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Texas' shuttered businesses, laid-off workers and overwhelmed hospitals among beneficiaries of coronavirus relief bill

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Mour Cafe in Austin closed its dining operations following an executive order by Gov. Greg Abbott which limits social gatherings to 10 people and prohibits eating and drinking at restaurants but allows take-outs. March 20, 2020. Eddie Gaspar/The Texas Tribune

WASHINGTON — It took a pandemic to get Democratic and Republican senators to work together.

It is a testament to the COVID-19's devastating impact on the American economy and to public health that members of the U.S. Senate on Wednesday night unanimously supported a bill so sweeping, so expensive, that it touches almost every part of American life and will, if it passes the U.S. House on Friday, cost three times as much as the bank bailout of 2008.

Known as the "Coronavirus Aid, Relief and Economic Security (CARES) Act," the bill is estimated to cost taxpayers over $2 trillion and has the primary goals of supporting the medical response to the pandemic, keeping businesses afloat long enough to avoid more layoffs, and bolstering liquidity in the market.

Members of both parties readily expressed reservations about the bill. But that all 96 senators present voted for the legislation means both parties will have complete political ownership of its known and unknown implications.

And despite its size, most Capitol Hill players anticipate that this legislation is only the beginning of the federal government's efforts to mitigate the economic fallout from COVID-19.

The bill will add trillions to the federal debt, which registered at nearly $24 trillion on Thursday afternoon.

The U.S. House is expected to vote on the bill Friday morning. How that vote will play out procedurally was uncertain Thursday night. Most House members are in their districts and members aim to avoid returning to the chamber in the near term out of fear of contracting the virus while in transit. After the vote, Senators returned home to their districts and are not scheduled to return until April 20.

Here are some highlights from the 880-page bill:

Unemployment insurance

The bill will expand unemployment insurance. In Texas, officials this week said the state's unemployment rate could cross into the double digits, which would top the historic high of 9.2% set in November 1986.

To qualify for this tranche of unemployment assistance, Americans must be unable to work because they are diagnosed with the virus, are experiencing symptoms, are seeking a diagnosis, are caring for a family member with the virus, must care for a child who is out of school because of cancellations caused by the virus, are unable to get to work due to the virus, have been advised by a health care provider to self-quarantine, must become the household breadwinner because the primary income earner died of COVID-19, lot one's job due to COVID-19-related closures or had to quit their job as a direct result of COVID-19.

Recipients will receive an additional $600 per week on top of what the state of Texas pays per week in unemployment.

Direct payments

Additionally, each American making less than $75,000 will qualify for a $1,200 direct payment. Joint tax filers making less than $150,000 qualify for a $2,400 payment. Additionally, families will receive a $500 payment for each child. Salaries will be based on 2019 tax filings.

For Americans who make more than $75,000, the payment amount is reduced $5 for every $100 in additional income, according to The Washington Post. Those making more than $99,000 will not receive a payment.

The money will be transferred electronically to Americans who registered their bank account information with the IRS in the past two filing years for a tax refund. Treasury Secretary Steven Mnuchin projected a three-week interim between the bill's passage and those payments landing in bank accounts.

The legislation did not clarify how the money would get to Americans who did not receive electronic tax refunds in recent years, and there is much public confusion on how those payments will be distributed.

CNN reports a Republican Senate aide predicted recipients of the alternative — paper checks — could take as long as five weeks. Stimulus checks during a similar push in 2008 took 10 weeks to distribute, per CNN. It is also advised to contact the Internal Revenue Service if one has moved since last filing a tax return.

Public health

The bill will also allocate $100 billion in reimbursements and lost revenue to hospitals and health care providers that are overwhelmed with patients suffering from the virus.

Additionally, the CARES Act calls for the government to study the supply chain for medical devices and drugs that are outsourced outside of the country and to consider the impact of domestic manufacturing of such products.

Mortgage grace period

The bill will also allow for up to 180 days of grace to borrowers of federally backed mortgages, if the borrower is facing a severe financial hardship that is a direct or indirect consequence from the virus. Borrowers must submit a forbearance request to their lenders.

Student loans

The bill also allows for suspending payments of federally-backed student loans through Sept. 30. Forbes.com explains more about these circumstances here.

State aid

The bill allots $150 billion in aid to states and local governments facing shortfalls tied to the coronavirus' impact. The bill states that these funds will be distributed proportionally based on population.

Small businesses

The CARES Act includes nearly $350 billion in loans to small businesses, meaning companies with fewer than 500 people. The aim here is to offer businesses that are facing serious turbulence up to $10 million in order to meet payroll and retain workers. At the same time, the loans will help small businesses cover mortgages, rent, utilities and debt.

These loans will target businesses that have faced disruption in supply chains, staffing challenges, decreased receipts or customers, or outright closure as a result of the virus. Additionally, the legislation allots funding to educate small business owners as to how to obtain loans and other resources, how to prevent the spread of COVID-19 and how to bolster remote customer service.

$500 billion in loans for distressed sectors

The most hotly negotiated pot of money in the bill is comprised of $500 billion in loans for "distressed sectors."

The airline industry is bearing so much of the fallout that legislators allocated within that pile of money $25 billion in loans and loan guarantees specifically for that industry.

In the Texas economy, this most obviously pertains to the two Texas-based airlines: American Airlines and Southwest Airlines. Carriers that accept loan money cannot furlough or reduce the salary of employees.

Additionally, $4 billion of the overall $500 billion will be dedicated to the air cargo industry and another $17 billion is designated to firms critical to national security.

But most of that money — $454 billion — is set aside for providing liquidity to companies that are adversely affected by the outbreak. To receive the loans, companies must make a good faith effort to retain 90% of its workforce at full compensation and benefits.

The ghosts of two major pieces of fiscal legislation hang over this section of the bill.

Deep in the language, there are provisions that demand companies not use the loans to pay dividends to investors or to buy back stocks. That language is a nod to the 2017 tax overhaul, in which many corporations used their tax cuts to buy back stocks.

Going back to 2008 tales of CEOs taking multi-million dollar bonuses while also accepting government bailout money, this bill attempts to bring to heel excessive pay packages. No person making more than $425,000 while working for a company accepting a CARES Act loan may make more than his or her 2019 salary, and no executive's exit package may be more than twice his or her 2019 compensation.

Additionally, Democrats forced language into the bill banning transactions with companies in which the controlling interest is held by the president; the vice president; heads of executive departments; members of Congress; or the spouses, children or sons-in-law and daughters-in-law of those officials from being eligible for this money. This move was an attempt to reduce conflicts of interest and was an unstated nod to Trump's overlap of his family company with government business.