CARES Act Stimulus & the Homeless

By: Eric Falquero, Sasha Polonko, & Suzanne Hanney April 9, 2020

Congress passed a $2.2 trillion coronavirus relief bill on March 27 that President Trump signed into law the same day. This third legislative action in response to the COVID-19 pandemic is the largest aid package in history and includes nearly $300 billion for direct payments to low- and moderate-income Americans. The infectious disease has killed almost 4,000 U.S. residents as of April 2 and brought the economy to a grinding halt. However, many people who were already struggling before the outbreak are at risk of not receiving the stimulus payment, according to the director of the D.C.-based non-profit Capital Area Asset Builders, Joseph Leitmann-Santa Cruz.


Adults who earn $75,000 or less per year should receive $1,200, but that amount will reduce on a sliding scale for people who earn up to $99,000. Anyone with a higher income will not qualify. There is no minimum qualification. This amount applies to each member of a married couple; families will receive an additional $500 for every dependent child under 17.


The payments are classified as advance tax rebates and will not be taxed. The legislation amends the tax code and tasks the Internal Revenue Service with distributing them using information from tax returns filed this year. For anyone who has not filed yet, last year’s returns will be used. A similar approach was taken for direct payments in the Economic Stimulus Act of 2008.


What about people who are not required to file taxes, such as individuals who earn less than $12,200 and couples who earn less than $24,400? (IRS poverty benchmarks are $13,064 and $16,815 for singles and couples, respectively. According to the most recent census data, 11.8 per cent of Americans were impoverished in 2018: 38.1 million people.)


The bill states that if a 2018 or 2019 tax return is not available, information should be used for anyone who received a Social Security Benefits Statement this year. This tax form, typically mailed in January, notes how much income someone received from the Social Security Administration the previous year through benefits such as disability or retirement.


An inspector general’s evaluation of the 2008 stimulus payments found that of the roughly 20 million non-filers the IRS identified by working with the Social Security Administration and Veterans Affairs, 3.4 million who were eligible did not receive the stimulus.


Economist Claudia Sahm of the Washington Center for Equitable Growth, who worked for the Federal Reserve Board for 12 years that included the Great Recession, agreed that the least well-off people will have to wait longer to get this money and are more likely to fall through the cracks. But she is adamant that the Treasury Department will build a system that allows individuals who do not file taxes and do not receive federal benefits to identify themselves.


Sahm noted that no-income or low-income people who have not filed tax returns or received SSA benefits are entitled to the payment but they will probably have to show they qualify. Any time federal money is being distributed there is potential for fraud, “So [people who don’t file taxes or receive SSA benefits] are going to get the money, they’re supposed to get the money, [but] there will be an expectation that those individuals will have to raise their hand and say, ‘Hey, I want my money.’


“If that person doesn’t come forward and say ‘I want my money,’ the government’s not going to find them and send them their money,” Sahm continued. “So people are going to have to choose to sign up, and we don’t even know how they’re going to choose to sign up yet. So then that means, with almost certainty, it will take more time.”


Simultaneously, Sahm stressed that consumers should await information from official sources, like the IRS. Scams posing as emails and calls to confirm personal emails and banking information have already been reported in Olympia, Washington.


Treasury Secretary Steve Mnuchin said March 25 that payments to anyone who provided direct deposit information on their tax return should begin showing up in their bank accounts within three weeks. Four days later, during an interview with CBS, Mnuchin said the IRS will also develop an online system to allow anyone who did not submit direct deposit information on their return to supply that information if they do not want to wait for a check in the mail.


The time delay exists also because the IRS has to create a database of the millions of eligible Americans and their payment information. Once that dataset exists, it will be given to another Treasury agency that regularly processes payments. When that step is complete, direct deposit payments, which the majority of tax filers use, could be “pushed out” in as little as two days, Sahm said.


Checks will take longer because there are constraints on how many paper checks the federal government can issue in one week. Sahm estimates it will take four to six weeks for all of the payments to be received, if the IRS and SSA staff “hustle.” Staff worked around the clock to get out the 2008 stimulus checks, she noted.


“I think the three weeks that Mnuchin is talking about is, um, heroic. I mean, I hope he’s right. But four weeks is fast,” Sahm said. “For anybody who has a Social Security number but isn’t in these other groups, it will take longer… like early July or something. But again, those are exactly the people that needed the money three weeks ago.”


Meanwhile, homeless and low-income people don’t necessarily have bank accounts, “so, if it’s a check being sent out, how then will it be cashed?” said Kim Johnson, a policy analyst at the National Low Income Housing Coalition (NLIHC). “Cash-checking places take such a large percentage of the check, taking from the actual money they will ultimately give someone.”


According to prepared material from NLIHC, the relief bill includes expanded unemployment insurance to be paid by the federal government that covers contractors, freelancers, and gig economy workers who would not normally be eligible; laid-off workers would receive full pay for four months. The bill also includes:


a 60-day moratorium on foreclosures for all federally-backed mortgages, including those covered by HUD, USDA, VA, FHA, Fannie Mae and Freddie Mac, effective March 18.


$5 billion for HUD’s Community Development Block Grant Program, which can use the money to expedite homeless people into individual shelters as opposed to congregate settings.


$1.25 billion for tenant-based rental assistance within public housing, for the retention of existing landlords and to adjust renewal funding for public housing agencies that see significant increases in voucher per-unit costs and would otherwise have to end rental assistance to families for lack of funds.


$150 billion to a national Coronavirus Relief Fund; each state will be allocated up to $1.25 billion that could help low-income renters impacted by the pandemic. Provisions on what the relief fund money may be used for are broad and Johnson said states could use this money to assist their homeless and undocumented residents.


$4 billion to the Emergency Solutions Grants Program for emergency measures – temporary shelters, staff costs, training and hazard pay -- to prevent an outbreak of COVID-19 among sheltered and unsheltered homeless people and those at risk of homelessness. The money could also be used for eviction prevention assistance such as rapid rehousing and rental deposit assistance. Half the money will be allocated within 30 days, the remainder within three months, to communities with the greatest needs.