The Federal CARES Act: What’s in the economic stimulus bill, who is left out

Nan Madden
Apr 03, 2020

We’ve called for an inclusive approach to the public health crisis and the related economic impact. While the latest federal response includes some important progress, further action is needed to make sure the weaknesses and inequities that characterized our economy before COVID-19 hit aren’t repeated in the policy response.

What’s left out of the latest federal action to address the coronavirus is as important as what’s in it. The CARES Act, the federal “economic stimulus” bill passed March 27, will help millions of Americans to stay healthy, pay the bills, and afford the basic necessities. But federal policymakers must do more to address the health and economic concerns of all of us.

This bill has a broad scope – $2.2 trillion and 880 pages of legislation. This analysis looks at some of the major provisions related to jobless workers; individuals and families; state, local, and tribal governments; businesses and employers; and other funding provisions. It also speaks to what is urgently needed in future policy action.

Expanded Unemployment Insurance

The CARES Act improves Unemployment Insurance (UI) to reach more people, increase the amount of dollars received by unemployed workers, and have coverage last longer. These are:

  • Coverage for those not typically covered by UI, such as “gig economy” workers, independent contractors, freelancers, workers with a shorter work history, and workers seeking part-time work. These changes are part of the Pandemic Unemployment Assistance program.
  • An additional $600 per week in unemployment benefits for people receiving either state UI or Pandemic Unemployment Assistance, through July 31.
  • Extending the amount of time people out of work can receive benefits by another 13 weeks.

The CARES Act also provides grants to states to create or improve work sharing programs.

More details on the Unemployment Insurance changes are available from the National Employment Law Project; Minnesotans can apply for Unemployment Insurance at

Stimulus payments to individuals and families

The CARES Act provides $278 billion in financial support to people and their families through what some are calling “recovery rebates.” Individuals can receive up to $1,200 each and up to $500 per child; households will get smaller or no rebates if their incomes are above $75,000 for an individual or $150,000 for married couples. The average household rebate is expected to be $1,720. The Institute on Taxation and Economic Policy (ITEP) estimates that 92 percent of Minnesota households will receive a rebate, bringing a total of $4.9 billion into our state economy. With so many people across the country facing financial hardship, this support can help them pay the rent, cover their bills, or meet other essential needs in the short term, while shoring up consumer demand in the economy overall.

Unfortunately and unfairly, the bill leaves out some people altogether. The $500 rebate for dependents doesn’t include children over the age of 16 or other kinds of dependents. Even worse, many immigrant families – including some with U.S. citizen children – are deemed ineligible because someone in the family uses an ITIN (Individual Taxpayer Identification Number) to file their taxes. Including everyone in these rebates must be a top priority for a next round of federal action.

Action also is needed to address the ways that the federal government makes it harder for some to actually receive the support – including some people with disabilities, and others with low incomes who aren’t normally required to file a tax return. Late Wednesday night, the U.S. Treasury Department reversed their initial stance and will send automatic rebates to Social Security recipients.

Funding to states, tribes, and other government entities

The CARES Act includes a $150 billion Coronavirus Relief Fund that states, tribes, and local governments can use to address COVID-related costs. Minnesota is estimated to receive $2.2 billion, with $1.9 billion going to the state government and $317 million to Hennepin and Ramsey counties (the only two local governments that have populations over 500,000 people, as required in the legislation to qualify.) At this time, we have not seen an estimate of the funding that would go to tribal nations in Minnesota.

States, tribal nations, and local governments are facing significant costs to address the public health crisis and the accompanying economic disruption. At the same time, the crisis will cause deep reductions in their revenue sources. State and local governments are required to balance their budgets, making the combination of higher costs and lower revenues a particularly troublesome combination. And the actions that governments turn to without federal assistance, such as laying off employees and cutting back on purchases and contracts from both nonprofit and for-profit partners, further drag on the economy.

Other funding sources in the CARES Act that will go entirely or in part to government entities include:

  • $30 billion for schools, colleges, and universities;
  • $25 billion for transit systems;
  • $5 billion for community development block grants;
  • $3.5 billion for child care (including an estimated $46 million to Minnesota); and
  • $400 million to prepare for elections.

However, this funding should be seen as only a first step and is not yet at the scale needed to meet needs in this crisis; for example, the Center for Law and Social Policy (CLASP) is calling for a $50 billion investment in child care, on top of the $3.5 billion allocated in the CARES Act.

Assistance to business

The bill contains a number of provisions related to businesses and employers. Among the largest items are:

  • $500 billion that the U.S. Treasury can use for loans, loan guarantees, and other support for businesses. Corporations receiving this assistance cannot engage in stock buybacks and the loans are intended to be used to retain at least 90 percent of the workforce.
  • $349 billion in loans for eligible small businesses and self-employed individuals. These loans can be used to cover basic business expenses such as rent and utilities, mortgage, and payroll. The Small Business Administration (SBA) will forgive the loans if all employees are kept on the payroll for eight weeks, and unlike other SBA programs, nonprofit organizations are eligible. More information about this “Paycheck Protection Program” is available from the Small Business Administration.

Other provisions include an employee retention credit for certain employers for 50 percent of wages paid during the COVID-19 emergency, a delay in paying employer payroll taxes, and other changes in business taxes.

Other funding and policy changes

The CARES ACT also includes:

  • A range of changes related to health care and health care delivery, such as expanding access to telehealth and other measures related to treatment of COVID-19, and delaying various planned cuts in health care payments under Medicare and Medicaid;
  • A new tax deduction for charitable giving, regardless of whether the taxpayer itemizes their deductions;
  • $340 billion in funding across a range of areas to respond to the pandemic (not including the $150 billion Coronavirus Relief Fund described above.) This part of the CARES Act is like a supplemental budget, with additional funding related to the direct health care response and areas such as: assistance for food banks, economic development assistance, resources for law enforcement, support for legal services, Economic Injury Disaster Loans through the Small Business Administration, disaster relief funds, emergency food and shelter through the Department of Homeland Security, Native communities and tribal governments, state arts and humanities agencies to support arts organizations, museums, and libraries; child care assistance (as described above), Head Start, the Community Services Block Grant, energy assistance through LIHEAP, family violence prevention, public broadcasting, the Community Development Block Grant, and affordable housing.

What needs to happen next

In many cases, more details need to be worked out about how exactly individuals and families, nonprofit community and service delivery organizations, small businesses, and government entities can apply for or receive the dollars and benefits provided under this bill.

But while the CARES Act is large, more will be needed to respond to the scope of the challenge ahead of us. The public health and economic crises will soon lead to a state fiscal crisis. While we can’t know exactly how big the problem will be, the Center on Budget and Policy Priorities warns that: ”annual state budget shortfalls totaled about $227 billion in the worst year of the last recession (adjusted only for inflation, and not including city and county shortfalls), and will likely be even larger in this recession. That’s both because unemployment is rising much more rapidly, causing steeper drops in income and sales tax revenues, and because the direct costs to state and local governments related to the virus are entirely unprecedented.”

Tribal nations also should be included in federal fiscal assistance. Tribal nations don’t have the same tax authority as states and local governments, and instead often rely on tribal businesses to generate needed revenue to fund essential services – and these tribal businesses are also being hard hit.

Some particularly pressing needs that must be addressed in future federal action include:

  • More fiscal support to states and other entities, including through further increasing the federal Medicaid matching rate and boosting funding for child care, housing, and homelessness programs.
  • Expanding the recovery rebates to include those left out, including currently-excluded dependents and especially to make immigrant families eligible for this financial lifeline. The federal government also needs to make it easier for the lowest-income Americans to access recovery rebates. The last time the federal government required people to file a tax return to receive a credit despite having the necessary information to send payments directly, 3.5 million eligible people did not receive the financial support they qualified for.
  • Additional measures to expand health coverage under Medicaid and the Affordable Care Act, and cover COVID-19 treatment for those who still fall through the cracks.
  • Increasing nutrition support through SNAP to both ensure struggling families can put food on the table and further stimulate consumer demand in local economies.
  • Creating and funding an emergency fund similar to the TANF Emergency Fund used in the last recession to provide cash assistance and other support to the Americans struggling most to afford the basics.