$600 unemployment, other COVID-19 relief are set to end

Paul Davidson
USA TODAYPublished 9:31 AM EDT Jun 22, 2020The extraordinary safety net that has buoyed financially stressed Americans during the coronavirus pandemic is starting to fray.In the coming weeks, the jobless will likely no longer receive an extra $600 in their weekly unemployment checks. Many tenants who don’t pay their rent can be evicted. And many small businesses won’t have a forgivable federal loan to cushion the blow of meager sales.Government and private-sector programs intended to keep millions of people afloat since mid-March during the most abrupt and severe recession in U.S. history are scheduled to expire soon even as near-record unemployment and deep financial hardship persist. Goldman Sachs says in a recent research note that it expects some of the programs to be extended in some form, though they likely won’t be as generous.And banks and utilities have said they’ll work with customers who have trouble paying bills.But the spirit of unqualified aid that prevailed during the worst of the crisis, much of it included in Congress’s $1.8 trillion CARES Act, is fading.The phaseouts come as states increasingly allow businesses shuttered by the outbreak to gradually reopen. The economy unexpectedly added 2.5 million net jobs in May, including layoffs and new hires. Yet an unprecedented 22 million jobs were shed the previous two months and the unemployment rate was still 13.3% in May, near the highest since the Great Depression.Retirement withdrawals: IRS expands criteria to withdraw money from retirement plans for those affected by coronavirusNo spare change?National coin shortage: Pennies, nickels, dimes and quarters part of latest COVID-19 shortageWhile a solid recovery is anticipated in the second half of 2020, unemployment is expected to hover near 10% by year’s end, up from a 50-year low of 3.5% in February. Many businesses have closed down permanently and many laid-off workers won’t be able to go back to their old jobs, Federal Reserve Chair Jerome Powell has told Congress.“We put a great deal of support into propping up the economy in the short run,” says Jay Shambaugh, senior fellow at the Brookings Institution. “That prevented the immediate economic impacts from being much worse. But the economic impacts of the pandemic will last more than a handful of months. It is really important to tie the fiscal support to economic conditions…rather than have policies end with a cliff based on arbitrary timelines.”A look at some of the programs and when they’re scheduled to run out:$600 in extra jobless benefitsThe additional $600 a week in federal unemployment benefits, included in the CARES Act, is set to end July 31. That means the unemployed will have to rely solely on state weekly benefits averaging $370, according to Goldman Sachs estimates.“A huge share of jobless people will be forced to exist on much less than what they had before,” says Heidi Shierholz, an economist at the left-leaning Economic Policy Institute.The Heroes Act, passed by the House of Representatives, would extend the perk until early next year but the Senate is unlikely to approve the legislation. Sen. Lindsay Graham, R-South Carolina, is among the legislators who believe the payment encourages many jobless Americans to stay on unemployment rather than return to work. Many restaurant and retail workers, for example, are earning more from jobless benefits than their previous wages. Graham declared that the provision will be renewed “over our dead bodies.”Shierholz, however, says, “The answer is not to back off the $600 but to make work more attractive,” perhaps by letting recipients continue to receive some of the benefits even when they go back to work. Goldman Sachs believes Congress ultimately will extend the payment but at $300 a week.Extended due date for income taxesThe Treasury Department says the due date for 2019 federal income taxes would be pushed back from April 15 to July 15, now just a few weeks away. Filers, of course, can file for an extension, though they would owe interest on any tax they owe, as usual.Eviction moratoriumsTenants of apartment buildings financed by a federally backed mortgage, such as Fannie Mae or Freddie Mac, could not be evicted for failing to pay rent for 120 days, a grace period that ends July 25, under the CARES Act. After that, landlords can issue a notice to evict but can’t remove tenants for another 30 days. The grace period for renters of single-family homes ends August 31. About half of all multifamily buildings and 40% of single-family homes are federally financed, according to the National Housing Law Project (NHLP).At least 34 states and dozens of cities issued broader moratoriums that apply to all rental units. But some of those bans have ended and 12 states never took steps to halt evictions. Twenty-four states are now processing evictions, a figure that’s likely to climb to at least 30 states by the end of June, even though tens of millions of Americans remain unemployed.“Back rent is coming due, and renters are no more able to pay it now than they were at the beginning of the crisis,” says Diane Yentel, CEO of the National Low Income Housing Coalition. “We are very concerned about a wave of evictions and a spike in homelessness.”Forbearance on mortgage paymentsHomeowners could suspend their mortgage payments for up to a year for federally backed mortgages, the CARES Act says. About 70% of outstanding single-family mortgages are owned or backed by a federal agency, according to NHLP.  Other homeowners have been granted 90-day deferments on private mortgages from large banks such as Wells Fargo, Bank of America and Chase. The Consumer Financial Protection Bureau discourages balloon payments that require back rent to be paid in a lump sum.The banks say they’ll provide financially strained homeowners options such as continuing forbearance, a loan modification to lower the monthly payment or adding deferred payments to the back end of the loan.Meanwhile, single-family homeowners already in foreclosure proceedings before the pandemic began having a reprieve that now extends to August 31.Utility billsMany phone, internet and utility companies suspended shut-offs and waived late fees to accommodate struggling consumers. That grace period will end June 30 for providers such as Verizon, AT&T, Comcast and Atlantic Broadband, in keeping with a pledge advocated by the Federal Communications Commission. The companies generally say they’ll work with customers experiencing financial hardship to set up payment plans or modify the amount due in some cases.  Several electric utilities — including Con Edison, National Grid, PSE&G, and NV Energy – have no plans to end their suspensions of shut-offs in the near-term. Dominion Energy in Virginia plans to extend its grace period through October 14 while Southern California Edison is waiving disconnections and late fees until April 2021.Small business loansThe Paycheck Protection Program has provided forgivable loans of up to $10 million to about 4.5 million businesses that employ up to 500 workers, propping up restaurants, shops, beauty salons and other neighborhood outlets that have shut down or sharply scaled back during the crisis.The loan — intended to cover eight weeks of payroll, rent and utility costs – becomes a grant as long as businesses retain or rehire their workers and 60% of the money goes to payroll expenses, a figure that Congress recently lowered from 75%.For the lion’s share of businesses that received the money from mid-April to mid-May, the eight weeks is set to end between now and mid-July. Lawmakers recently gave borrowers as much as 24 weeks to spend the money. But there’s probably little left for many that already have kept or rehired their workers, and they’ll almost certainly choose the eight-week time frame over the 24 weeks, says Ami Kassar, CEO of MultiFunding, a small business loan advisor.The evaporation of the federal support is a daunting prospect for restaurants and other merchants that may be operating a 50% capacity and surviving on sharply diminished sales.“Their lifeline is gone,” Kassar says.To partially close the gap, Goldman Sachs believes Congress will expand a separate employee retention credit that pays businesses half of employee wages up to $10,000 this year as long as they suffered at least a 50% drop in revenue or their operations have been at least partly suspended by government order.Congress could expand the credit to cover 80% of payroll costs and provide a partial credit to firms enduring as little as a 10% percent revenue decline, Goldman says. Even small businesses that got PPP loans could be eligible, the research firm says.Another option, Goldman says, is for Congress to allow some stressed firms that received PPP loans to get another one. About $160 billion of the $660 billion program is still available.Contributing: Michael Braga and Jessica Menton


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