Lawmakers attempt to improve on CARES Act upon return to Capitol Hill
WASHINGTON (SBG) — As Congress gets back to work on a new recovery package, there are calls for more transparency and efficiency this time around.
An attempt by Senate Majority Leader Chuck Schumer and Sen. Ben Cardin, D-Md., to implement transparency and oversight measures on loans and grants issued to businesses failed to pass by unanimous consent Tuesday afternoon.
“The more data we have, the sooner we have it, the better we can make the program," Schumer said after Sen. Marco Rubio, R-Fla., objected the measure.
The law would have required frequent detailed public reporting from the Small Business Association, including which businesses get the money, its industry, and how much money it received.
“To add an additional requirement without thinking it through would have unintended consequences of potentially slowing the program down," Rubio said.
This effort by Senate Democrats comes after much of the first round of funding for the Paycheck Protection Program (PPP) went to large companies, slighting other smaller businesses.
“The mechanics of the operations of this program have fallen far short of the what the intent was," Milken Institute Chief Economist William Lee said. "But the overall intent was to just preserve the internal infrastructure of the U.S. economy so that when the switch is turned back on again, we actually have a functioning economy.”
Some, though, insist the PPP was a success and saved millions of jobs.
Another unintended issue brought on by an element of the CARES Act is that some employers are struggling to hire new workers who, because of the boosted unemployment benefits in the act, are making more money now than they did at their job. Those extra benefits will last until July 31.
“If you tell them that you can make more money not working, you made the decision really easy for them," Sen. Tim Scott, R-S.C., said. “If you’re making $24 an hour, we should pay you $24 an hour because of the coronavirus but if you’re only making $20 an hour, we should have a system nimble enough to pay you $20 an hour.”
Scott said he hopes to "recraft or recalibrate" unemployment benefits in the next package, which some have called "CARES 2."
“When you have such high unemployment benefits, you incentivize firms to say, ‘Hey, why should I even bother hanging onto these people? I’ll just let them go because they’ll be taken care of,'" Lee said.
According to Deepak Hegde, an associate professor of management at New York University's Stern School of Business, there is a long term issue at play: weakening links between employers and employees could put the American economy in a weak position when the global economy restarts.
"Those other economies will be able to get started, restarted very soon and get launched where as we might fall behind as our companies struggle to replace and retrain all the employees that they have fired off in the short run," Hegde said.
Hegde said the longer a business is closed during the pandemic, the harder and more expensive it can be to retain employees.
"The training costs and the other set up costs, they start paling in comparison to the cost of keeping employees on," Hegde said. “As the economy starts looking, the prospects start looking bleaker, it may be better to let these, from the small businesses’ perspective, to let these employees go.”
