WASHINGTON — Deadlocked over the next big coronavirus relief bill, Congress is shifting its attention to a more modest overhaul of small business aid in hopes of helping employers reopen shops and survive the pandemic.
Bipartisan legislation that would give small employers more time to take advantage of federal subsidies for payroll and other costs is expected to pass the House this week, as lawmakers return to Washington for an abbreviated two-day session.
Yet absent from the agenda is formal talks between congressional leaders on the next “phase” of the federal coronavirus response. Democrats have already pushed a $3 trillion-plus measure through the House, but negotiations with the GOP-controlled Senate and White House have yet to begin.
“We can’t keep propping up the economy forever,” Senate Majority Leader Mitch McConnell said Tuesday in Lexington. It was one of his first public appearances in his home state of Kentucky since mid-March due to the pandemic.
“The ultimate solution is to begin to get back to normal,” he said. “There are three things that are essential to have full normalcy — testing, treatment and vaccine.”
Senate Republicans are divided on the next steps and wary of another sprawling negotiation where Democrats and the White House call the shots. They are also split on a central element — how much aid to provide state and local governments and other coronavirus response after earlier relief bills totaled almost $3 trillion.
Even as they hit “pause” on a larger bill, Republicans are enthusiastic about improving The Paycheck Protection Program, which was established in March under the $2 trillion CARES Act and was replenished last month. All told, Congress has provided about $660 billion for the program,
Sen. Marco Rubio, R-Fla., a key architect of the aid, said in an interview that the program has shifted from one that was intended to keep paychecks flowing during the shutdown to a bridge as businesses reopen. The money can help fill the gap to pay workers as businesses, in many cases, operate at less than full capacity.
“It’s taken on a different level of importance now,” Rubio said. “The program has evolved from simply keeping people from getting unemployed to actually helping rehire people as these businesses open up but the cash flow lags.”
“It’s really becoming more assistance and start up,” he said.
The House bill would provide a 24-week window to spend PPP funds and would eliminate a requirement that 75% of the forgivable loans be used for payroll costs. The goal is to give business more flexibility to pay rent and other overhead costs such as installing protective equipment.
Under the original program, businesses are required to spend their loan money within the eight-week window to have their loans forgiven. That deadline is fast approaching. Without forgiveness, they would face a debt burden that, for many, would be hard to bear in a struggling economy.
But the eight-week window has created a dilemma, particularly for restaurants. Under the law, they were required to rehire all their laid-off workers despite being closed or limited to takeout and delivery. Many restaurant owners feared that they would use up their loan money before being allowed to reopen, only to be forced into laying off employees again once sales didn’t bounce back.
Many companies that have reopened are indeed seeing sharply reduced revenue. Social distancing requirements are limiting the number of customers and diners that restaurants and other businesses can serve, and many consumers are uneasy about going into stores, reducing retailers’ revenue.
Rubio said it would be “problematic” to wait and change the small business program until the next coronavirus relief bill is finished, given that “many, many businesses” will be past the 8-week deadline by then.
The House’s return to Washington for voting Wednesday comes after Senate Republicans — who are on recess after spending the past three weeks in Washington — have been knocking the decision by top Democrats to largely stay out of session during the pandemic.
It appears the House could be out of session for much of June as well. Majority Leader Steny Hoyer, D-Md., said there isn’t much legislation ready for floor votes, and committees are just beginning to write must-pass legislation like agency budget bills, the annual defense policy measure and a major reauthorization of water projects.
Moreover, the House which has more than four times as many members as the 100-person Senate, is operating under the Capitol physician’s guidance, as Washington, D.C., remains under stay-home orders.
Hoyer said political messaging bills, usually a feature of election years, are likely to take a backseat for now, as voting in the House has become an arduous and time-consuming process because of social distancing rules.
In the meantime, Democrats are focused on touting the more than $3 trillion measure that they passed earlier this month, a more than 1,800-page measure crafted in response to Speaker Nancy Pelosi’s admonition that they “go big” in the response.
Republicans and the White House have dismissed the bill as a liberal wish-list, but they have yet to coalesce around an alternative despite acknowledging the need for more legislative action.
One idea gaining steam among Republicans — pushed by Rep. Kevin Brady of Texas and Sen. Rob Portman of Ohio — would deliver a bonus to unemployed people who return to their jobs. It’s being talked about as a replacement for the $600 per week supplemental unemployment benefit that expires July 31.
“It’s something we’re looking at very carefully,” White House economic adviser Larry Kudlow said Tuesday. “The trouble with the $600 (jobless benefit) plus-up … frankly it’s a major disincentive to go back to work and we don’t want that, we want people to go back to work.”
Portman has proposed a $450 return-to-work bonus, while Brady has floated two one-time payments of $600.
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Associated Press writers Joyce Rosenberg in New York and Bruce Schreiner in Lexington, Ky., contributed.
