Kevin Dietsch/Pool via AP
Unsanitized-062520
Sen. Ben Cardin (D-MD) wants to reserve unused PPP funds for additional funding for small business.
First Response
First-time unemployment claims held steady last week at around 1.5 million, three months after the beginning of the crisis. Over 31 million Americans are still receiving some form of unemployment with just a month to go until the expanded $600/week boost ends. The Census Household Pulse Survey shows large expected losses in income coming, along with high food and housing insecurity. More worryingly, small business revenue is showing signs of taking a step back in June, and that’s before the full impact of rising cases. States don’t need to be formally locked down for people to just stay inside because they fear the coronavirus.
This all comes as a June 30 deadline for applications for the Paycheck Protection Program (PPP) rapidly approaches, with $130 billion still left to hand out. It seems unlikely that all that money will fly out the door in the final few days, or that Congress will pass legislation to extend the deadline before the end of the month. So what happens to that money, which Congress intended to go to keep workers on payrolls?
Sen. Ben Cardin (D-MD) is the ranking member of the Senate Small Business Committee, and he has been working with a small bipartisan group—committee chair Marco Rubio (R-FL), Jeanne Shaheen (D-NH) and Susan Collins (R-ME)—on where to go next. “We want to make sure the money [left over] is reserved for small business,” Cardin said in an interview with the Prospect. “The first round of aid for those that followed the rules, their time has expired or will be expiring shortly. It’s time for us to act.”
Cardin’s legislation, which he’s already introduced with Shaheen, would extend the application period (or at this point, restart it) to at least December 30, giving the Small Business Administration the authority to go beyond that if necessary. And it would build in a second round program for companies that already got a forgivable loan and still need support, if their revenues remain well below the norm. Cardin thinks that money would be focused on smaller firms and those that rely on large gatherings of people or visitors traveling from around the country, like hospitality and tourism, catering, entertainment venues, and the like.
Read all of our Unsanitized reports
It’s been difficult for the committee to understand where the PPP fell short or where it could be targeted in the future because of the lack of transparency around the program. “We were not getting good information, we have been flying in the dark as far as understanding where the money is going.” In addition, the continual changes to the program made it hard for business owners to understand if the program worked for them; another round of changes designed to make the funding more flexible just passed a couple weeks ago. Changes to an eligibility rule to let formerly incarcerated small business owners access funds just happened this week.
Inability to get smaller businesses what they need to survive will have ripple effects on local property taxes, as I discussed yesterday. Economic Injury Disaster Loans, which were also expanded in the CARES Act, have been unsuccessful in rescuing very many businesses. “I think there’s been a bipartisan response, small businesses are the growth engine of the economy, job creation and innovation,” Cardin said. He praised businesses who have figured out creative options to find customers and get them goods and services, through home delivery or other means. (This is one reason I think Amazon just got a bunch of new competition.) “If we don’t save these small businesses,” Cardin said, “it’ll be a harder recovery for the economy.”
I asked Cardin about another June 30 deadline, the Trump administration ending federal support for testing sites in areas of the country like Texas, which has lawmakers in both parties angry. “We’re still in triage, in the first wave of the pandemic,” Cardin replied. “This is not the time to slow down. We have not even close to enough testing to safely reopen the economy.” He noted that he has talked to health care providers on the verge of closing and nursing homes without enough protective equipment. And he stressed the need to transition to insourcing manufacturing of critical goods. “I hope we learned that we not only need a better stockpile but a domestic supply chain,” Cardin concluded. “We need to work on that now to ensure it for the future.”
South by Southwest
So you probably heard that U.S. cases were at a daily high yesterday. I think everyone will agree that this is a high for positive tests, not infections; we’re testing at much higher levels now than in March or April, so we actually know a little more about the universe of those with COVID-19. But the methods we were supposed to put in place while locked down are completely failing us. Contact tracing in Austin, Texas, now a hotspot, isn’t working, because there are too many people moving around. You can contact trace 10 or 20 people but when it gets to 100 for each case and there are a thousand cases a day, it’s unmanageable.
Elective surgeries have been shut down again in Texas, and Florida’s governor has threatened to take business licenses away from those not practicing social distancing. Cities and counties like Palm Beach are mandating mask wearing, leading to this epic county commission hearing, with one woman managing to impressively shoehorn 5G, Bill Gates creating the rona, Pizzagate, QAnon, and the “deep state” into one two-minute comment. The force is strong in that one.
Marco Rubio was more pithy: “Wear a damn mask.”
Days Without a Bailout Oversight Chair
90. Ninety days and nobody is running the main oversight authority on the bailout. I’ll bet Tim Geithner is kicking himself over this!
Today I Learned
- No delegates at a mostly virtual Democratic National Convention. (NBC News)
- Enormous news about cracks in the wall upholding the legislative filibuster. Top Biden ally Chris Coons says he won’t let post-pandemic initiatives be blocked. (Politico)
- New York City halts all major capital infrastructure projects. (The City)
- Dean Baker is more optimistic than I am but always interesting on the post-pandemic economy. (CEPR)
- The lost years in schooling will particularly hit hard. (Axios)
- Amazon approved to get in on the food delivery game, with a stake in Deliveroo. (Competition Policy International)
- A giant brush fire-causing fireworks display at Mount Rushmore is just what we need. (Washington Post)
- I have been to Lopburi, a town that has monkeys like major cities have pigeons. They’ve turned ornery without tourists to give them bananas and have taken over the city. (The Guardian)
