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Stimulus checks may help, but not cure lasting economic ailments from pandemic

Maudine Holloway is hoping that the $2.2 trillion stimulus package passed by Congress Friday will help Anniston’s neediest residents. But she doubts a one-time check will be the only thing people need to get them through the pandemic.

“Maybe for one month, it’ll help them,” said Holloway, director of Community Enabler Developer, an Anniston nonprofit that helps low-income people.

Holloway and other local residents sounded cautiously hopeful Friday about the stimulus plan Congress passed to try to offset the economic shock of the coronavirus COVID-19.

The deadly virus first emerged in China late last year, but by most counts, the U.S. surpassed China this week as the nation with the most infected patients. Alabama’s count of the infected neared 600 Friday; the first confirmed case in the state was reported just two weeks ago. 

Virus-related business closures have delivered a gut-punch to the nation’s economy, with jobless claims skyrocketing in the past two weeks. The bill passed Friday by Congress is by most accounts bolder even than the measures lawmakers took in the wake of the 2008 financial crash. 

Most Americans will get direct checks in the mail or deposits to their bank accounts — $1,200 for an individual making less than $75,000 per year, with $500 more for every child in the household — directly from the federal government. The government will make hundreds of billions in loans to businesses to keep them afloat during government-mandated shutdowns.  The federal government will add $600 per week to what states pay to people receiving unemployment benefits, and more people will be eligible for those benefits.

Local experts were somewhat reluctant to discuss the 800-plus-page bill Friday, unclear on what provisions in the legislation survived to the end of the process. Cassie Chandler, an adviser to the Small Business Development Center at Jacksonville State University, said the bill will add important changes to a disaster-loan package Congress passed earlier this month. 

The first bill allowed loans for businesses that lost money to the virus. Friday’s bill includes potential debt forgiveness, she said, for businesses that keep employees on the payroll through the crisis. 

“At least that will be a little bit of working capital to help with things like the cost of payroll,” she said. 

No one believes the bill will make every business whole. Glenn Richey, a professor at Auburn University’s Harbert College of Business, said the pandemic has already pushed businesses farther toward online commerce. 

Richey said direct stimulus checks will help both people who’ve lost jobs and people who’ve spent more than usual stocking up on supplies, though he doesn’t expect a sustained boost to the larger economy from those checks alone. 

“There will be a short-term effect,” he said. “There will be a tick-up in spending, but it won’t last for long.”

Richey said the biggest problem with the plan is that it adds to the national debt.

At Alabama Arise, a Montgomery-based nonprofit that advocates for the poor, spokesman Chris Sanders said an overlooked element of the bill was its increase in the government's rate of pay to states through Medicaid. He said that should provide hospitals with more funding during the crisis. 

Sanders said Alabama would be better off in the crisis if it had expanded Medicaid under the Affordable Care Act, making sure more people in the state have health care coverage. He said the federal government should consider funding that expansion, for states that haven’t already expanded the program.

“In a situation like this, no one should be afraid to get life-saving medical care because they’re afraid of going bankrupt,” he said. 

Sanders described the direct stimulus payments to taxpayers as “a good step” though he said more help would likely be needed.

“I question whether a one-time payment is going to be enough,” he said. “This is not a problem that's going to last for just weeks, but for months to come.”

Capitol & statewide reporter Tim Lockette: 256-294-4193. On Twitter @TLockette_Star.

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