Unemployment aid, other COVID-19 aid on the verge of disappearing
As coronavirus cases hit record highs, dealing a further blow to the health and economy of the country, the federal safety net that has supported financially abused households is set to disappear unless a Congress divided cannot get out of a deadlock lasting several months.
At the end of the year, millions of unemployed Americans will lose their unemployment benefits. Tenants can be evicted from their apartments. People in debt will have to resume their payments. Small businesses will lose a critical financial lifeline.
President-elect Joe Biden’s administration and a new Congress are likely to reinstate most or all relief programs, analysts said, but their disruption could disrupt lives and cause further financial grief during the worst economic crisis in years. the great Depression.
“The economy will operate without a safety net in January,” Bank of America economists wrote in a research note on Friday.
Treasury Secretary Steven Mnuchin told CNBC on Friday that he and GOP lawmakers will try to work with Democrats to draft targeted relief legislation in the coming weeks. The parties have been deadlocked for months: The Democratic-controlled House passed a $ 2.2 trillion measure, but Senate Republicans are in favor of a $ 500 billion package.
Federal aid, which has bolstered the recovery from an unprecedented pandemic-induced recession, has been included in the $ 2,000 billion coronavirus aid, relief and economic security law passed by Congress or authorized by the executive actions of President Donald Trump.
Here is an overview of the programs to run:
About 12 million Americans will lose their unemployment insurance on Dec. 26 when two coronavirus assistance programs expire, according to estimates from the Century Foundation, a nonprofit think tank. They include 4.6 million workers who will have exhausted their 26 weeks of unemployment benefits and received an additional 13 weeks under the Emergency Pandemic Unemployment Compensation Program (PEUC). These emergency benefits will end even for workers in the middle of their 13 weeks. An additional 4.4 million workers will have used up their PEUC assistance by the end of December.
About 3 million of those who lose PEUC checks are eligible for an additional round of “extended benefits” for up to 20 weeks in 18 states with unemployment rates high enough to trigger relief, according to the Century Foundation and Michele Evermore , senior policy. analyst at the National Employment Law Project, a workers’ rights group.
An additional 7.3 million workers will lose their assistance in the event of an unemployment pandemic – benefits paid to workers who are not traditionally covered by unemployment assistance, including the self-employed, independent contractors and caring workers sick parents.
“Tens of millions of people will go to zero (in income) in the dead of winter in the midst of a pandemic,” Evermore said.
Aid evaporation will hurt the economy as jobless Americans sharply curb spending, said Heidi Shierholz, senior economist at the Left Institute for Economic Policy. That would reduce first-quarter economic growth by 1.2 percentage points, Bank of America estimated.
Moratoriums of expulsion
In September, the Centers for Disease Control and Prevention extended the moratorium on evictions until December 31 and widened it to cover all tenants – not just those in apartment buildings funded by a federally guaranteed mortgage. like Fannie Mae, like Coronavirus Aid, Relief and Economic Security Act required.
The moratorium has been riddled with loopholes, said Shamus Roller, executive director of the National Housing Law Project. Tenants had to declare they couldn’t pay partial rent and asked for other help first, and many landlords have successfully challenged those claims in court, Roller said. Yet, he said, the moratorium protected from eviction millions of tenants who lost their jobs during the crisis.
About 30 million renter households are at risk of losing their homes at the end of the year, according to Bank of America. Although evictions were banned during the moratorium, homeowners could have taken eviction proceedings in court, meaning millions of Americans could be evicted from their homes in early January, Roller said.
Although the Biden administration may reinstate the moratorium later in the month, “you will have three weeks of people evicted from their homes by the time they lose their unemployment benefits,” Roller said.
A handful of states have their own eviction bans that extend beyond the end of the year, according to Princeton University’s Eviction Lab.
Mortgage forbearance and foreclosure
Homeowners could withhold payments for up to a year for federally guaranteed mortgages under a relief provision in the law that expires Dec. 31. Those who have requested postponements can extend them for up to a year, even after that deadline, Roller said.
About 70% of outstanding single-family mortgages are owned or guaranteed by a federal agency, such as Fannie Mae or Freddie Mac, Roller said.
Although Fannie and Freddie will allow homeowners to apply for forbearance in January, the Federal Housing Administration has not announced such a policy, Roller said. Someone who loses their job in December and cannot make the FHA mortgage payment in January may be in arrears.
A moratorium on foreclosures for federally guaranteed mortgages expires at the end of the year. Until a new Congress or administration renews the ban early next year, homeowners who missed their payments and were not granted forbearance could face foreclosure in January, Roller said.
Suspension of student loan payment
In March, Trump issued an executive order suspending student loan payments and waiving interest for at least 60 days. He extended the stay until December 31. In January, tens of millions of student loan borrowers will have to resume their payments, assuming Trump does not grant another extension. During the pandemic, borrowers saved about $ 7 billion per month, according to the Federal Reserve Bank of New York and the Bank of America.
Paid sick leave and family leave
The Coronavirus Aid, Relief and Economic Security Act granted two weeks of paid sick leave to workers in companies with fewer than 500 employees who have been affected by the virus, quarantined or caring for loved ones. The provision is expected to expire on December 31.
Thirteen states and Washington, DC, globally guarantee paid sick leave, said Pronita Gupta, director of job quality at the Center for Law and Social Policy. About 32 million hourly workers, most of them low paid, do not receive paid sick leave from their employers.
People “who may be sick or have a sick family member will be forced to go to work,” Gupta said. “It will spread contagion.”
Likewise, 10 weeks of paid family leave was granted to workers in companies with fewer than 500 employees who had to care for children whose schools are closed. Ten states require companies to offer paid family leave.
The expiration of the federal benefit at the end of the year “will wreak havoc on many families,” Gupta said. They “will have to figure out how to juggle this”.
Small business loans
The last vestiges of financial assistance to small businesses struggling to survive the crisis are fading. Small businesses looking for a low-interest economic disaster loan of up to $ 150,000 for working capital should apply by Dec. 21, Small Business said. Administration.
The popular paycheck protection program – which offered SBA forgivable loans to cover two months of expenses for small businesses that kept or rehire employees – stopped receiving applications on Aug. 8. Most businesses have spent the money. Those who have chosen to spend it over 24 weeks instead of eight weeks must do so by the end of the year if they have not already done so.
“A lot of businesses are sort of on hold without any relief,” said Ami Kassar, CEO of MultiFunding, a small business loan adviser. “Every day there are businesses that close because they have no more options. “
Yelp has estimated that more than 160,000 businesses on its website have closed since the start of the pandemic.
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