President Donald Trump on Tuesday pushed to add $250 billion to the new payroll program for small businesses.
Treasury Secretary Steven Mnuchin said more money is needed for the popular new $350 billion Paycheck Protection Program, which took off with a start last Friday and proved incredibly popular as companies jumped at the chance to tap up to $10 million in forgivable loans to keep paychecks flowing amid the stay-home shutdown.
The popularity of the program is a hopeful sign for the economy, indicating that businesses are fighting to survive rather than giving in to what is shaping up to be the deepest economic slump in generations.
Mnuchin said had requested the funds in private calls to House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell. McConnell said he hopes to get the increased amount through Congress this week, perhaps as early as Thursday.
At the direction of President @realDonaldTrump, I've spoken with @SenateMajLdr, @SenSchumer, @SpeakerPelosi, and @GOPLeader to secure an additional $250 billion for the #PPPLoan program to make sure small businesses get the money they need!
— Steven Mnuchin (@stevenmnuchin1) April 7, 2020
“I will work with Secretary Mnuchin and Leader Schumer and hope to approve further funding for the Paycheck Protection Program by unanimous consent or voice vote during the next scheduled Senate session on Thursday,” McConnell said in a statement.
With jobless rates soaring to record highs, Pelosi called the small business program “very important” Tuesday.
But Pelosi is signaling she may throw sand into the legislative gears, arguing that she needs more oversight so that money goes to those she thinks needs it.
“We do have to have oversight to make sure everybody who qualifies has access,” she said on CNN.
Democrats have started grumbling that McConnell, the Republican leader, is pushing ahead too quickly. They warn that this could upend the bipartisan dynamic usually needed to secure support for a broader package. Democrats complained they were not consulted on the latest plans, another sign that they may slow down needed legislative action even as the economy careens into a deep slump.
“Congress will need to provide more funding or this crucial program may run dry. That cannot happen,” McConnell said in a statement.
Underscoring the tension, the push comes as Trump sidelined the acting inspector general tasked with leading oversight of the $2.2 trillion rescue package, the biggest of its kind in history.
Through it, a small business can use 75 percent of the loan to keep paying its employees and the other 25 percent to meet overhead such as rent and utilities. The payroll protection is for eight weeks and if the business keeps its employees on the payroll or rehires workers who have been laid off, the loan will be forgiven.
“Jobs are literally being saved as we speak,” McConnell said Tuesday.
The program just began operating last Friday and has been in such high demand that Trump administration officials are concerned they will quickly run out of funds. The huge demand for the funds indicates that U.S. businesses are eager to secure the funding to keep operating and return to business when the economy reopens, a strong signal that small business owners remain hopeful despite the sudden and dire economic conditions created by the pandemic.
“We were so successful that we were concerned we were going to run out of money,” Mnuchin said during an event at the White House.
Not surprisingly, the new program has hit some bumps along the way. Some small business owners have complained that they are unable to get through to the SBA or the banks to apply for loans or they are being rejected by banks who say they are only accepting applications from businesses that are already customers of the bank.
The Federal Reserve intervened on Monday, saying it would buy the loans that banks make, a way to nudge hesitant lenders.
By creating a backstop on the loans, the Fed is giving the banks an incentive and freeing up more of their cash for lending.
Many Democrats hope to use the coronavirus crisis as an opportunity to accomplish long-sought leftwing policy goals unrelated or only tangentially related to the disease. They may push for a broader bill that would go beyond the increased funding for the small business program. As a result, it is unclear a stand-alone vote on the paycheck program will make it through the Democratic-run House.
With Congress adjourned except for perfunctory pro-forma sessions, a vote to fund the payroll program would require either the unanimous consent of all lawmakers or a simple voice vote without a formal roll call. There could be objections.
House minority leader, Rep. Kevin McCarthy, R-Ca., backed McConnell’s effort for a smaller, discrete infusion for the small business program. “The House should move swiftly to do the same,” he said in a statement.
But the overture sets up a showdown with Democrats led by Sen. Chuck Schumer of New York who on Tuesday called for up to $25,000 “heroes” pay for frontline health care and service industry workers.
Schumer declared the pay hike for nurses, truck drivers grocery store clerks and others the “highest priority.”
Bigger corporations would be expected to foot the bill for the pay hike, he said, while the federal government would provide funding for smaller firms.
The House bill is expected to include the small business boost alongside another round of $1,200 direct payments, unemployment benefits and food stamp assistance. Some Democrats, including freshman class president Rep. Joe Neguse, D-Colo., are also seeking as much as $250 billion to smaller municipalities that face mounting costs to care for sick Americans and shore up their own economies.
The shifting dynamics from the political leaders are stark amid what officials warn could be one of the toughest weeks for the country, as the number of confirmed cases and deaths climbs.
The House gaveled in for a perfunctory pro forma session with Rep. Brad Sherman, D-Ca., presiding — wearing a face mask sewn by his young daughter.
This would be the fourth package from Congress since the start of the virus outbreak. Two initial efforts were followed by the third last month, which was by far the largest, the most ambitious of its kind in U.S. history.
–The Associated Press contributed to this report.