Proposed Reform to Paycheck Protection Program Faces Republican Opposition
The Trump administration and the Republican-led Senate are opposing a pro-business, anti-regulatory effort by the House Democrats to amend the Paycheck Protection Program (PPP). The House Democrats have agreed with business groups that requiring 75 percent of PPP loans go toward retaining employees is undermining the usefulness of the loans.
The PPP loans were intended to keep businesses afloat and workers tied to their jobs during the crisis and will be forgiven by the government if the 75 percent requirement is met. But many businesses say that’s a problem because it doesn’t leave enough left over to cover things like rent, utilities, taxes, and paying vendors. It also requires businesses to spend the loans within eight weeks, which they say is also problematic.
In a rare case of House Speaker Nancy Pelosi’s Democrats grasping that a business regulation was #neverneeded and should be rolled back, the House’s proposed PPP overhaul eliminates the 75 percent requirement altogether. It also gives businesses 24 weeks to spend the loans, up from eight under the current regulation. Both changes would go a long way towards making PPP loans much more helpful to businesses and the broader economy.
Some Senate Democrats like California’s Diane Feinstein are will to go along too. But the Senate’s bipartisan companion version only extends the time requirement to spend the loans by 16 weeks and retains the 75 percent requirement. Lawmakers are currently trying to rush it through.
Why is the Senate version less favorable to business? It appears that the Trump administration is pressuring the Senate to not seriously reform the PPP loans. The administration is apparently wedded to the idea of being as pro-worker as possible.
Business groups have pleaded with President Trump and Treasury Secretary Mnuchin to remove the requirement. But the White House has been apparently unmoved. “We want most of this money to go to workers,” Mnuchin said at an event hosted by the Hill Thursday. “We believe that the 75 percent was exactly consistent with the way the program was designed.”
That’s a nice sentiment but it is hard to see how it helps workers if their employers go out of business.