The Corner

Politics & Policy

The Small-Business Loan Extension: Another Excuse to Increase Spending?

Empty restaurant tables sit on a plaza on Pennsylvania Avenue in during the coronavirus outbreak in downtown Washington, March 31, 2020. (Jonathan Ernst/Reuters)

While our country is in the middle of a pandemic, with a quarantine, deaths, and an economic nightmare, politicians are using the crisis to promote big-government schemes.

Case in point: Democrats have opposed an expansion of spending for the Paycheck Protection Program that was part of the CARES Act because it didn’t include their demands for more spending on issues unrelated to small-business loans.

It is worth reviewing their demands to understand how committed they are to using any opportunity they have to spend more money and expand the footprint of the government. They wanted to increase the funds available for lending to small businesses, but demanded that $125 billion of the $250 billion PPP money go to “community-based financial institutions that serve farmers, family, women, minority and veteran-owned small businesses and nonprofits in rural, tribal, suburban and urban communities across our country.” This requirement will make a program that is already having a hard time processing applications, and fulfilling requests by small business owners, even more unworkable.

Democrats also demanded an additional $100 billion “to provide grants to hospitals, public entities, not for profit entities, and Medicare and Medicaid enrolled suppliers and institutional providers to cover unreimbursed health care related expenses or lost revenues attributable to the public health emergency resulting from the coronavirus.” That’s on top of the $150 billion for health-care spending in the last bill. And then they wanted an additional $150 billion for tribal communities and state and local governments. That’s on top of the previous $150 billion in direct aid to states in the last bill. Finally, they wanted to include a 15 percent increase in SNAP benefits.

Keep those demands in mind, because they aren’t going away.

We have no idea how much money will really be needed. And the CARES Act was only passed two weeks ago. Can we wait a little to assess the situation? I guess not.

This criticism, by the way, also goes to the Republicans rushing this PPP extension through. By all accounts, the program suffers from major design flaws. They should fix that before they throw any more money (which I am sure will be needed, considering the large number of small businesses affected by this crisis) at the problem.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.
Exit mobile version