The unique and unprecedented challenge posed by the coronavirus pandemic required a fast-moving effort to support the economy as companies had to close or reduce services.
In the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Paycheck Protection Program was devised to keep Americans on the payroll of their employers at their current base pay.
It does so by providing small businesses, self-employed individuals, and gig economy workers such as Uber drivers with eight weeks of cash-flow assistance through 100 percent federal guaranteed loans. By maintaining their payroll, employers can have the portion of the loans used for covered payroll costs, interest on mortgage obligations, rent, and utilities forgiven. The loans are available through approved participating lenders, in most cases the local bank or financial institution.
Employees would keep their jobs and businesses would have assets to stay open, two goals with nearly universal support.
Fortunately, the implementation of the Paycheck Protection Program has been a remarkable success.
The CARES Act was signed by President Trump on March 27. The U.S. Small Business Administration and the U.S. Department of the Treasury had the Paycheck Protection Program accepting applications on April 3. By April 10, I was hearing from businesses across the Ninth Congressional District that were getting the funds for which they applied. On April 12, the Roanoke Times ran an article, “Paycheck Protection dollars reach Roanoke,” about small businesses getting their money.
Unfortunately, at the time I write this column, political posturing has ended this valuable program because of lack of funds. While I believe the program will eventually receive more funding to begin distributing loans again, this program is too important to the livelihoods of millions across the country to make it the pinata of Democrat party politics.
Federal programs rarely run out of money because they are successful, but the Paycheck Protection Program has exhausted its original $350 billion because it has been funding loans and supporting small businesses as intended.
Almost no one objects to the program’s intent or management, but when Senate Majority Leader Mitch McConnell (R-KY) moved on April 9 to add more funding for the program, he was blocked by Senate Democrats at the behest of Minority Leader Chuck Schumer (D-NY) and House Speaker Nancy Pelosi (D-CA).
Their stated reason was to help states and local governments with their budgets, as well as deliver more money to hospitals. States have already received some aid to fight the coronavirus, including $3.3 billion allocated to Virginia. While the states and local governments may eventually need further federal assistance, it is too early to tell, and state and local governments should look at their budgets to eliminate unnecessary spending before asking for a federal bailout. When we get through this crisis, the Federal Government will need to do the same to offset some of this spending.
Further, the CARES Act provided $100 billion to health providers, and on April 9, none of that money had been distributed at all. The first round of $30 billion has since been distributed, but that still leaves most of the money to health providers yet to be released.
To be clear, hospitals may need more help after the funds appropriated for this purpose by the CARES Act run out, and I would be supportive, but we are not at that point yet. We have reached that point for the Paycheck Protection Program.
It is important that this crisis also not be used to fund unrelated items on a wish list. Although the circumstances justify appropriate emergency spending now, the national debt and deficit is still accumulating. Anyone seeking to attach spending for pet political causes to coronavirus relief measures must remember that our country will have to reckon with the bill in the future.
The goal of the Paycheck Protection Program is to keep the economy alive for the time when we reopen, and we can start planning for that event. The coronavirus may be with us for a while, so businesses and employers should consider how they can operate while recognizing the need for continued measures to prevent its spread. But people want to get back to work, and we should soon be able to do that safely and responsibly.
For questions, concerns, or comments, call my Abingdon office at 276-525-1405, Christiansburg office at 540-381-5671, Washington office at 202-225-3861, or via email at www.morgangriffith.house.gov.
