After almost seven months of causing economic and physical devastation, it doesn’t look like the COVID-19 pandemic is anywhere near done hurting America and its citizens. For some people, the devastation has led to financial problems that will take them years from which to recover. The now expired unemployment bonus is going to hurt even more people and some hard decisions are going to be made.
To help keep Americans and the economy afloat during this trying time, Congress passed the CARES Act back in March of this year. As part of that bill, most Americans were given a stimulus payment while a large number of them, who lost their jobs, were also awarded an unemployment bonus of up to $600 a week. That’s $600 weekly on top of any benefits they might have also been getting at the state level.
For a little perspective, the unemployment rate reached a high of over 14.5% in late April before starting to improve in May as some state economies started opening back up. Today, more than 30 million Americans are still out of work, and the unemployment provision of the CARES act expires at midnight on July 31st, 2020.
Republicans proposed the Health, Economic Assistance, Liability Protections & Schools Act (HEALS Act) on July 27th that, if passed, would provide $200 weekly enhanced unemployment payments through September on top of what states regularly pay in benefits. That could mean $400 less weekly that some families have been dependent on to pay their bills and put food on the table. Senators go on recess from August 10th to September 7th, and Senator Mitch McConnell has not yet indicated a willingness to delay that. If that’s the case, another stimulus bill would need to be voted on by Friday, August 7th or it’s going to be put on hold until they return after the first week of September.
What Happens Next –
With families still suffering, hopes were high that Congress would extend benefits for the unemployed. However, nothing has been done to date with the U.S. Senate going on recess and the House ready to join them later this week. At issue is the fact Republicans and Democrats alike are trying to use the potential for another stimulus package as political leverage.
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While both parties battle with each other, the only thing on which everyone seems to agree is that the country needs another round of stimulus to avoid economic disaster. They just can’t seem to agree on how that package should look.
People should remember that the House did pass its HEROES Act in mid-May. The new bill proposed another $3 trillion in bailouts, with over $1 trillion going to state and city governments. That clause alone was probably responsible for Senate Majority Leader Mitch McConnell declaring the bill “dead on arrival” as it reached the Senate floor. As part of the HEROES Act, the benefits for the unemployed would have been extended through January 2021.
With that bill sitting on the shelf, the Senate has been working feverishly on its version of a stimulus package. Nothing has gotten done to date. This is going to leave many people high and dry. They’ll most likely turn to their credit cards to help them get through and that has long-term negative ramifications. You can find out more about that here: https://pittsburgh.cbslocal.com/2020/07/27/consumers-relying-on-credit-cards-as-coronavirus-pandemic-continues-to-cause-financial-struggles/.
Clearly, both political parties understand there is a sense of urgency for Americans who cannot return to work as of yet. The GOP did offer a couple of temporary solutions for the unemployed but to no avail. The Democrats are pushing for a final package, not temporary solutions.
What Should You Be Doing Now That It Has Expired –
Every American family, large or small, is responsible for figuring out how to financially survive during this crisis. If benefits are going to get cut, there are steps Americans can take to prepare themselves.
First, most American families are likely to face credit issues with their creditors. A bit of free credit counseling would be a very good idea at this point. People need to know their options and how to deal with creditors in the short-term.
Second, people need to start preparing for the idea that Congress might not extend benefits for the unemployed at all, prepare for the worst. Yes, it still seems likely something will get done, but no one should be banking on that at this point. For what it’s worth, the Democrats are pushing to keep the $600 a week benefit intact through at least the end of the year while the Senate led GOP is thinking along the lines of only $200 extra a week. The GOP has even considered starting with $600 a week, then slowly decreasing that amount over the coming months. But none of that is set in stone yet, so it’s best not to rely on that extra money.
Aside from getting free credit counseling and financial advice, each American needs to tighten the purse strings for as long as it takes to ride out the Coronavirus economic storm. In time, things should start improving, and perhaps, things will return close to normal. Budgets will need to be made, examined weekly, and strictly followed, and cutbacks will also need to be thought about. A credit counselor can help you create a budget, advise on where to make cutbacks, and help answer any financial questions you might have. Reach out to a reputable non-profit credit counseling agency today! Give us a call at 1-866-699-2227 to see how we can help!