Small business relief that was included in the $2.2 trillion legislation passed by Congress and signed into law by President Donald Trump to shore up payrolls of millions of American workers during the Chinese coronavirus pandemic has been so popular that it is in danger of running out.
As of Tuesday, the $350 billion program had already exhausted $257 billion as President Trump’s top economic advisor told Fox Business, “At the present run-rate, we’re going to be out of money.”
Thirty million small businesses employ up to 60 million Americans, the backbone of the U.S. economy, and for House Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.), the shortfalls are just fine. Those are hostages.
The trouble is everyone knows they’ll kill the hostages, figuratively speaking, of course.
That is, they’ll let those funds run out, even if it means tens of millions more Americans will lose their jobs for good while they wait to exact another toll from taxpayers on behalf of their own special interests, including state and local governments they want to bail out again.
It’s a free for all.
Perhaps Pelosi and Schumer have figured that with the pandemic destroying small businesses and anywhere from 17 to 20 million who have already lost their jobs, that soon there won’t be any more taxpayers to pay city and state taxes should the closures go on much longer. As an aside, hopefully they’ll learn a lesson when they consider their job-killing Green New Deal and universal income schemes in the future, but I tend to doubt it.
Thing is, the closures destroying the private sector are being ordered by state and local governments. It’s a taking under the Constitution, with livelihoods being taken away, owing of just compensation. They broke it, they bought it.
And governments will never run out of money, even state and locals. Not really. Governments can borrow on the bond markets at some of the lowest interest rates ever and they’ll continue to do so no matter what. As a last resort, the Federal Reserve will intervene if it gets really bad. We all know it. Government employees by and large will not lose their jobs in this pandemic.
But many of those small businesses will go away forever.
As it is, with almost 20 million Americans who have already lost their jobs, the damage being wrought will likely take years or a decade to recover from. That is why the longer the closures go on, the more assistance these entities will need.
And, apparently, the more demands House and Senate Democrats will make to ensure that they’re not giving up any hostages for free.
It’s a very dangerous game. As cash reserves are depleted these businesses will fail forever and millions more will be thrown out of work. Without revenues, every aspect of the economy will seize up and become a vast financial crisis as households become unable to pay their debts. The unemployment benefits passed by Congress won’t cover them. Then, banks. People will break quarantine before then out of desperation, potentially endangering lives.
This leaves President Trump with just a few options. Keep going to Congress periodically to get this money for small businesses and keep paying the Democrats’ toll. Have Congress remove the limit on emergency small business lending. Or perhaps have Treasury Secretary Steven Mnuchin go to the Federal Reserve to expand the program in accordance with the legislation Congress already passed or to build out a new program suited to the task.
As it is, with economic recessions and then recoveries lasting on average 27 months since 1948 — 11 months to lose all the jobs, and 16 months to get them all back — these small businesses will probably need support beyond the extent of the current pandemic. And if the closures are going to go on much longer, the limits on the current emergency program will have to be lifted. Whatever option the president goes with, he must not allow Pelosi and Schumer to kill the hostage.
Robert Romano is the Vice President of Public Policy at Americans for Limited Government.