McConnell Opens Door to More Stimulus Checks, for Some
Senate Majority Leader Mitch McConnell (R-KY) on Monday outlined the key elements he’d want to have included in the next coronavirus relief bill, opening the door to more direct payments to Americans making up to $40,000 a year and again insisting on legal protections for businesses.
McConnell said he would likely release a new bill in a few weeks. That would be the GOP’s starting point for negotiations with Democrats. Those talks, likely to start after Congress returns from a two-week recess on July 20, are expected to be contentious. "I can’t comfortably predict we’re going to come together and pass it unanimously like we did a few months ago — the atmosphere is becoming a bit more political than it was in March," McConnell said, according to The Washington Post. "But I think we will do something again. I think the country needs one last boost."
McConnell added that the coronavirus pandemic is clearly not over.
Another round of stimulus checks: McConnell said that the next coronavirus package "could well" include more stimulus checks, but suggested that the payments would be more narrowly targeted. "I think the people who’ve been hit the hardest are people who make about $40,000 a year or less," including many hospitality industry workers, McConnell said.
Liability protections: McConnell guaranteed that the next bill would include liability protections to shield business, hospitals and schools against lawsuits stemming from the coronavirus. He said the protections would be "narrowly crafted" and that he envisions they will cover five years, from December 2019 through 2024. Democrats have opposed such a measure.
The bottom line: Once lawmakers return, they’ll have just a few weeks to hammer out a deal before their next recess. Right now they aren’t close.
"Instead of talking about writing a partisan bill in his office to help big corporations, Sen. McConnell ought to be working across the aisle to prevent mass evictions, a new hunger crisis, and the layoff of more essential state and local government employees," Senate Minority Leader Chuck Schumer (D-NY) said Monday.
Congressional Republicans and Trump administration officials also face internal divisions on additional relief spending that could make it difficult to reach consensus. "I think the key right now is to try and get sort of the White House and Republicans on the Hill in the same place," said Sen. John Thune (R-SD), according to the Post.
Who Got Loans Through PPP Small Business Rescue Program?
The Trump administration on Monday released data on loans made through the Paycheck Protection Program meant to help small businesses get through the coronavirus pandemic, including the names of 660,000 companies that received loans of $150,000 or more. The loan recipients include restaurant chains, businesses linked to members of Congress and the Trump administration, high-priced law firms, special interest groups, Planned Parenthood locations and Kanye West’s clothing and sneaker company, Yeezy.
The disclosure could bring some renewed criticism of the PPP, which has faced questions about whether it is reaching the businesses that need help the most. The program generated some outrage early on when large, publicly traded companies said they had taken out loans. More than $30 billion in loans were reportedly returned after the administration said that companies with access to other sources of capital shouldn’t be borrowing through the program.
"My 1,000-foot takeaway is that the government was handing out free money and the line went around the corner," Aaron Klein, a fellow in economic studies at the Brookings Institution, told The New York Times. "This is not your mom-and-pop shop on Main Street."
The big picture: The program issued more than $521 billion across nearly 4.9 million forgivable loans through June 30. The health-care and social assistance industry received more than $67 billion, or 12.9% of the loan money. Professional and technical services got 12.7%, while 12.4% went to construction and 10.3% went to manufacturing
The program still has $131.9 billion in funding left unused, though Congress just passed legislation to extend the application deadline through August 8 and is considering ways to repurpose funds left over.
The data released Monday doesn’t include names or addresses for businesses receiving loans of less than $150,000, which collectively represent 86.5% of loans and about a quarter of the total loan dollars approved. The data also only provides loan amounts in broad ranges, which groups advocating for government transparency criticized as inadequate.
Treasury Secretary Steven Mnuchin said that the PPP has supported more than 51 million jobs and more than 80% of all small business employees, with an average loan size of about $107,000. Still, nearly 49,000 loan recipients reported that they would save zero jobs with the borrowed money and nearly 41,000 others did not say how many jobs they would keep with the money, according to The Washington Post. Ten companies apparently received between $5 million and $10 million but reported retaining only one job with the money, the Post says.
Who got large loans: More than 4,800 businesses received loans between $5 million and $10 million. "Restaurants, medical offices and car dealerships were the top recipients of large loans from the program," the Times reports. "More than 40,000 full- or limited-service restaurants received loans worth as much as $32 billion, according to the ranges provided by the government." Among the large chains with Wall Street backing that received loans between $5 million and $10 million were PF Changs, Legal Sea Foods and Silver Diner, according to the Post.
The Times also notes that doctors’ offices received as much as $19 billion, while law offices got $13 billion, with more than 100 law firms getting loans ranging from $1 million to $10 million. The firm of President Trump’s longtime personal lawyer, Marc Kasowitz, received between $5 million and $10 million. The firm said the money enabled it to keep on its hundreds of employees at full salary and benefits.
Businesses linked to lawmakers got millions: "At least nine lawmakers and three congressional caucuses have ties to organizations that took millions of dollars in aid," Politico reports. "In total, companies linked to lawmakers and congressional caucuses have received at least $11 million in aid from the federal program that Congress created to help small businesses."
It is not illegal for lawmakers to receive the loans, and their offices generally emphasized that the money was taken to help keep workers employed.
Among the lawmakers who own or have other ties to businesses that received loans are Republicans Reps. Rick Allen (GA), Vicky Harzler (MO), Kevin Hern (OK), Mike Kelly (PA), Markwayne Mullin (OK) and Roger Williams (TX) as well as Democratic Reps. Matt Cartwright (PA), Susie Lee (NV) and Debbie Mucarsel-Powell (FL). A company tied to the husband of House Speaker Nancy Pelosi (D-CA) got a loan of between $350,000 and $1 million.
The Congressional Black Caucus Foundation and the Congressional Hispanic Caucus Institute, the nonprofit arms of the member caucuses, also received loans of between $350,000 and $1 million each.
Trump-connected loans: The Trump Organization did not apply for PPP loans, but many tenants at buildings owned or managed by Trump reportedly received funds. An Associated Press analysis found that as much as $273 million in PPP aid went to more than 100 companies that are owned or operated by major Trump donors, though the report notes that there’s no evidence the companies received favorable treatment as a result of their Trump connections. Other loan recipients were linked to Jared Kushner, Trump’s son-in-law and senior adviser. Businesses tied to Trump’s family and associates stand to get as much as $21 million in loans, according to ProPublica.
The disclosure could again raise questions about the extent to which the president’s businesses are benefitting from his government role, but plenty of politically connected applicants got PPP funds.
"A firm that raises money for Mr. Trump’s re-election campaign and the Republican National Committee received a loan of more than $1 million, according to the data set, while a company that produces Mr. Trump’s political advertisements received between $350,000 and $1 million," the Times reports. "So did a consulting firm started by President Barack Obama’s former campaign manager Jim Messina and one that Hillary Clinton’s 2008 campaign paid for communications consulting."
Cultural institutions: Some well-known cultural institutions — including some with large endowments — received millions in PPP loans, Bloomberg News reports: "The institutions -- such as Carnegie Hall and the Whitney Museum of American Art in New York and the San Francisco Symphony -- were among the largest recipients of aid to nonprofits under the program, with each of them receiving injections in the range of $5 million to $10 million."
Grover Norquist’s anti-spending group took money: A foundation affiliated with Grover Norquist’s Americans for Tax Reform, a conservative group known for its anti-tax advocacy and its efforts to rein in government spending, received a PPP loan of between $150,000 and $350,000. In a statement, the organizations said Americans for Tax Reform had never opposed PPP and that the foundation that received the loan "was badly hurt by the government shutdown," used the money to avoid layoffs and "does not engage in lobbying."
But the Daily Beast notes that Norquist had signed on to a recent letter asking Trump and McConnell to stop spending on coronavirus relief. "The inside-the-beltway crowd falsely calls these trillions of dollars a ‘stimulus’ to the economy," the letter read. "But government can only give money to some people, as Nobel-prize winning economist Milton Friedman taught all of us many years ago, by taking money from others."
Two other groups focused on cutting government spending, Taxpayers for Common Sense and Citizens Against Government Waste, also received PPP loans, as did Citizens United, the group that fought to enable more corporate spending on elections. On the Left, Media Matters for America reportedly received a loan of between $1 million and $2 million while the Center for Economic and Policy Research and The Institute on Taxation and Economic Policy each received between $350,000 and $1 million, according to Roll Call.
Op-Ed of the Day: The Cost of a Covid Vaccine
Dr. Elisabeth Rosenthal, the editor in chief of Kaiser Health News and a contributing opinion writer at The New York Times, writes that the search for a Covid-19 vaccine could yield a costly result, at least under the American health care system:
"Now we are looking for viral deliverance when drug development is one of the world’s most lucrative businesses, ownership of drug patents is disputed in endless court battles, and monopoly power often lets manufacturers set any price, no matter how extraordinary. A new cancer treatment can cost a half-million dollars and old staples like insulin have risen manifold in price to thousands of dollars annually.
"And the American government has no effective way to fight back. … If a Covid-19 vaccine yields a price of, say, $500 a course, vaccinating the entire population would bring a company over $150 billion, almost all of it profit. …
"Every other developed country has evolved schemes to set or negotiate prices, while balancing cost, efficacy and social good. The United States instead has let business calculations drive drug price tags, forcing us to accept and absorb ever higher costs. That feels particularly galling for treatments and vaccines against Covid-19, whose development and production is being subsidized and incentivized with billions in federal investment."
Read the full piece, including options for reining in vaccine costs, at the Times.
Poll of the Day: 82% Support Extending CARES Act Benefits
A monthly survey of likely voters for the Financial Times and the Peter G. Peterson Foundation found that 82% said they support extending CARES Act benefits. (The Fiscal Times is an editorially independent organization funded by the late Peter G. Peterson and his family.)
About two-thirds of those polled said they favor extending the enhanced unemployment benefits provided by the law, which are scheduled to expire this month. More than eight in 10 said they would back an extension of the moratorium on evictions in federally backed housing and more than three-quarters would favor a payroll tax cut.
- The Dollar Is Still King. But If Our Institutions Keep Failing, It Won’t Stay That Way. – Charles Lane, Washington Post
- How America Lost the War on Covid-19 – Paul Krugman, New York Times
- President Trump, Coronavirus Truther – Aaron Blake, Washington Post
- How the White House Can Build Public Trust and End the Coronavirus Crisis – Dan Goldberg, Politico
- Pandemic Aid Helps Make the Case for Basic Income – Noah Smith, Bloomberg
- Trump Brings Atlantic City-Style Bankruptcy to America’s Immigration Agency – Washington Post Editorial Board
- The Economy Will Not Recover Until the Government Insures Pandemics – Howard Mills, Roll Call
- Advancing Comprehensive Primary Care in Medicaid – Katherine Hayes, G. William Hoagland et al, Bipartisan Policy Center
- How Liquid Is the New 20-Year Treasury Bond? – Michael Fleming and Francisco Ruela, New York Fed