Thursday was a one-two punch in the gut for the economy.
Just hours after the U.S. Department of Labor announced that over five million Americans lost their jobs in the past week, the federal government’s fund to keep small businesses afloat—considered Washington’s key measure to keep people employed—ran out of money after just two weeks of operation.
That initiative, called the Paycheck Protection Program, will likely be shuttered for business for days, as congressional Democrats refuse to accept a refill of the program’s coffers unless Republicans agree to pair it with new funding for the country’s hard-hit hospitals and state governments, which are similarly struggling to stay above water.
Amid another day of a familiar Washington split-screen—lawmakers torching each other before retreating to negotiate behind closed doors—the people whose lives and livelihoods are riding on the outcome of the political theater are watching anxiously from hundreds and thousands of miles away, wondering if the country’s leaders are able to meet a crisis of staggering scale.
Asked what small businesses in Arizona need, Jess Roman’s answer was brief: “The simple answer is money.”
Roman, the interim CEO of the Arizona Small Business Association, told The Daily Beast on Thursday that his group just conducted a survey of businesses in the state that have filed for relief under the PPP, which is a government loan to keep workers on payroll that doesn’t need to be paid back. He expected most filers to be newer and less stable enterprises, but when the results came in, he was shocked at how many of the businesses seeking relief had been around for over a decade and had more than 10 employees. “That’s tough stuff,” he said.
The news out of Washington that day didn’t make it any easier. “Now you’re reading in the paper that Democrats and Republicans are once again fighting and because of that, everything’s being held up,” said Roman. “You just can't be very hopeful about Washington.”
Small business advocates hope to see the relief funds replenished immediately, with or without the items Democrats demand.
“The availability of this program is the difference between holding on and not holding on,” Brian Calley, president of the Small Business Association of Michigan, told The Daily Beast.
But hospitals and state and local governments—which Democrats are fighting to increase funding to by hundreds of billions of dollars—are also hoping for a lifeline of their own soon. Their funding has not gone off a cliff, like the PPP has, but crunchtime is close. Hospitals are worried they may go under or have to dramatically cut back on services. State and local governments—which can’t run deficits—are figuring out how to square an impossible budgetary circle with cratering tax revenue and increased expenses.
In Elkins, West Virginia, Tracy Fath of the Davis Medical Center says that their facility has been relatively untouched by the virus but that a state ban on “non-urgent” and other procedures has tanked their revenue. “We’ve seen a 75, 80 percent drop in revenue in a short period of time,” Fath told The Daily Beast. “What we need help with is cash from this second round Congress is looking at just to maintain our business.”
“I don’t think we’re anywhere close to meeting the need there is currently,” said Fath. “I think it's just going to be compounded once we get a few months past this. It’s the biggest thing I’ve ever seen.”
Indeed, weeks after passing the $2 trillion CARES Act, one of the most sweeping pieces of legislation in U.S. history, lawmakers are already in the position of having to respond again to a crisis that seems to grow in size and severity with each passing day. As those affected hope for urgent action, lawmakers have to balance swiftness with the considerations of a web of constituencies with their own needs.
Republicans, for their part, are incredulous that Democrats will not agree to a $250 billion extension of the PPP funds—which were initially approved in the CARES Act without a single no vote—that could be advanced on the Senate floor without having to bring lawmakers back to Washington for a vote.
Earlier in the week, Democrats blocked Senate Majority Leader Mitch McConnell’s attempt to green-light the funding in hopes of buying time to negotiate a broader deal. But as the PPP funding lapsed on Thursday, no deal had materialized, though talks were ongoing between congressional Democrats and Treasury Secretary Steven Mnuchin. “It is absolutely surreal to see Democratic leaders treat support for workers and small businesses as something they need to be goaded into supporting,” said McConnell (R-KY) on Thursday afternoon.
Republicans say it’s not like they’re trying to slip a poison pill past Democrats. “Republicans aren’t getting anything out of this deal,” said a spokesman for Sen. Marco Rubio (R-FL), an architect of the CARES Act’s provisions for small businesses. “This is not a time to come up with a wish list of things to squeeze out... Democrats have to decide if it’s worth holding small businesses hostage for some wish list.”
But many Democrats are incredulous themselves that the GOP won’t agree to funding for states and hospitals that they also previously approved in the CARES Act. They also argue that aspects of the small business relief program need tweaks, and that it’s simply not a “clean” extension of the program.
“There's no reason we can't do both,” said Sen. Chris Coons (D-DE) on MSNBC Thursday. “There is a simple package the Democrats have put forward that should be taken up and passed promptly.”
Some Democrats embrace the hardball as a smart political move. “Democrats are getting hammered back in their states from hospitals, these gig workers, who are not just their constituents but their base,” said a former Democratic aide. “This is something they know they have to fix. They have the leverage now that they need to do it.”
“The Republicans were going to hammer them no matter what,” continued the former aide. “The lesson some Democrats I hope are learning is, these guys are gonna scream whatever they want at the top of their lungs no matter what.”
Congress and the administration may soon reach a deal to satisfy all sides. But doing so after letting the PPP lapse for several days, to some advocates, is a hardly comforting sign of Washington’s ability to meet the crisis. Calley, with the Small Business Association of Michigan, said that if a deal doesn’t come through soon, businesses will have to start making tough decisions: whether to take out a mortgage or liquidate assets just to cover another round of payroll.
“As I look at the steps taken so far, I think Congress and the president have shown a willingness to scale and to take steps bigger than any steps ever taken before to meet his unprecedented need,” said Calley. Still, he said, “we have been very discouraged by how difficult it is to cleanly get this done.”
“Everybody needs to put aside partisan differences and just talk about how we can help people, help people stay in jobs and help businesses stay open,” Jack Lavin, president and CEO of the Chicagoland Chamber of Commerce, told The Daily Beast. “That’s what should be a top priority for policymakers.”
But an extension of the size that lawmakers are pushing for is likely to give way to another one down the road—sooner rather than later, if the economic hurt from the crisis continues.
Asked if the government were thinking big enough to meet the historic moment, Roman, of the Arizona Small Business Association, said no. “It’s tough—it’s not like a black swan financial moment. It’s a health thing. It’s crazy.”
“There’s a part of me that thinks, there’s not even a solution,” he said. “It’s a Rubik’s Cube with no simple answer.”