“The Republicans reject the reckless threat from the Democrats to continue to block funding for job creation unless we renegotiate unrelated programs that are not in similar danger,” said the joint statement. “This will not be the last word of Congress on COVID-19, but this crucial program needs funding now. American workers cannot be used as political hostages. “
Their statement seems to worsen an impasse on the next steps of Congress to deal with the country’s economic misery.
The paycheck protection program for small businesses, originally funded at $ 350 billion, was part of the $ 2 trillion bailout bill approved by Congress late last month to deal with the economic havoc. coronavirus.
McConnell and McCarthy said in their statement that the program “had consumed about half of its original funding in the first week”. They did not provide more information on this claim, and it does not seem to follow the way the program was designed.
The program encourages banks to make loans to small businesses. These loans are forgivable, which means that they should not be repaid if companies follow certain measures, such as job retention. But government funding is not intended to be used for initial loans, and therefore the $ 350 billion in taxpayers’ money should still be largely intact unless the SBA and the Department of the Treasury have advanced the money to banks, which they did not announce they would do.
The White House said the program had proven to be so popular in its first week that more money was needed. It seems that only a fraction of the country’s 30 million small businesses are participating in the program, and many businesses have complained that the banks are not cooperating enough or providing assistance faster.
Democrats do not want to approve the $ 250 billion increase without also adding hundreds of billions to hospitals, cities, states and food stamp recipients. They also want to make sure that half of the $ 250 billion on offer goes through community banks, emergency grants and other programs for underserved communities.
Democrats blocked McConnell’s attempt on Thursday to advance the $ 250 billion increase in forgivable small business loan financing, while McConnell blocked Democrats’ efforts to block competing relief law with cash for the small business program and other priorities.
The paycheck protection program has been overwhelmed with overwhelming demand, although lenders have complained about the regulatory confusion and small businesses have complained about the difficulties in accessing the program and actually getting the money. Speaking on Fox Business, White House economic adviser Larry Kudlow said that more than 660,000 loans were approved for a total of $ 168 billion, which means that almost half the Program money has already been committed.
He said the money was to run out on April 17.
“These are huge numbers,” said Kudlow. “This is why we would like Congress to help us with an additional $ 250 billion. “
President Trump said during his coronavirus task force daily briefing on Friday that he was open to requests from Democrats, which include an additional $ 100 billion commitment to hospitals and health systems; $ 150 billion to help cities and states; and a 15% increase in the benefits of food stamps. But Trump has suggested that these should come in a later recovery package, perhaps with a payroll tax cut and an infrastructure bill, two priorities he has been championing for some time.
“I am all for helping states and hospitals,” said Trump, but added that the paycheck protection program was “overwhelmed.”
Republicans argue that the small business loan program is the only piece of the $ 2 trillion care law that immediately needs an injection of funds because other parts of the bill – such as the insurance and aid to hospitals, cities and states – roll out more slowly.
McConnell and McCarthy’s statement follows comments by Democratic leaders on Friday about the need for negotiations in response to the government’s $ 250 billion request for the small business loan program.
Senate Minority Leader Charles E. Schumer (D-N.Y.) Said he had spoken with Treasury Secretary Steven Mnuchin about interim relief legislation for the coronavirus. “There is no reason why we should not be able to reach a bipartisan agreement early next week,” said Schumer.
Speaker of the House Nancy Pelosi (D-California) also had a conversation with Mnuchin, according to her spokesperson, Drew Hammill. Pelosi reiterated Democrats’ assertion that the small business initiative “must not reinforce the disparity in access to capital faced by many small businesses in underserved areas” and that any agreement should also include money for hospitals and state and local governments.
Despite McConnell and McCarthy’s assertion that no negotiations were necessary, some other Republicans were open to talks that could improve the program.
Senator Rob Portman (R-Ohio) said in a Washington Post interview Friday that while supporting McConnell’s efforts to increase funding for the program, he was also seeking to refine the way it is run – citing concerns at subject of some companies, such as in the hotel and tourism sectors, which have already laid off thousands of employees.
“I don’t think the legislation works as well for this type of business,” said Portman. “We agree that there should be an increase in the ceiling. But we also think we should consider more flexibility to manage those types of businesses that were really forced to let go of their employees because they were shut down by government action. “
Congressional negotiations are complicated by the fact that both the House and the Senate are out of session due to health concerns, and although they are expected to meet again in late April, it is not certain that they will will actually do. In the absence of physically present legislators, the only way to move the legislation forward is to consent unanimously or to vote in one of the regularly scheduled and brief “pro forma” sessions that take place twice a week in each bedroom. This requires bipartisan consensus and gives any individual legislator the opportunity to prevent legislation from moving by raising an objection.
Mike DeBonis contributed to this report.