- The Senate passed the Coronavirus Aid, Relief and Economic Security Act or the CARES Act on Wednesday, March 25, sent it to the House of Representatives and used President Trump to initiate economic stimulus of around $ 2 trillion Coronavirus threatens a short-term recession.
- The stimulus measure went from 96 to zero around 11:50 p.m. ET and includes payments to millions of Americans, unemployment benefits expansions, and loans to businesses in difficulty.
- The passage follows consecutive blockades by the Senate Democrats when the party called for greater worker protection and details on business aid loans.
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The Senate passed the Coronavirus Aid, Relief and Economic Security Act or the CARES Act on Wednesday, March 25, to provide financial relief to Americans and businesses affected by the coronavirus and its economic burden.
The tax package went from 96 to zero around 11:50 p.m. ET. The economic stimulus includes direct payments of $ 1,200 to millions of Americans, increases unemployment benefits and supports loans to sick companies worth hundreds of billions of dollars.
Around $ 150 billion will be allocated to hospitals and healthcare workers for devices. U.S. airlines affected by the virus and receiving stopovers resulting from it receive loans of $ 50 billion. Democrats have won a series of stricter guidelines on how companies can get and benefit from emergency loans granted by the Treasury.
The passage of the law follows two interruptions by Senate Democrats who want to ensure greater protection for workers and stricter guidelines for which businesses could receive government loans. Several meetings between Senate Minority President Chuck Schumer and Treasury Secretary Steven Mnuchin led to in-depth discussions on the specificities of the legislation.
President Trump and leading Republicans called for the measure to reach the White House by the end of Monday, a lofty goal that economists who monitor the rapidly escalating effects of the corona virus still consider to be too late. The failure to press ahead with the bill on Sunday and Monday led to deliberations going beyond the administrative deadline.
Senate chairmen approached the compromise on Tuesday, while House Speaker Nancy Pelosi presented her own $ 2.5 trillion tax plan to speed up economic relief.
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The White House and Senate reached agreement on the recovery package early Wednesday morning and approved the bill later in the day. Schumer viewed the legislation as an "outstanding agreement," while Senate majority leader Mitch McConnell said it was "a level of investment for our nation in wartime."
The bill must now be passed in the House of Representatives before it reaches President Trump's desk.
The failed cloture vote on Sunday caused short-term concerns in the already weakened financial sector. The US stock futures reached their trading limit shortly after the Sunday afternoon vote. The S&P 500 was down around 3% until close on Monday, when the law's failed cloture vote further irritated Wall Street's need for stimulus.
Shares rallied 11% at Tuesday's session as new hopes for the law pass. However, little detail emerged during the session on the timing of the legislation or new measures. Tuesday's win was the Dow's biggest since 1933.
While investors have been waiting for the White House to provide fiscal relief, the Federal Reserve has used a number of policy instruments to ease money markets. The central bank cut its key interest rate near zero on March 15 after an emergency cut two weeks earlier. The New York Fed office supported liquidity with multi-trillion dollar capital injections spread across the month.
In its recent efforts to combat the economic blow of the virus, the bank announced plans for unlimited asset purchases on Monday to "support the smooth functioning of the market and an effective monetary policy transfer," a Explanation. Three credit facilities to support businesses, consumers, and employers are being set up, and an additional Main Street Business Lending program will be announced in the near future, the Fed said.
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