A Glimmer of Hope for Small Business Rescue Plan

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Is This How the Small Business Rescue Program Gets More Cash?

As the standoff over providing billions of additional dollars to a crucial small business aid program continued Friday, comments from House Minority Leader Kevin McCarthy pointed toward a possible deal that would provide lawmakers with a way around the impasse.

The standoff: With the $349 billion Paycheck Protection Program running out of funds earlier this week, Democrats and Republicans can’t agree on how to inject another $250 billion into the program, which provides loans and grants to small businesses struggling during the coronavirus crisis. Senate Republicans want to see a “clean,” single-purpose bill that provides the funds, while Democrats are pushing for a more complex package that provides additional funds for hospitals, food aid, and state and local governments.

Senate Majority Leader Mitch McConnell said Thursday that the two sides have made “absolutely no progress,” according to The Hill. But on Friday, McCarthy, a California Republican, told The Wall Street Journal he was willing to include the additional money for hospitals in the small business funding package that Democrats are seeking, raising hopes for a compromise deal that could be taken up in the Senate as soon as Monday.

“Hospitals need the help. Hospitals are the modern-day soldiers,” McCarthy said. “I’d like to see money in there—money in the PPP and money in hospitals—that would be a very smart move right now.”

McCarthy also expressed interest in boosting the Economic Injury Disaster Loan program, a second small business aid fund that has run out of money. Democrats reportedly agree.

Not a good time for a stalemate: CNN’s Phil Mattingly and Lauren Fox said Friday that the PPP — which approved 1,661,397 loans worth $349 billion in less than two weeks — has run out of cash at a particularly inopportune time. “Tens of thousands of businesses did not get access to the program before it ran dry,” they wrote. “Those businesses, many of them teetering on the brink of failure, currently have no clear pathway to survival at the moment.”

Point-Counterpoint of the Week

As President Trump this week laid out new guidelines to help states decide when to lift lockdown orders, the lack of widespread coronavirus testing remains a barrier to reopening the economy. Who's responsible for ramping up that testing?



President Trump:

Democratic Senator Brian Schatz of Hawaii:

Infographic of the Day: The Cost of the CARES Act

Ernie Tedeschi, an economist at research firm Evercore ISI, broke down the fiscal impact of major provisions of the CARES Act, based on the Congressional Budget Office’s score of the legislation published Thursday.

Biden Proposes Expanded Federal Subsidies to Keep Workers on Payrolls

Former Vice President Joe Biden, the likely Democratic presidential nominee, on Thursday released a plan calling for federal subsidies to help companies keep on more employees during the coronavirus pandemic.

Biden proposed scaling up state-run “short-time compensation programs” under which, as he described it, “firms in distress keep workers employed but at reduced hours and the federal government helps make up the difference in wages.”

The goal is to keep workers attached to their jobs, wages and benefits, even if employers cut their hours. “We should be committed to keeping as many people as possible attached to their employment, so they can easily return to work when appropriate, and maintain their income and benefits,” Biden said in a statement. “This is more than just the right thing to do — it is the surest road to a rapid recovery, because the faster everyone returns to their jobs, the faster we can improve demand and get our economy running again.”

The Biden campaign said 27 states have such short-time compensation plans and that, if elected, Biden would look to reform and expand such programs. Biden said he would have the programs “be 100% permanently funded by the federal government” and expanded to all states and territories by “using a mix of conditioned assistance and additional incentives.”

Biden also proposed allowing the program to help businesses cover rent and other necessities, automatic triggers for the emergency aid and a tax credit to help cover employer health care costs for workers whose hours are cut. “While it is crucial that employees keep their full benefits, having to fund the full health care costs of workers when they are seeing a significant fall in revenue can discourage companies from choosing short-time compensation over layoffs,” the Biden campaign said.

The $2.2 trillion coronavirus relief package enacted last month provides 100% federal funding for short-time compensation programs, with benefits capped per person at the total amount workers would have received had they lost their job, according to The Hill.

Your Prize for Making It Through the Week

It’s been another long and difficult week, but perhaps this magical multicolored fox created by a five-year-old artist we know can help brighten your day just a bit.

Email us at yrosenberg@thefiscaltimes.com. Follow us on Twitter: @yuvalrosenberg, @mdrainey and @TheFiscalTimes. And please tell your friends they can sign up here for their own copy of this newsletter.

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