Paul Davidson, USA TODAY
Published 6:03 a.m. ET Nov. 23, 2020 | Updated 8:01 a.m. ET Nov. 23, 2020
A new coronavirus stimulus deal is still in the works between Democrats and Republicans, bu they can't agree on a conclusion.
As coronavirus cases surge to records, dealing another blow to the nation’s health and economy, the federal safety net that propped up financially battered households is set to vanish unless a divided Congress can break a monthslong impasse.
At the end of the year, millions of unemployed Americans will lose jobless benefits. Tenants can be evicted from their apartments. People with student debt will have to resume 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 of the relief programs, analysts said, but their interruption could disrupt lives and cause additional financial heartache during the worst economic crisis since the Great Depression.
“The economy will be operating without a safety net in January,” Bank of America economists wrote in a research note Friday.
Treasury Secretary Steven Mnuchin told CNBC 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 favor a $500 billion package.
The federal assistance, which bolstered the recovery from an unprecedented pandemic-induced recession, was included in the $2 trillion Coronavirus Aid, Relief and Economic Security Act passed by Congress or authorized by President Donald Trump’s executive actions.
The CDC extended a moratorium on evictions to Dec. 31. (Photo: Getty Images)
Here’s a look at the programs set to run out:
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About 12 million Americans will lose their unemployment insurance Dec. 26 when two coronavirus aid programs expire, according to estimates by the Century Foundation, a nonprofit think tank. They include 4.6 million workers who will have exhausted their 26 weeks of state jobless benefits and received an additional 13 weeks under the Pandemic Emergency Unemployment Compensation (PEUC) program. Those emergency benefits will end even for workers in the middle of their 13 weeks. An additional 4.4 million workers will have exhausted their PEUC aid by late December.
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About 3 million of those who lose PEUC checks are eligible for an additional round of “extended benefits” for up to 20 weeks from 18 states whose unemployment rates are high enough to trigger the relief, according to the Century Foundation and Michele Evermore, senior policy analyst at the National Employment Law Project, a worker advocacy group.
An additional 7.3 million workers will lose their Pandemic Unemployment Assistance – benefits doled out to workers who traditionally aren’t covered by jobless aid, including the self-employed, independent contractors and workers caring for sick relatives.
“Tens of millions of people are going to go to zero (in income) in the dead of winter in the middle of a pandemic,” Evermore said.
The evaporation of the assistance will hurt the economy as jobless Americans sharply rein in their spending, said Heidi Shierholz, senior economist at the left-leaning Economic Policy Institute. That would reduce first-quarter economic growth by 1.2 percentage points, Bank of America estimated.
In September, the Centers for Disease Control and Prevention extended a moratorium on evictions to Dec. 31 and expanded it to cover all tenants – not just those in apartment buildings financed by a federally backed mortgage such as Fannie Mae, as the 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 that they couldn’t pay partial rent and first sought other assistance, and many landlords successfully challenged such claims in court, Roller said. Still, he said, the moratorium shielded from eviction millions of tenants who lost their jobs in the crisis.
About 30 million renter households will be at risk of losing their homes at year’s end, according to Bank of America. Although evictions have been banned during the moratorium, landlords could have started eviction proceedings in court, meaning millions of Americans could be removed from their homes in early January, Roller said.
Although the Biden administration could reinstate the moratorium later in the month, “you’ll have three weeks of people being kicked out of their homes just as they’re losing unemployment benefits,” Roller said.
A handful of states have their own eviction bans that stretch beyond year’s end, according to the Eviction Lab at Princeton University.
Mortgage forbearance and foreclosure
Homeowners could suspend their payments for up to a year for federally backed mortgages under a relief act provision that expires Dec. 31. Those who sought deferments may extend them for up to a year, even after that deadline, Roller said.
About 70% of outstanding single-family mortgages are owned or backed by a federal agency, such as Fannie Mae or Freddie Mac, Roller said.
Though 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 a job in December and can’t make the FHA mortgage payment in January may be delinquent.
A moratorium on home foreclosures for federally backed mortgages expires at year’s end. Until a new Congress or administration renews the ban early next year, homeowners who have missed payments and haven’t been granted forbearance could face foreclosure in January, Roller said.
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Student loan payment suspension
In March, Trump issued an executive order suspending student loan payments and waiving interest for at least 60 days. He extended the reprieve until Dec. 31. In January, tens of millions of student loan borrowers will have to resume payments, assuming Trump doesn’t issue another extension. During the pandemic, borrowers have saved about $7 billion a month, according to the Federal Reserve Bank of New York and Bank of America.
Paid sick days and family leave
The Coronavirus Aid, Relief and Economic Security Act provided two weeks of paid sick days to workers at companies with fewer than 500 employees who were stricken by the virus, quarantined or caring for relatives. The provision is scheduled to expire Dec. 31.
Thirteen states and Washington, D.C., broadly guarantee paid sick days, said Pronita Gupta, director of job quality at the Center for Law and Social Policy. About 32 million mostly low-paid hourly workers get no paid sick days from their employers.
People “who may be sick or have a family member who is sick will be forced to go to work,” Gupta said. “That will spread the contagion.”
Similarly, 10 weeks of paid family leave was afforded workers at companies with fewer than 500 employees who needed to care for children whose schools are closed. Ten states require businesses to provide paid family leave.
Expiration of the federal benefit at year-end “is going to throw a lot of families into disarray,” Gupta said. They’ll “have to figure out how to juggle that.”
The last vestiges of financial assistance for small businesses struggling to survive the crisis are running dry. Small businesses seeking a low-interest Economic Injury Disaster Loan of up to $150,000 for working capital must apply by Dec. 21, the Small Business Administration said.
The popular Paycheck Protection Program – which offered forgivable SBA loans to cover two months of expenses for small businesses that kept or rehired employees – stopped taking applications Aug. 8. Most businesses have spent the money. Those that chose to spend it over 24 weeks instead of eight weeks must do so by the end of the year if they haven’t already.
“A lot of businesses are sort of left hanging without any relief at all,” said Ami Kassar, CEO of MultiFunding, a small-business loan adviser. “There are businesses every day that are shutting down because they’re out of options.”