18
Lending A Helping Hand?
filed for unemployment benefits because of stay-at-home directions from state and federal officials; in March 2020 alone, $3.89 billion was paid out in unemployment benefits in the U.S., up from $2.75 billion in February. April unemployment benefit figures are likely to be just as high.
Governmental reaction to the pandemic has been unprecedented, whatever one thinks about its timing or specifics.4 Congress passed narrow appropriation bills in early and mid-March,5 followed by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), signed into law on March 26, 2020 and extending more than $3 trillion in aid.6 This was followed on April 24 by the Paycheck Protection Program and Health Care Enhancement Act, which supplemented the monies appropriated under the PPP and EIDL programs established in the CARES Act, and appropriated new funds for public health relief, with an additional $484 billion.7
Federal, state and municipal governments have lent a helping hand to address both the public health and economic effects of the pandemic. In some settings, economic
assistance to address the financial hardship that has occurred as a consequence of COVID-19 – this helping hand – has, indeed, mostly come in the form of a “loan.”
Structuring this assistance as a loan and not an outright grant has been intentional. Presumably Congress and the President are hoping that no one views the aid in the CARES Act as a bailout, regardless of the scale and immediacy of the federal government’s economic assistance.
Jerome Powers, Chair of the Federal Reserve Board, in his remarks early April on the breadth and depth of the Fed’s market interventions, was careful to “stress” that these had been an exercise of the Fed’s “lending powers, not spending powers.”8
Much of Congress’s economic assistance similarly has been structured either as a new loan or as help with a pending or existing loan obligation. As one example, the CARES Act creates a new type of loan for the United States Small Business Administration (the “SBA”) to administer, which it calls its Paycheck Protection Program (PPP). While 100% of the principal amount of these PPP monies is potentially forgivable, until forgiven the SBA Paycheck Protection involves economic protection by means of a
4For a critique of the CARES Act aid to individuals, see, e.g., Pamela Foohey, Dalié Jiménez and Christopher K. Odinet, Cares Act Gimmicks: How Not To Give People Money and How To Do It Instead, THE NATIONAL LAW REVIEW (April 11, 2020), available at https://www.natlawreview.com/article/cares-act-gimmicks-how-not-to-give-people-money-during-pandemic-and-what-to-do.
5Corona Virus Preparedness and Response Supplemental Appropriations Act (March 6, 2020)(“an $8.3 billion bill spurring coronavirus vaccine research and development”); Families First Corona Virus Act (March 18, 2020)(“an approximately $104 billion package largely focused on paid sick leave and unemployment benefits for workers and families”).
6Summary of CARES Act, THE NATIONAL LAW REVIEW (March 29, 2020), available at https://www.natlawreview.com/article/summary-cares-act.
7For summaries of the April bill, see Senate Passes Paycheck Protection Program and Health Care Enhancement Act, THE NATIONAL LAW REVIEW (April 22, 2020), available at https://www.natlawreview.com/article/senate-passes-paycheck-protection-program-and-health-care-enhancement-act; American Medical Association, Summary of PPP&HCE Act: COVID 3.5 (April 24, 2020), available at https://www.ama-assn.org/delivering-care/public-health/summary-paycheck-protection-program-and-health-care-enhancement-act.
8Jerome H. Powell, COVID-19 and the Economy, Remarks by Chair of the Board of Governors of the Federal Reserve System (April 9, 2020), available at https://www.federalreserve.gov/newsevents/speech/powell20200409a.htm.
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