The airline industry is poised to receive an enormous bailout as part of the stimulus bill, a draft of which sets aside around $30 billion to pay employees of passenger and cargo employees. It also provides loans to passenger and cargo carriers in addition to some tax relief.
In exchange for the aid, airlines are prohibited from stock buybacks and dividends until a year after the loan is repaid. They must also maintain current staffing levels through September.
THE CONTEXT In recent weeks, the outlook for the global aviation business has soured significantly, with major carriers like American Airlines fighting for survival and United Airlines eliminating virtually all of its international flights for April. During that time, airline executives and industry groups had been lobbying the White House and members of Congress for aid.
The provisions almost exactly mirror what the industry lobbying group, Airlines for America, said would be necessary to stave off devastation of the industry.
THE RESPONSE As executives and union officials pored over the details of the stimulus deal on Wednesday morning, Sara Nelson, the influential president of the Association of Flight Attendants union, claimed victory.
“This is not a corporate bailout; it’s a rescue package for workers — for flight attendants, gate agents, pilots, mechanics, caterers, airport maintenance and janitorial staff and everyone who keeps our aviation system moving,” she said in a statement.
The Rescue Plan
The checks will roll out slowly.
As part of the country’s biggest emergency spending plan, American lawmakers have agreed to provide direct payments of up to $1,200 to certain taxpayers in an attempt to create a safety net for those whose jobs and businesses are affected by the pandemic.
But it sounds like the checks could take a while to get to bank accounts.
The legislation isn’t finished, so only the broad outlines are known. The Senate is expected to vote on the bill on Wednesday.
But Democratic aides in the Senate said on Wednesday that eligible Americans with direct-deposit bank account information on file with the Internal Revenue Service for tax refunds — about 70 million people — should see their payments arrive within a few weeks of the bill being signed into law.
Eligible Americans who do not have such information on file, and thus will be waiting for a check in the mail from the I.R.S., will need to wait up to four months to receive one, the aides said.
The Rescue PLAN
A $2 trillion lifeline will help, but more may be needed.
If you want to shut down an economy to fight a pandemic without driving millions of people and businesses into bankruptcy, you need the government to cut some checks. The coronavirus response deal that congressional leaders struck early Wednesday will get a lot of checks in the mail, but those checks will soothe financial pain for only a few months.
The legislation, which is expected to be enacted within days, is the biggest fiscal stimulus package in modern American history, and more than double the size of the roughly $800 billion stimulus package that Congress passed in 2009, during the last recession.
Among the items in the bill are:
$350 billion in loans for small businesses to help bridge their expenses for up to 10 weeks. Firms would not need to repay up to eight weeks of the loans if they refrain from laying off employees, or move by June to rehire workers they have already laid off.
$500 billion in aid to airlines and other large corporations that have been hurt by the cratering of consumer demand. Much of the money would be used to backstop loans and other assistance that the Federal Reserve said it planned to extend to companies.
A $1,200 payment for each adult, and $500 per child, in households that earn up to $75,000 per year for individuals or $150,000 for couples. The assistance phases out for people who earn more.
Economists hailed the emerging agreement as a good start, one that works on multiple fronts to keep money flowing through the parts of the economy that have been suddenly rendered inactive. But some warned that it may not be large enough, given the enormous economic challenge the United States faces today.
Stocks climb, adding to Tuesday’s surge.
Trading on Wall Street was volatile on Wednesday, as investors started sizing up a $2 trillion coronavirus rescue package designed to shore up the American economy.
The S&P 500 dipped in early trading before climbing more than 3 percent. In Europe, major benchmarks were mostly higher.
Some of the companies expected to benefit from government help led the gains. Boeing was up nearly 30 percent, helping lift the Dow Jones industrial average by more than 5 percent; American Airlines jumped more than 15 percent and Carnival Corp. jumped more than 14 percent. All three had logged double-digit gains on Tuesday as talks on the package progressed.
On Tuesday, stocks on Wall Street had their best day since 2008 on expectations of the stimulus deal. Democratic and Republican leaders in the Senate finally came to agreement in the early hours of the day Wednesday.
Governments elsewhere are also laying out plans to help. On Monday, Germany prepared an emergency budget and rescue fund for companies that includes state-supported loans. European Union leaders are working on additional measures to help loosen up money for some countries to help soften the economic blow of the virus.
Though investors have welcomed the plans, few are willing to conclusively say that the worst of the market sell-off is over.
In the United States, widespread social distancing measures put in place to control the spread of the coronavirus have hammered consumer spending, the heart of the American economy. Economists are expecting almost unthinkable declines in the gross domestic product in the second quarter. Analysts at Capital Economics said on Wednesday that they now expect U.S. growth to fall 40 percent in the second quarter at an annualized pace, as the unemployment rate jumps to 12 percent, higher than its 10 percent peak in 2009.
There’s unease over Trump’s White House briefings, even as ratings soar.
President Trump is a ratings hit, and some journalists and public health experts say that could be a dangerous thing.
Since reviving the daily White House briefing — a practice abandoned last year by an administration that bristles at outside scrutiny — Mr. Trump and his coronavirus updates have attracted an average audience of 8.5 million on CNN, Fox News, and MSNBC, roughly the viewership of the season finale of “The Bachelor.” On Monday, nearly 12.2 million people watched Mr. Trump’s briefing on cable news, according to Nielsen — “Monday Night Football” numbers.
The veteran anchor Ted Koppel said on Wednesday that television news executives had forgotten a crucial distinction of their profession. “Training a camera on a live event, and just letting it play out, is technology, not journalism; journalism requires editing and context,” he wrote in an email.
One of the most contentious questions dogging talks over the $2 trillion economic stabilization bill was over who would be in charge of a $500 billion “slush fund” with few strings attached, and how to ensure that such a sweeping bailout is administered fairly and without preferential treatment.
The final bill is expected to include the appointment of a new special inspector general to oversee the disbursement of funds to companies and ensure they qualify, according to a congressional aide.
The legislation would also create a five-person oversight panel, chosen by congressional leaders, that would monitor whether companies that received bailout money were living up to the obligations detailed in the bill to retain workers and limit executive pay.
And, Treasury Secretary Steven Mnuchin would be required to make regular appearances before Congress to discuss the bailout package and how it was being carried out.
Those guardrails are similar to what lawmakers put in place for the Troubled Asset Relief Program, the $700 billion bank bailout that Congress passed during the 2008 financial crisis.
How should economic costs be weighed against saving lives?
Government agencies calculate these trade-offs regularly. The Environmental Protection Agency has established a cost of about $9.5 million per life saved as a benchmark for determining whether to clean up a toxic-waste site.
In a paper this week, three economists tried to calculate the optimal way to slow the spread of the new coronavirus without economic costs that exceed the benefits.
In one set of assumptions — leaving it to individuals to decide whether to isolate themselves — the authors say that about 1.7 million people in the United States would die within a year and that consumer demand would decline by $800 billion in 2020, or about 5.5 percent.
They say that under an alternative approach — involving tighter restrictions on movement and commerce — the decline in consumption in 2020 more than doubles, to $1.8 trillion, but deaths drop by half a million. The difference amounts to $2 million in lost economic activity per life saved.
Nurses share coronavirus stories anonymously in an online document.
More than 1,200 health care workers have used a private online document to share their stories of fighting the coronavirus pandemic on the front lines.
In their accounts, they say the outbreak has turned American hospitals into “war zones.” They talk about being scared to go to work and anxious that they will become infected. They describe managers who seem to not care about their plight.
“But we show up and have to keep showing up,” one nurse wrote, “and we have to test ourselves.”
The document was created on March 19 by Sonja Schwartzbach, a nurse in New Jersey who is studying as a doctoral student. She said she started compiling the accounts after she determined that hospital conditions were “far worse” than most people realized and that her fellow health care workers needed a place to share what they were seeing.
HUB FOR HELP
Medicare is updating coverage for the coronavirus crisis.
Older Americans are at a high risk for serious illness from the coronavirus, and most who are over age 65 are covered by Medicare.
Medicare already covers its enrollees for much of what they might need if they contract the virus and become seriously ill — and it has expanded some services and loosened some rules in response to the crisis. Read more on how navigate Medicare right now.
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Here’s what else is happening:
Ford Motor said on Wednesday that it would keep its North American plants closed beyond March 30, the day it had previously hoped to restart production. BMW also said it would idle its factory in Spartanburg, S.C., on Sunday, five days sooner that is had previously planned, and keep it shut through at least April 12.
Major retailers announced efforts on Wednesday to help secure protective equipment for hospitals. Gap said it would help source masks and protective gowns from its vendors for California hospitals. Canada Goose said it would reopen two manufacturing facilities to produce scrubs and patient gowns for health care workers and patients in Canada.
Reporting was contributed by Niraj Chokshi, Jim Tankersley, Alan Rappeport, Alexandra Stevenson, David Gelles, Eduardo Porter, Clifford Krauss, Michael M. Grynbaum, Edmund Lee, Sapna Maheshwari, Brian X. Chen, Neal E. Boudette, Elaine Yu, Daniel Victor, Jason Karaian, Kevin Granville and Carlos Tejada.