Republicans and Democrats finally stopped squabbling long enough to spend an estimated $2 trillion on what they claim is emergency coronavirus relief. Here’s the good, the bad, and the ugly of the bill.
1. Payroll Tax Deferral
Employer-side payroll tax payments are suspended through the end of the year, to be paid half by year-end 2021 and half by year-end 2022. This will increase business liquidity by about $700 billion.
While I would have preferred a cut to a deferral, this will significantly lessen the near-term tax burden on business payrolls, encouraging businesses to retain and restore jobs. (Treasury has already announced a deferral of corporate income taxes under existing authorities.)
2. More Federal Reserve Money
The Federal Reserve’s new lending facility is funded with up to $425 billion, which will be levered to provide up to $4 trillion in liquidity to distressed businesses.
3. Net Operating Losses
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