The “CARES” Act (“Coronavirus Aid, Relief, and Economic Security Act”)

On Friday, President Trump signed into law H.R. 748, the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES” Act.

The Act authorizes over $2 Trillion to be spent. As stated in a March 27, 2020 Statement By The President:

The Act makes emergency supplemental appropriations and other changes to law to help the Nation respond to the coronavirus outbreak.

There are a broad array of questions that can – and should be – asked with regard to this stimulus bill. Many of the questions are similar in nature to those that I have discussed with regard to stimulus measures taken during and after the Financial Crisis. Of note, there is broad anticipation that additional large stimulus measures will be taken, especially if the broad-based economic weakness that is occurring – and will continue to occur – persists.

Two excerpts from President Trump’s March 27, 2020 comments regarding the “CARES” Act, as seen in the WhiteHouse.gov release titled “Remarks by President Trump at Signing of H.R.748, The CARES Act“:

THE PRESIDENT:  Well, thank you all very much.  This is a very important day.  I’ll sign the single-biggest economic relief package in American history and, I must say, or any other package, by the way.  It’s twice as large as any relief ever signed.  It’s $2.2 billion, but it actually goes up to 6.2 — potentially — billion dollars — trillion dollars.  So you’re talking about 6.2 trillion-dollar bill.  Nothing like that.  And this will deliver urgently needed relief to our nation’s families, workers, and businesses.  And that’s what this is all about.

also:

This legislation provides for direct payments to individuals and unprecedented support to small businesses.  We’re going to keep our small businesses strong and our big businesses strong.  And that’s keeping our country strong and our jobs strong.

This historic bill includes the following:

• $300 billion in direct cash payments will be available to every American citizen earning less than $99,000 per year; $3,400 for a typical family of four.  So a family of four: $3,400.
• And then $350 billion in job retention loans for small businesses, with loan forgiveness available for businesses that continue paying their workers.  The workers get paid.
• Approximately $250 billion in expanded unemployment benefits.  The average worker who has lost his or her job will receive 100 percent of their salary for up to four full months.

So, things like this have never happened in our country.

• $500 billion in support for hard-hit industries, with a ban on corporate stock buybacks — we don’t let them buy back the stock; we don’t let that happen — and tough limits on executive compensation.
• Over $100 billion to support our heroic doctors, nurses, and hospitals.  And you see what’s happening.  And I want to thank, while we’re here, also the incredible job that’s done by the Army Corps of Engineers and by FEMA.  It’s been incredible.  They did four hospitals in two days or three days, in New York.  And they’re, like, incredible structures.  What a job they’ve been doing.  And they’re doing them all over the country.
• $45 billion for the Disaster Relief Fund, supporting our state, local, and tribal leaders.
• $27 billion for the development of vaccines, therapies, and other public health response efforts, including $16 billion to build up the Strategic National Stockpile with critical stockpiles.  And I’m going to — we have tremendous supplies coming into the stockpile, and you’ll be seeing that and hearing about it in a little bit because we’re doing a news conference at 5:30 on what’s happening.

_____

Additional details regarding the allocations of this “CARES” Act can be seen in a variety of media sources, including the Committee for a Responsible Federal Budget (CRFB) March 25, 2020 post titled “What’s in the $2 Trillion Coronavirus Relief Package?“

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2584.97 as this post is written