Treasury Secretary Steven Mnuchin said Wednesday that the U.S. economy has begun to rebound from coronavirus closures and will “improve dramatically” over the second half of the year, but that more fiscal support will be needed, especially for hard-hit sectors.
“I definitely think we are going to need another bipartisan legislation to put more money into the economy,” Mnuchin said at a hearing of the Senate Small Business and Entrepreneurship Committee. He later added: “We absolutely believe small business — and, by the way, many big businesses in certain industries — are absolutely going to need more help.”
Mnuchin said that the administration does not want to rush that legislation but plans to spend the next 30 days considering what should go into the next package and would “seriously look” at whether more direct stimulus payments should be included. “Whatever we do going forward needs to be much more targeted to the industries and small businesses that are having the most difficulty reopening as a result of Covid-19,” he said.
Mnuchin pointed to travel, leisure and restaurants as industries that would need more help and that new support measures will be needed to encourage businesses to rehire workers.
Targeting enhanced unemployment benefits: Mnuchin also said again that the enhanced jobless benefits provided by Congress will need to be fixed, since in many cases workers earned more in unemployment than they had at their jobs. “I think we’ve seen from the recent [unemployment] numbers that didn’t have a big impact, because people want their jobs,” he said, but with unemployment expected to remain high, the benefits will have to be evaluated.
Labor Secretary Eugene Scalia said Tuesday that the administration opposes a Democratic proposal to extend the $600 in additional weekly unemployment benefits. Those benefits are set to expire at the end of July. Scalia told the Senate Finance Committee that those enhanced payments were “the right thing to do” when introduced in March, but are no longer needed. “There’s been discussion of perhaps having a smaller benefit ― not $600, but perhaps $250,” Scalia said.
Praise for PPP: Mnuchin credited the Paycheck Protection Program with supporting 50 million jobs and more than 75% of small business payroll in all 50 states. He said that some $130 billion in PPP funds remain unspent and some money would likely be left after the June 30 application deadline passes. He told Republican Sen. John Kennedy of Louisiana that he’s open to repurposing money to help businesses hurt by recent looting.
Loosening loan forgiveness rules: Mnuchin also confirmed that PPP borrowers who don’t spend 60% of their loans on payroll costs will still be able to have a portion of their loan forgiven. The loan program initially required 75% of borrowed funds to be used on payroll in order to qualify for loan forgiveness, but Congress lowered that threshold to 60% in legislation signed into law last week. Mnuchin and Small Business Administration chief Jovita Carranza announced earlier this week that borrowers who use less than 60% of their funds on payroll will still be eligible for partial loan forgiveness — “subject to at least 60 percent of the loan forgiveness amount having been used for payroll costs.”