On the heels of a second round of a stimulus checks, the incoming Biden Administration has unveiled a $1.9 trillion economic relief proposal, named the American Rescue Plan; this includes a $400 billion COVID aid package that plans to expand on many of components that passed in Congress’ $3 trillion relief bill from March, as well as the $900 billion legislation they passed in December.
“The crisis of human suffering is in plain sight, and there’s no time to waste,” President-Elect Joe Biden said in a statement. “We have to act, and we have to act now.”
While the bill will need to make its way through Congress, here’s what’s being proposed:
Biden plans to send an additional $1,400 to eligible residents in order to expand upon the $600 payments Congress approved in December, totaling $2,000. According to the proposal, there may be some changes to eligibility, allowing some to receive funds who may not have been able to claim it during other aid rounds. Details on that to come.
The proposal adds another $25 million in rental assistance for both low- and moderate-income households in which members became unemployed as a result of the pandemic. Additionally, another $5 billion is set aside for renters who are struggling to pay their utility payments, and another $5 billion in state assistance to help those at risk of homelessness.
Biden proposed the federal eviction moratorium deadline be moved to Sept. 30. This also includes access to forbearance for those with federally-backed mortgages. Currently, the moratorium expires at the end of January.
The weekly enhancement would increase from the $300 approved in December to $600. Based on the initial plan from December, this funding would only last until March.
Small Business Assistance
The plan is proposing an entirely new grant program, separate for the PPP, for small business owners, setting aside $15 billion. Additionally, the proposal includes a $35 billion investment in state, local, tribal and non-profit financing programs with low-interest loans to help entrepreneurs with venture capital.
Emergency Paid Leave
The proposal would reinstate paid sick and family leave benefits through September—they initially expired in December. These benefits would extend to employees of companies with more than 500 workers, as well as those with less than 50, in addition to federal workers who were previously not eligible.
Among those listed, the proposal also includes a 15-percent increase in food stamp benefits through December, and additional funds for childcare and child tax credits—including increasing the Child Tax Credit $3,600 for children under the age of six and to $3,00 for those between six and 17. Also, there are funds set aside for vaccine distribution and testing, including for keeping frontline workers employed and launching nationwide community vaccination centers.
So far, the industry appears favorable to many of the components in the proposed package.
“We are encouraged that the incoming administration and legislatures around the country are laser focused on what they think matters most for American communities to ensure a nascent recovery becomes a strong recovery,” says broker M. Ryan Gorman.
“I’m in favor of the proposed stimulus package. The rental assistance, in particular, will be a welcome relief for both tenants and landlords,” says Rei Mesa, a Florida broker.
The National Association of REALTORS® (NAR) agrees that the stimulus package will provide some necessary assistance across several sectors. NAR President Charlie Oppler sent RISMedia the following statement:
“NAR looks forward to reviewing this proposal in more depth, but we are pleased to initially note President-Elect Biden’s intentions to expand unemployment assistance, provide hundreds of billions in funding for state and local governments, and authorize significant resources for homelessness assistance. Perhaps most notably for our members and for America’s real estate industry, we applaud the inclusion of an additional $30 billion in rental assistance for housing providers and rental families.”
Which policies could provide the biggest help to the economy? Stimulus checks could lead to savings and increased consumer spending—and on the real estate side, may help renters pay their bills or prospective purchasers save for a down payment on a home. Additionally, the vaccination plan will play a significant role.
Additionally, increased funding could help growth in the job sector, particularly in construction, which is in need of labor to tackle the growing housing inventory shortage.
According to the latest commentary from the Fannie Mae Economic and Strategic Research (ESR) Group, economic growth for the year ahead is highly dependent on the recovery of the ongoing pandemic, as well as the response to the health crisis.
“COVID-19 remains the dominant force altering the path of the economy through the behaviors of people, businesses and policy makers,” said Doug Duncan, Fannie Mae senior vice president and chief economist of Fannie Mae’s ESR Group, in a statement. “Therefore, the best policy for economic recovery is the broad distribution of an effective vaccine, which is underway. The sooner this can be successfully accomplished the sooner growth can accelerate, and our thought is that by mid-year vaccine distribution efforts will be well-established, allowing for a strong second half.”
“One impact of our projected growth acceleration is likely to be modestly rising interest rates, whether as a result of increased growth expectations—as consumer savings are augmented by stimulus leading to stronger consumer spending—or by a modest increase in inflation driven by demand growth outpacing a recovery in supply,” Duncan continued. “We believe the Fed’s policy of tolerating a modest overshoot of its long-term inflation target is likely to be tested.”
Liz Dominguez is the senior online editor at RISMedia. Email her your real estate news ideas to [email protected].
This is a developing story, stay tuned to RISMedia for continuing coverage.