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1 1 (February 3, 2021)

handle is hein.crs/govebnf0001 and id is 1 raw text is: Congressional *.Research Service informing the qeislative debate since 1914___________________ Fiscal Policy in the COVID-19 Economic Recovery February 3, 2021 Congress is currently considering a new stimulus package to address the economic recovery. As of December 2020, the unemployment rate for private nonagricultural workers was 6.7%, down from 13.3% in May and 14.7% in April, but significantly above the 4.4% rate in March before the Coronavirus Disease 2019 (COVID-19) pandemic began to affect the economy. COVID-19 infections and deaths, while slowing in the late spring of 2020, began to rise steeply in the fall and winter. Causes of the COVID-19 Recession The recession was caused by a steep decline in demand in sectors requiring personal contact, including the service sector (and particularly travel and leisure), as well as petroleum products due to decreased travel (see CRS Report R46460, Fiscal Policy and Recovery from the COVID-19 Recession, by Jane G. Gravelle and Donald J. Marples for a more detailed discussion of issues discussed in this Insight). Job losses and wage reductions were concentrated in low-wage workers. Although many state and local officials issued stay-at-home and shut-down orders, economic studies indicate that the primary cause was consumer fear of catching the virus. Those findings suggest that bringing the virus under control through vaccination and testing is key to recovery. Policies Enacted in 2020 Several policies were enacted in 2020 in response to the pandemic. The largest in size was the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136), enacted at the end of March, which provided $1.7 trillion in fiscal policy initiatives and lending authorities. The major components of the CARES Act were the Paycheck Protection Program (PPP), providing loans for small businesses that could be forgiven; an extension and expansion of unemployment benefits, including an additional $600 weekly supplement; and direct payments (refundable tax rebates) of $1,200 ($2,400 for joint returns). The $600 unemployment supplements lapsed at the end of July. The second major act, enacted in December 2020 as part of the Consolidated Appropriations Act, 2021 (P.L. 116-260), provided about $900 billion in COVID-related spending and tax cuts, including an extension of the PPP, an extension of unemployment benefits with an additional $300 weekly supplement through March 13, 2021, Congressional Research Service https://crsreports.congress.gov IN11589 CRS INSIGHT Prepared for Members and Committees of Congress

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