business owners.
The U.S. Government’s Response to the Coronavirus Pandemic
Beginning in March 2020, three pillars of the federal government and national financial system took action on the crisis: Congress, the executive branch, and the Federal Reserve (the Fed).
Further actions occurred throughout the spring and summer. The work continued through 2020 and into 2021, with the most recently passed major legislative package modeled after President Biden’s proposed American Rescue Plan.
A follow-up package focused on infrastructure has been described as “pandemic relief” (described here by The New York Times) because it would likely boost the economy as the pandemic fades were it to become law.
However, its primary objective is not to stabilize the economy amid the pandemic but to modernize the United States’ transportation, energy, and communications systems.
Federal Legislation for Coronavirus Relief
On March 6, 2020, President Donald Trump signed into law the Coronavirus Preparedness and Response Supplemental Appropriations Act.
The following week, in the early hours of March 14, 2020, the U.S. House of Representatives passed the much larger Families First Coronavirus Response Act. That bill became law later in the month and represented the first major piece of stimulus legislation associated with the pandemic.
A much larger package, the CARES Act, followed within weeks.
Coronavirus Preparedness & Response Supplemental Appropriations Act
The Coronavirus Preparedness and Response Supplemental Appropriations Act provides $8.3 billion in emergency funding for the U.S. and international response to COVID-19, the illness caused by the new coronavirus.
The government has earmarked about 80% of the supplemental act’s appropriation for the domestic response.
The remainder is for the international response, with most of that portion going to crucial United States Agency for International Development programs to shore up COVID-19 responses in less developed parts of the world.
About $264 million will go to the U.S. Department of State’s efforts to support U.S. consular operations and emergency evacuations across the globe.
The supplemental bill’s domestic appropriation includes several major funding buckets:
- $3.4 Billion for the Department of Health and Human Services’ Public Health and Social Services Emergency Fund. This allocation covers funding for the development of vaccines, treatments, and diagnostic tests for COVID-19. It also includes health care center grants, which aim to improve medical care for geographically isolated or vulnerable populations.
- $1.9 Billion for the Centers for Disease Control and Prevention (CDC). This allocation replenishes the CDC’s Infectious Diseases Rapid Response Reserve Fund and funds state and local responses to the outbreak.
- About $835 Million for the National Institute of Allergy and Infectious Diseases and About $60 Million for the Food and Drug Administration (FDA). These allocations also cover funding for vaccine and treatment development. The FDA’s portion could help address medical supply chain issues as well.
- $20 Million for the Small Business Administration (SBA)’s Disaster Loans Program. These loans provide financial assistance to businesses and entities affected by the outbreak.
- About $500 Million (Estimated) for Expanded Telemedicine at Medicare Providers. This provision relaxes restrictions on Medicare providers’ telemedicine operations. It allows them to provide telemedicine services to Medicare beneficiaries regardless of location. Previously, Medicare providers limited telemedicine offerings to beneficiaries in rural areas.
What It Means for You
The Coronavirus Preparedness and Response Supplemental Appropriations Act is a targeted package intended to shore up the U.S. government’s response to a rapidly worsening pandemic.
Those not eligible for SBA disaster loans or enrolled in Medicare won’t see significant changes to daily life as a result of its enactment.
However, in the long run, all Americans stand to benefit from the development of effective COVID-19 treatments or vaccines.
Families First Coronavirus Response Act
On March 14, 2020, the U.S. House of Representatives passed the Families First Coronavirus Response Act (FFCRA). The U.S. Senate passed a corrected measure on March 18, 2020, sending the bill to the White House for Trump’s signature.
The FFCA is much broader in scope than the supplemental act. Its core provisions, such as expanded unemployment insurance and paid sick leave for certain workers, are open-ended, rendering its total cost impossible to project until the full scope of the pandemic is clear.
According to a House summary of the bill, the FFCRA includes seven major divisions. Some of the bill’s provisions changed as a result of the technical changes negotiated by the House and White House to ensure bipartisan support.
The most notable of these changes was the scaling back of paid sick leave for those affected directly or indirectly by COVID-19.
- Second Coronavirus Preparedness and Response Supplemental Appropriations Act. This act expands funding for several federal nutrition assistance programs, including Special Supplemental Nutrition Program for Women Infants and Children (WIC) and The Emergency Food Assistance Program (TEFAP), for families affected by COVID-related job losses, layoffs, and school closings. It also provides nutrition assistance financing for low-income seniors and directs multiple federal agencies to offer COVID-19 diagnostic testing at no charge to employees, service members, and the uninsured.
- Nutrition Waivers. This division loosens restrictions on in-person and location-based services for multiple federally funded nutrition assistance programs. For instance, it allows child and adult care centers to provide meals to go, rather than on-site only. This division also waives state work and work training requirements for beneficiaries of the Supplemental Nutrition Assistance Program (SNAP), where they exist.
- Emergency Family and Medical Leave Expansion Act. This act amends the Family and Medical Leave Act to require employers with fewer than 500 employees and all government employers to provide up to 12 weeks of paid family leave to provide child care due to school closures or the absence of other child care arrangements.
- Emergency Unemployment Insurance Stabilization and Access Act of 2020. This act shores up state unemployment insurance funds in anticipation of layoffs and business closings related to COVID-19. Among other provisions, it includes full federal funding (rather than the typical 50%) for unemployment benefits paid during the 26-week extended benefits period triggered when a state’s unemployment rate increases by more than 10% over the prior year.
- Emergency Paid Sick Leave Act. This act requires employers with between 50 and 500 employees and all government employers to provide employees quarantining due to COVID-19 symptoms or exposure with two weeks of paid sick leave at the employee’s regular rate.
- Health Provisions. This division requires private health plans and government health care payers, such as Tricare and Medicare, to cover the full cost of COVID-19 diagnostic testing. Essentially, it establishes free COVID-19 testing for all Americans.
- Tax Credits for Paid Sick Leave and Paid Family and Medical Leave. This division helps defray the cost of the paid sick leave and family and medical leave provisions. Its benefits include refundable tax credits to businesses and self-employed individuals that give employees (or themselves) paid sick or family leave.
What It Means for You
Millions of Americans are likely to utilize or benefit from the FFCA in some capacity. This includes:
- Anyone who takes a COVID-19 diagnostic test
- Anyone who files for unemployment insurance after a layoff or furlough during the pandemic
- Anyone who qualifies for paid sick leave under the Emergency Paid Sick Leave Act
- Anyone who takes job-protected leave under the Emergency Family and Medical Leave Expansion Act
- Anyone who benefits from SNAP job requirement waivers
- Anyone who benefits from the National School Lunch Program and WIC waivers or other supplemental nutrition program provisions
- Businesses affected by any of the FFCA’s employment provisions
Certain FFCA benefits may outlive the acute phase of the pandemic.
On March 27, President Trump signed into law a sweeping economic stimulus package called the CARES Act. The total expected cost of the mammoth law is $2.2 trillion, making it the largest single stimulus measure in U.S. history.
Its major provisions include:
- Cash Payments to Individuals. The CARES Act’s hallmark was a provision for one-time cash payments to lower- and middle-income Americans, including those with no taxable income at all in recent years. Adult taxpayers with adjusted gross incomes under $75,000 and married-filing-jointly taxpayers with adjusted gross incomes under $150,000 received $1,250 per person. Each qualifying child received $500. Above the adult income thresholds, payments phased out. They disappeared completely for single filers earning more than $99,000 and married filers earning more than $198,000.
- Expansion of Unemployment Benefits. The CARES Act gave unemployed workers $600 in additional unemployment assistance per week through July 31, 2020, more than doubling the typical state unemployment insurance payment. The act also provides for 13 additional weeks of unemployment benefit payments on the federal dime.
- Aid for Hospitals and Health Care Programs. The CARES Act created a $100 billion public health fund to cover providers’ expenses and lost revenues during the pandemic. It also boosts COVID-related Medicare reimbursements by 20% and eliminates planned payment reductions to hospitals with large populations of uninsured and Medicaid patients.
- Air Travel Industry Bailout. The CARES Act provided $32 million in grants and $29 million in loans to airlines, air cargo carriers, and aviation industry contractors. The aid came with significant strings attached, including a requirement that airlines continue flying routes they’d normally cancel due to reduced demand and a prohibition on stock buybacks, dividend payments, employee furloughs, and pay cuts through September. The bill also limited executive compensation for bailed-out airlines’ leaders.
- Business Lending Program and Tax Credits. The air travel industry bailout was part of a $500 billion support package for private companies and municipalities. The program favored nonprofits and businesses with between 500 and 10,000 employees with a six-month grace period on loan repayments. Loan terms were capped at five years, and the loans themselves come with strings, including a prohibition on dividend payments for a year after receiving funds and a requirement that businesses maintain 90% of their March 24 headcount through Sept. 30.
- The Paycheck Protection Program. Meanwhile, under the popular Paycheck Protection Program, companies with 500 employees or fewer were eligible for up to eight weeks of cash flow assistance if they maintain their payrolls. The act includes provisions waiving or delaying employer-side payroll taxes as well, though eligibility was not uniform. The first round of PPP applications closed on June 30, 2020. A second round of the loan program followed later in the summer, along with relaxed guidelines for PPP forgiveness applications, with a third authorized as 2020 turned to 2021.
- Foreclosure and Eviction Suspension. The CARES Act allowed homeowners with federally backed mortgage loans to claim forbearance for an initial period of 60 days and up to four extension periods of 30 days each: up to 180 days in all. Landlords with federally backed mortgage loans were prohibited from evicting tenants for failure to pay rent for 120 days. The law also prohibited fees or penalties for unpaid rent during this period. Shortly after taking office, President Biden extended both suspensions through March 31, 2021.
- Support for the Emergency Food Assistance Program and Other Emergency Nutrition Programs. The CARES Act provided an additional infusion of $450 million to the federal Emergency Food Assistance Program, which purchases and distributes food to needy Americans. It also earmarked $200 million in food assistance specifically for Puerto Rico, which is still recovering from Hurricane Maria and the subsequent collapse of its electric grid, and $100 million in food assistance for American Indian reservations.
- Student Loan Repayment Freeze. The CARES Act authorized the Department of Education to allow all federal student loan borrowers to defer payments through September 2020. Under the law, each deferred payment counted toward required payment thresholds for federal student loan forgiveness programs, including Public Service Loan Forgiveness. As the September deadline approached, President Trump issued an executive order extending the deferment through December 2020 (and, subsequently, through January 2021). After taking office, President Biden issued a new executive order extending the deferment through September 2021.
- Support for Higher Education Institutions and College Students. The CARES Act authorized the creation of the Higher Education Emergency Relief Fund (HEERF), which provided more than $14 billion in emergency aid to higher education institutions (colleges and universities) and college students. A portion of this funding seeded a student aid grant program for students whose lives were meaningfully disrupted by the pandemic.
December 2020 Relief Package
The next round of legislative relief began to take shape in late July 2020, when Senate Republicans released the text of the HEALS Act, a slimmed-down response to the $3-trillion HEROES Act passed by House Democrats in May.
After months of wrangling, Congress finally agreed and passed a fourth coronavirus stimulus package in late December 2020. The package included:
- $284 Billion in Additional PPP Funding. The package earmarked $284 billion for a third round of PPP loans. Like previous tranches, loans funded with this money would be fully forgivable for businesses that met forgiveness criteria. Unlike the second round, the new authorization allows businesses that previously received PPP funding and experienced significant revenue declines in 2020 to apply for another tranche.
- A Second Round of Stimulus Checks. This provision promised one-time stimulus payments of $600 to Americans who earned less than $75,000 ($150,000 for couples filing jointly) and $600 per qualifying dependent (up to $2,400 for a family of four). The income phase-out was identical to the first round of stimulus payments.
- Extension of Federal Unemployment Benefits. This provision extended additional federal unemployment benefit payments by another 11 weeks, roughly through mid-April 2021. The federal bonus payment fell to $300 per week (from $600).
- Support for Schools and Colleges to Reopen for In-Person Learning. The bill provided at least $82 billion in financial aid for primary, secondary, and postsecondary schools to cover costs associated with reopening for classroom learning.
- Rental Assistance and Eviction Moratorium. These provisions set aside $25 billion in financial assistance for renters struggling to pay their bills and extended a broad federal moratorium on rental evictions that was set to expire at the end of 2020. The move was seen as necessary to blunt momentum for a national rent strike.
- Support for Child Care and Nutrition. These provisions earmarked at least $23 billion in financial support for child care services, the Supplemental Nutrition Assistance Program (SNAP), and separate child nutrition programs.
- Expanded Broadband Access. The bill included at least $7 billion for improvements to the United States’ broadband infrastructure in underserved urban and rural communities.
- Funding for Coronavirus Vaccine Distribution. The package set aside billions in funding for expedited distribution of coronavirus vaccines as supply allows.
President Biden’s American Rescue Plan
In early March 2021, the U.S. Senate passed a $1.9 trillion stimulus package modeled after President Biden’s American Rescue Plan. President Biden signed the measure on March 11, 2021.
According to a summary from NBC News, the latest stimulus package includes:
- A Third Round of Stimulus Checks. The package includes yet another round of stimulus checks. At $1,400 per individual and $2,800 per married couple, this one is the largest yet. Individuals earning $75,000 or less and couples earning $150,000 or less are eligible for the full amount. Above these thresholds, payments phase out until disappearing completely for individuals earning more than $80,000 and couples earning more than $160,000.
- A Temporary Boost to Federal Unemployment Benefits. This provision provides a $300 weekly boost to federal unemployment benefits for new and continuing claims through Sept. 6, 2021.
- Tax-Free Unemployment Benefits for Qualifying Earners. This provision, added by the Senate in a last-minute compromise, waives federal income tax on the first $10,200 of jobless benefits earned by taxpayers with incomes as high as $150,000.
- COBRA and ACA Subsidies. The bill subsidizes 100% of COBRA payments (for continuing job-provided health insurance benefits after separation) for unemployed taxpayers. It also provides $34 billion to subsidize premiums on health insurance policies purchased through the Affordable Care Act marketplace.
- Monthly Cash Payments to Families. According to NBC News, this package would provide one year of monthly payments or tax credits to families with children. The payments would total $3,600 per year for children under age 6 and $3,000 per year for children between the ages of 6 and 17, temporarily expanding the Child Tax Credit from up to $2,000 per year to as much as $3,600 per year, per child. Payments to income-qualified families would arrive monthly and all qualifying families would get the full amount (in contrast to the current Child Tax Credit, which can’t increase the size of recipients’ tax refunds).
- Funding for Coronavirus Vaccine Distribution. Like its December 2020 predecessor, this package sets aside tens of billions in funding for coronavirus vaccine distribution. This bill earmarks $14 billion for that purpose.
- Financial Aid to States. This measure provides about $350 billion to shore up state and local government budgets impacted by the pandemic-induced recession.
Proposed Federal Legislation to Combat Coronavirus Fallout
Members of Congress, the president, and executive branch agency heads proposed numerous measures to combat the economic and human toll of the COVID-19 outbreak. The most notable proposals that may or may not become law include:
- Further Industry Bailouts. The December 2020 stimulus legislation satisfied many lawmakers’ and lobbyists’ demands for financial support to hard-hit industries, such as hospitality and live entertainment. Although further support measures were discussed at the time, notably a second airline industry bailout to mitigate the fallout from ongoing international travel restrictions, they appear less likely as the economy reopens.
- Infrastructure Investment. House Speaker Nancy Pelosi, Senate Majority Leader Chuck Schumer, and President Biden all support massive infrastructure investment to mitigate unprecedented job losses and capitalize on historically low interest rates. Although Pelosi’s optimism that the House would take up an infrastructure package in 2020 proved unfounded, Biden has made this a top priority for 2021. Biden’s proposal to invest nearly $2 trillion in transportation, water, broadband Internet, and community health infrastructure over the coming decade was a starting point for negotiations with Republicans, but the final package is likely to be more modest.
- Tax Reform. The Biden Administration is pitching an ambitious tax reform measure as a long-overdue effort to increase the tax code’s fairness, reduce poverty, spur consumer spending, and facilitate job creation. According to a Bloomberg summary, the measure could include an increase in the corporate tax rate from 21% to 28%, a reduction of tax preferences for pass-through entities, an expansion of the estate tax, an increase in capital gains taxes for very high earners, and higher marginal income tax rates for taxpayers earning more than $400,000 per year. Biden has also proposed a global corporate minimum tax of 15%.
Some of these proposals, such as infrastructure investment and tax reform, are not directly related to the pandemic or its economic aftereffects. However, the pandemic created a sense of urgency around economic stimulus and modernization, likely increasing these proposals’ size and ambitiousness as a result.
Executive Branch Action to Address COVID-19
The executive branch of the U.S. government first took action to slow the spread of COVID-19 in late January 2020 with the suspension of noncitizen entry from China, which had the most concentrated outbreak at the time.
Much broader restrictions on entry from Europe followed in the second week of March, leading to the effective shutdown of trans-Atlantic air travel between the U.S. and Europe.
Restrictions gradually began to lift in the spring of 2020, but trans-Atlantic travel volumes remain minuscule by historical standards.
These measures couldn’t stop the spread of COVID-19 within the United States, where person-to-person transmission was confirmed to occur as early as late January, according to a White House statement.
National Coronavirus Emergency Declaration of March 2020
Trump’s declaration of a national emergency on March 13, 2020, freed up $50 billion in sorely needed resources and provide the federal government with additional powers to respond to the evolving crisis, according to Politico.
Most important for the average American, the declaration allows the U.S. Department of Health and Human Services to waive potentially burdensome requirements imposed by three major federal health care programs: Medicare, Medicaid, and the Children’s Health Insurance Program.
That could improve the speed and quality of health care to beneficiaries of those programs.
Passenger Travel Bans and Restrictions
Trump later imposed a ban on Chinese passenger airline traffic to the United States, effective June 16, 2020. The public health rationale for the ban is unclear, as China’s coronavirus outbreak appeared under control by late spring and non-Chinese airlines were not affected.
It’s likely the decision had more to do with the Chinese government’s decision to revoke Hong Kong’s special economic and political status in late May.
Separately, the U.S. Department of State maintains national and regional “threat level” assessments for U.S. travelers abroad. At various times during the pandemic, all or much of the world has been at Level 4, denoting the highest level of caution (“Do Not Travel”).
In January 2021, the U.S. Centers for Disease Control instituted strict COVID-19 testing requirements for all travelers entering the U.S. from abroad, including U.S. citizens.
What It Means for You
Much depends on how the federal government utilizes the powers provided by the executive branch’s emergency declaration and subsequent decrees
It’s easier to predict the effects of specific measures the government has taken to date, such as freezing federal student loan repayments and reallocating 100% of federal student loan payments to principal — both of which could significantly reduce total borrowing costs and repayment timelines for struggling graduates.
Federal Reserve Measures to Stabilize the Economy
The Federal Open Market Committee (FOMC) sets monetary policy for the Federal Reserve System, including the short-term rates at which commercial banks lend money to other banks, known as the federal funds rate.
In March 2020, the FOMC held two unscheduled meetings to address the economic fallout from the COVID-19 crisis by lowering the federal funds rate and committing to additional measures to shore up the financial system.
March 3, 2020: Emergency Rate Cut, 50 Basis Points
According to an announcement from the Fed, the Federal Reserve Board voted unanimously to reduce the federal funds rate by 50 basis points (0.50%) to 1.10%, effective March 4, 2020.
The board also voted to reduce the primary credit rate by 50 basis points to 1.75%. Also known as the discount rate, the primary credit rate is the rate at which commercial banks and other depository institutions borrow from regional Fed banks.
What It Means for You
Reductions to the federal funds rate and primary credit rate ripple through the financial industry almost immediately.
If you use any sort of variable-rate credit product, such as a credit card, or have funds on deposit in an interest-bearing bank account, you’re likely (but not guaranteed) to see corresponding reductions to your accounts’ interest rates within weeks (and sometimes within days) of the Fed’s decision to lower rates.
For consumers and entrepreneurs, these reductions’ impacts can be positive or negative — and are often both.
On the positive side, lower federal rates not only reduce rates on variable-rate products but depress rates on fixed-rate products as well, including conventional fixed-rate mortgages, auto loans, and personal loans.
On the negative side, lower federal rates usually lead to lower rates on FDIC-insured deposit accounts, including high-yield savings accounts and CDs — though the best online banks do what they can to offer higher yields than competitors.
March 15, 2020: Emergency Rate Cut, 100 Basis Points
On March 15, 2020, the Federal Reserve Board voted to reduce the federal funds rate by 100 basis points (1%) to between 0.00% and 0.25%, according to the Fed.
At the same unscheduled meeting, the board voted to increase purchases of mortgage-backed securities by no less than $200 billion and increase purchases of Treasury securities by no less than $500 billion.
They hope these moves can maintain smooth functioning in the country’s credit markets, which have come under strain due to COVID-19.
What It Means for You
In normal economic times, a rock-bottom federal funds rate promotes borrowing by businesses and consumers while encouraging investors to put money to work in the stock market, where the long-term historical rate of return is significantly higher than interest-bearing bank or cash management accounts.
But the COVID-19 pandemic does not qualify as “normal economic times,” so the jury remains out on just how effective the Fed’s moves will prove.
That said, if you’re thinking about buying a house or car, taking out a personal loan to fund a home improvement project or other significant expense, or refinancing your current mortgage, the present low-rate environment is an excellent time to do so. If you feel financially secure, that is.
Subsequent Federal Reserve Actions
In the months since its initial flurry of action in March 2020, the Federal Reserve took a number of lower-profile actions to shore up the American financial system and prevent a full-blown financial crisis.
These actions included a far-reaching April initiative to inject up to $2.3 trillion in liquidity into U.S.-based banks, businesses, and state and local governments.
As the year wore on, Fed Chair Jerome Powell made it clear that U.S. monetary policy will remain accommodative for the foreseeable future. “We’re not even thinking about raising rates,” he said in a July 2020 press conference. In September, Powell went even further, saying the Fed wouldn’t raise rates until 2023, according to The New York Times.
Removal of Emergency Lending Support by the Outgoing Administration
The Fed’s ongoing support for the economic recovery hit a roadblock after the 2020 election when outgoing Treasury Secretary Steven Mnuchin withdrew his department’s financial support for emergency economic assistance measures authorized by the CARES Act and administered by the Federal Reserve.
Specifically, Mnuchin requested the Fed return about $455 billion in unused economic rescue funding, arguing that the programs had achieved their objectives and stabilized the economy.
The practical effects of a premature end to this support remain to be seen, but the Federal Reserve’s rare public rebuke of Mnuchin’s request indicated concern that it could hamper the ongoing economic recovery.
COVID-19’s rapid global spread became impossible to ignore in late February 2020.
In the time since, the federal government has taken action to shore up the foundations of the American economy and bolster the health care system’s response to what could turn out to be the worst respiratory disease pandemic in a century. The Fed has taken decisive action of its own.
Some state and local governments have taken actions of their own, complementing and reinforcing the steps taken by the federal government. COVID-19’s ongoing spread and mounting economic toll necessitated follow-up actions throughout 2020 and into 2021.
And though political appetite for direct economic stimulus faded as the economy got back on its feet, the lingering fallout allowed proposals for more indirect public investments — in infrastructure and the social safety net in particular — to flourish.
In public policy terms, the COVID-19 pandemic could have a very long tail indeed.