Details about the $2 trillion federal stimulus package making its way through Congress were offered Thursday by Connecticut legislators.
Not only will unemployed workers get an additional $600 a week from the feds, but they’ll get the full amount for their first week of unemployment, with no waiting period, Jim Himes said.
The Himes tele-town hall, held in the morning, offered details such as the opportunity for people suffering from COVID-19 to withdraw money from a qualified retirement plan, penalty free for three years. U.S. Senators Richard Blumenthal and Chris Murphy (D-Conn.) said, during the Governor’s daily press conference, that the stimulus is just another step in responding to the coronavirus pandemic.
“This bill is a massive down payment,” Blumenthal said, suggesting that future actions should also help the unemployed with COBRA benefits, which extend group health insurance.
The stimulus was passed by the U.S. Senate Wednesday and should be passed by the U.S. House on Friday, Himes said.
It also provides a $1,200 check for workers who make up to $75,000 a year. The goal is to get those checks out in the first or second week of April, Himes said.
The one-time check is means tested, with a declining amount awarded to workers who make between $75,000 and $99,000 a year, zeroing out at the higher amount, Himes said.
“You get a reduced grant, if you’re making between $75,000 and $100,000,” Murphy said.
Families will receive $500 per child. So if you’re a family of four making $150,000 or less, you’ll receive a check for $3,400. But if you make more than $198,000 a year, you won’t qualify.
“Whenever you’re writing legislation like this, the number you pick is going to be arbitrary and there are going to be people that fall on the other side,” Murphy said.
“This will be based on 2019 taxes if filed, and if not filed, it will be based on 2018 taxes,” Himes said.
If your income is from Social Security, you’re still eligible for the payment.
“There are obviously very needy people out there who are not taxpayers because their incomes don’t require them to file taxes,” Himes said. “We are going to try to capture those individuals through Social Security contributions. In other words, identify people who are really particularly low income and therefore didn’t file a 1040, in order to receive that $1,200 benefit.”
“How much of a difference will it make? For a lot of people in Connecticut, it’s a month’s rent,” Blumenthal said.
Weekly unemployment payments will be increased by $600. Those benefits are capped at $649 a week in Connecticut, so with the federal contribution the payments will be $1,249.
It’s a “vastly expanded” program, Blumenthal said, explaining that it goes to everyone who is laid off or furloughed. The payments will continue for four months, Murphy said.
“It will include gig economy workers, and it will include freelancers and the self employed. This is a reform and innovation,” Himes said.
“If you are self-employed and you are no longer receiving income, do not assume that you are not eligible for unemployment,” Murphy said. “Please call up the unemployment office, call our offices, to see if you are newly eligible for unemployment insurance under the terms of this legislation.”
“I anticipate that the mechanics of getting that worked out will probably not work perfectly right out of the gate because there will be gig economy workers who have not filed tax returns with the IRS, but we’ll cross that bridge when we come to it,” Himes said.
Small businesses are eligible for loans that can actually be grants, because if they rehire laid off workers the loan will be forgiven, Murphy said. The loans can be used to pay rent and utilities.
These loans “will allow small businesses to pay for payroll, employee salaries, paid medical leave, insurance, premiums, mortgage rent, utility, etc. at very, very low cost,” Himes said. “This includes – and this is a little bit of an innovation – sole proprietors, independent contractors and other stuff employed individuals.”
SCORE, an network of volunteer business mentors, will help businesses navigate this process, Himes said.
“The program provides for loan forgiveness equal to the amount spent by the borrower by the business over a two-month period for payroll costs, interest payment on mortgages, payment of rent and payment on utilities,” Himes said. “So it’s almost not quite right to call this a loan. It is obviously, I don’t want to use the term, but it is it is a grant.”
Aid to states
The bill provides $150 billion in aid to states, giving governors “tremendous discretion (and) flexibility” in how they use it,” Blumenthal said. “… \This provision, which was not even in the (Senate Majority Leader Mitch) McConnell version of this bill, is a recognition that states have been at the forefront bearing the burden financially, and in fact, bleeding.”
- “Federally backed student loan payments are suspended for the period of this crisis,” Murphy said. “Really important for thousands of families that didn’t know how they were going to make those payments over the course of the next few months.” This suspension will last for six months, according to Himes.
- “There’s $30 billion in this bill for elementary and secondary education and higher education,” Murphy said. “Connecticut eats, sleeps and breathes higher education is one of our strengths. And we were very worried that some of our colleges might not be able to survive. They will now that they have this temporary funding and schools, even though they’re closed or having to engage in all sorts of additional expenses to feed kids, to engage in distance learning, more funding coming for that.”
- “$100 billion for hospitals,” Murphy said. “Connecticut generally gets about one to 1.5 percent of all federal grants so that means a sizable amount of money, in the neighborhood of half a billion dollars, coming to Connecticut’s hospitals to make sure that we can engage in all of the additional services that we need to. I’m going to be looking forward to working with the governor to make sure that that money lands where it needs to.”
- “There is a provision to allow for a penalty free withdrawal from a qualified retirement plan,” Himes said. “So your 401k, your IRA, if you are diagnosed with COVID-19, if you have a spouse or dependent diagnosed or if you have experienced adverse financial consequences or due to COVID-19, you can make a penalty free withdrawal.” That would be taxable over three years, if not recontributed.
- “Employers will receive a tax benefit, an income exclusion for employers to pay to contribute up to $5,250 per year to pay off an employee’s student loan debt, and the employee will not have to pay income tax on that payment,” Himes said.
- Cruise lines are not benefiting from the bill because most of them are Liberian registered, Himes said. “Any borrower under this program must be a U.S.-domiciled business and its employees must be predominantly located in the United States.”
- There are foreclosure moratoriums on mortgages purchased by Fannie Mae or Freddie Mac, or insured by the Veterans Administration, Himes said.
- “There is an eviction moratorium for 120 days beginning the day of enactment, which I hope is tomorrow,” Himes said. “Landlords are prohibited from evicting tenants if the property is in any way insured, guaranteed or protected by any of the federal entities.”
- The ongoing “hiccup” won’t adversely impact your credit report, according to Himes.
- “The bill provides for free coverage, without cost sharing, for a vaccine when that vaccine is developed for COVID-19, an obvious public health benefit,” Himes said.
- “For those senior citizens who have Medicare Part D, the bill provides for up to a 90-day supply of prescription medication, to be provided if the beneficiary requests that over the emergency period,” Himes said.
A Marshall Plan
“I think that this package that we passed last night in the Senate, will be effective in staving off catastrophe. But it is not the end of our work,” Murphy said.
“This bill is imperfect but imperative. It is not a panacea. It is not the final step there needs to be a fourth and a fifth package to cover still the unmet needs,” Blumenthal said.
The “massive down payment” is “by far, the biggest such relief package in the nation’s history,” Blumenthal said. “…It was made better, because we took it from (Sen. Mitch) McConnell and made it truly bipartisan, not just better, but bigger. And it provides for a medical surge, a Marshall Plan that will help provide that equipment, the supplies, the masks, gowns, tests, the personal protective equipment that is needed in Connecticut and around the country. And that will help to fund the vaccines and treatment that the nation needs and that Marshall Plan recognizes that we do have to address the healthcare emergency in order to successfully confront the economic crisis.”