Senate President urges federal government to incorporate freeze on payments as critical part of economic response to coronavirus recession
Trenton – Senate President Steve Sweeney today urged the federal government to include a full or partial two-month moratorium on mortgage, home equity, loan, utility and insurance payments as part of its economic response to the coronavirus recession.
Senator Sweeney (D-Gloucester/Salem/Cumberland) also called on the federal government to cover the state share of Medicaid costs, supplement state Unemployment Insurance funds, cover municipal debt shortfalls and provide funding for laptops for K-12 students, in exchange for state governments agreeing to freeze spending on new programs unrelated to coping with the coronavirus crisis.
“Economic lockdowns in New Jersey, New York, Pennsylvania and other states are rightfully keeping people in their homes and closing down most small businesses in an effort to reduce the spread of the deadly coronavirus,” said Senator Sweeney. “Tens of millions of Americans will not be collecting paychecks and businesses will not be making sales, but monthly bills are still due.”
“If we are going to keep this partial economic shutdown from turning into a long-term recession, the federal government needs to take decisive action to put a freeze on our largest recurring bills for at least two months until we emerge from this unprecedented public health crisis,” he said. “With the economy effectively taking a two-month pause, we need a two-month pause on fixed monthly bills as well.”
The Senate President noted that the Federal Reserve and the Treasury are already teaming up to ensure that the nation’s banks and credit markets are able to continue to function during the crisis, and suggested that funding mechanisms could be put in place to cover the costs to financial institutions of such an extension.
Mortgage, bank, college and auto loans and lines of credit for individuals and small businesses could be extended two months with additional interest added over the course of the longer loan if the federal program requires it, but with interest on the deferred balance capped at a reasonable interest rate no higher than 5%. The cost of skipped utility, telephone, cell phone, Internet and insurance payments could be spread out over the payment year following the end of the coronavirus lockdown.
“While this economic crisis is going to hurt everyone, including those who are still working and businesses that remain open, the federal government could limit the program, if financially necessary, to individuals and small businesses that are losing a significant portion of their income during this period,” Senator Sweeney said.
Senator Sweeney said the federal program should include a full or partial freeze for two months on:
- Mortgage and home equity loan payments for individuals
- Bank loans, mortgage payments and lines of credit for small businesses
- Utility, cell phone, telephone and Internet bills
- Auto and college loans, including college loans held by private lenders
- Health, home and auto insurance premiums
Senator Sweeney said a similar two-month deferment program should be developed for rental payments.
The Senate President also called for the federal government to cover the state share of Medicaid costs for the next year, supplement state Unemployment Insurance funds as they are depleted, guarantee municipal debt to avert a crisis caused by unpaid property taxes, and provide laptops for all students to enable distance learning.
In exchange, Senator Sweeney said, all states should be required to implement a spending freeze on new programs unrelated to coping with the coronavirus pandemic.
“While Congress and the President are already moving on a $2 trillion package this week, we recognize that this is just the first step in providing the federal support our people and our businesses will need to come out of this crisis without a long recession,” Senator Sweeney said. “It’s only right to require states not to spend beyond their budgets for any new programs not related to the pandemic.
“This crisis is putting our communities, businesses and institutions to the test. We need to rise to the challenge and take these comprehensive steps to maintain a sense of order, security and confidence that this crisis will pass, and we will come out stronger on the other side,” he concluded.