The federal government is set to give a bailout to industries hardest hit by the coronavirus pandemic, from airlines to tourism.
A bailout is not strictly free money from the government, and could come in the form of loans or grants with limitations.
Here’s what a bailout is, what could be included in the one to address the coronavirus fallout, and a look at past bailouts in the US.
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What a bailout is — and isn’t
A government-funded bailout is more complex than just free money from the government. The bailout, while still being negotiated, is likely to give financial assistance to major corporations, small business, and individuals alike.
The bailout will likely include grants — money not to be paid back — to corporations, as well as checks to Americans to help boost the economy.
It is also set to include loans to be repaid by businesses after they bounce back from the economic fallout.
The grants are also likely to come with some strings attached, such as limits on executive compensation or stock buybacks for the companies benefiting from the bailout.
What could be included in the bailout
Democrats and Republicans in the Senate have struggled to agree exactly on what the bailout — which is set to cost the government more than $1.8 trillion — should include.
A $500 billion fund proposed in current legislation to help industries like airlines — which would receive around $58 billion if the bill passes — and tourism has come under fire from Democrats who say that the fund lacks critical oversight, according to a report by Politico.
The bill is also likely set to send Americans $1,200 checks to help boost the economy, though the exact amount is in flux as the bill is negotiated, and could change with income and dependents.
Republicans and Democrats are also at an impasse on things like unemployment assistance and funding for hospitals, according to the Politico report.
Which companies could get a boost from the bailout
Airlines For America, an airline industry group that represents major carriers like United, American, and Delta, as well as UPS and FedEx, asked for a $54 billion bailout.
The request included $29 billion in grants (money not to be paid back) and $25 billion in loans and tax breaks.
The airline industry has received criticism for asking for financial help even though many of the industry’s largest companies, such as American Airlines, Delta Air Lines and United Airlines, spent billions on stock buyback in recent years.
The restaurant industry is asking for help as many restaurants around the country have been forced to close and lay off employees. The National Restaurant Association asked the White House and Congress for a $145 billion recovery fund to pay employees and maintain financial obligations.
The group also asked for $45 billion in loans, and assistance in deferring mortgage, lease, and loan obligations.
Hotels are seeking help, too. The American Hotel & Lodging Association, which represents companies …read more
Source:: Business Insider