Extending the popular Payroll Protection Program is one of the few areas of agreement between the White House and Democrats in the latest proposed coronavirus stimulus — a spending bill criticized by many in the Republican base as a wasteful bailout for cities and states.
Administration and banking industry sources say Senate Republicans’ proposal to extend the PPP, which is set to expire this week, for companies with fewer than 300 employees and a reduction of 50% or more in revenue is accepted in principle in the talks.
But the provision, which also offers more generous terms for loan forgiveness, could get sidetracked by Democrats’ insistence on an overall $3.4 trillion package that would include massive aid for states and cities. The White House opposes the state and local aid as a “bailout.”
“Speaker [Nancy] Pelosi is trying to drive a very hard bargain,” said Tim Phillips, president of Americans for Prosperity, who is in close contact with Senate Republicans. “That would include genuinely $1 trillion of bailouts for big-spending states and cities. She’s not come off of that.”
Senate Majority Leader Mitch McConnell blasted Democrats Tuesday for prolonging COVID-19 relief negotiations, saying more businesses are closing, people are worried about making rent, and more people are filing for unemployment because of the negotiations’ delay. He said Democrats are demanding a “slush fund” for states and cities.
“It never seems to change,” the Kentucky Republican said, noting it has been more than a week since the GOP introduced its proposal for the fifth round of coronavirus relief. “The Democrats are blocking it all.”
Senate Small Business Committee Chairman Marco Rubio warned of “long-term structural damage” Tuesday without another round of the PPP aid.
“What we’re facing now is a national emergency,” the Florida Republican told radio host Hugh Hewitt. “And in times of a national emergency like this, the government has to play a greater role than it would in normal times. These are not normal times. And if we don’t act now on things like PPP and more, there is going to be long-term structural damage to the economy that’s going to make it almost impossible to ever get the debt under control and not to mention … grow our economy again.”
Sen. Susan Collins, the Maine Republican who helped put together the original PPP plan, said Tuesday she’s still “hopeful that common sense will prevail and that we will achieve an overall agreement that will include an extension of the PPP and a second round for the hardest-hit small businesses and their employees.”
The CARES Act, approved in March, provided $349 billion in PPP aid for small businesses, to be administered by the Small Business Administration for firms with fewer than 500 workers. Congress later provided an extra $310 billion. More than 5 million businesses have received the aid since April.
The program was extended through Aug. 8, and about $130 billion is still available.
Senate Republicans’ bill would add an additional $190 billion to the PPP and make the money available to certain second-time borrowers.
Mrs. Pelosi and Senate Minority Leader Charles E. Schumer of New York met again Tuesday with White House chief of staff Mark Meadows and Treasury Secretary Steven T. Mnuchin with few signs of an agreement on a new relief package.
Mr. Meadows said he still hoped they could make progress and avoid the need for President Trump to issue executive orders on measures such as extending federal unemployment benefits and halting evictions in federally backed housing. Both men said the president is “absolutely” willing to walk away from the talks and take action by himself.
Mr. Meadows said they are still “a long ways away from striking any kind of deal.”
The president said Tuesday evening that progress was being made in the talks, but Democrats’ plan to bail out cities and states was a sticking point.
“They’re looking for a trillion dollars to help out with cities run by Democrats, in some cases radical left Democrats,” Mr. Trump said.
He also said he wants to resolve the eviction moratorium, which expired last week.
“This is not a time to be in a shelter with the COVID,” Mr. Trump said.
Mr. Trump has proposed issuing an executive order to cut payroll taxes, a move opposed by most Democrats and some Republicans.
Mr. Schumer said Tuesday he is hopeful about the negotiations for a fifth round of relief, suggesting Republicans are open to Democrats’ demands.
“The negotiations are moving forward bit by bit,” Mr. Schumer said.
But the White House also said Democrats were being “fundamentally unserious” in the negotiations, citing Democratic leaders’ raising their overall demand from $3 trillion to $3.4 trillion since the talks began a week ago.
“The president has had a very narrow focus, it’s extending unemployment insurance and it’s making sure Americans don’t get evicted,” said White House press secretary Kayleigh McEnany, adding that Democrats are “moving in the opposite way.”
Mr. Phillips, who is pushing lawmakers to include more regulatory relief in any package, said the conservative base is strongly opposed to bailing out cities and states.
“I have not seen grassroots engagement at this much of a fever pitch on an issue in years,” he said in an interview. “They are fired up, they’re aware of this issue, and hopefully Senate Republicans would hold their ground and not do some giant bailout. They’re less than 100 days away from an election when a lot of base voters are looking at an issue they’re fired up about. They [senators] could see dramatic frustration among their base if they just do another big-spending, multi-trillion-dollar bill.”
Nearly three-quarters of small businesses in the country have received PPP loans, with the average loan amount about $104,000. Slightly more than one-third of the total disbursed has been loans of more than $1 million.
The administration says the program has saved roughly 51 million jobs.
The National Waste & Recycling Association joined other organizations on letters to congressional leaders urging support for efforts to strengthen PPP as Congress negotiates the next relief package.
The National Waste Recycling Association, which represents companies in all 50 states, urged Mrs. Pelosi and Mr. McConnell in a letter Tuesday to expand the PPP program by lowering the requirement on the 50% revenue reduction and allowing the funds to be tax deductible.
“We strongly urge Congress to make the necessary improvements to the PPP as part of the next stimulus package,” said NWRA President and CEO Darrell Smith. “It is imperative that the next stimulus package provides the maximum amount of flexibility to employers that it can. Congress should correct the tax treatment of PPP loans and expand eligibility to participate in a second PPP loan.”