First District Congressman Kevin Hern said Wednesday it’s imperative that the government perfect a playbook to effectively deal with the financial response to the COVID-19 pandemic.
“We are re-inventing the wheel right now,” he said. “There is no precedent been set on how to deal with this. So this comes from how you keep businesses open, how you keep compensated so they can actually go out and feed themselves, how you keep their rents so that they can actually live without being kicked out of their homes, how you get your children back in schools safer.
“Short of that — this is going to sound really bad — but we are continue to continue throwing billions and billions of dollars at things without really knowing if they are going to work or not.”
The Tulsa Regional Chamber on Wednesday hosted Hern, whose district includes Tulsa, Broken Arrow and Bartlesville, during a virtual forum of about 165 people. During the give-and-take, he highlighted items Congress is considering in a fourth round of major legislation to aid small businesses and maintain the economy.
A $3 trillion relief pact was approved by the Democrat-controlled U.S. House of Representatives in May. That plan has been widely panned by Senate Republicans, who want that price tag reduced to about $1 trillion.
Under the Republican proposal, a second round of Paycheck Protection Program loans would be made available with a couple of notable changes. Loans would be limited to businesses with 300 employees or fewer (as opposed to 500), and forgiveness would hinge on being able to show at least a 50% decline in revenue compared to a previous year’s quarter.
Local hotelier Pete Patel told Hern the revenue-drop qualifier should be closer to 40%. The hospitality and restaurant industries have been among the hardest hit by the coronavirus impact. An estimated 100,000 national restaurants are expected to fold because of the pandemic, Hern said.
“We’ve got a lot of people in the hospitality, restaurant, travel industry, including our airlines, that are in a dire way,” the congressman said. “When you see our airlines from $2 to $3 billion a month, it doesn’t say a lot for what’s going to happen. It ultimately will be problematic.”
As a result of the public health scare, many businesses are putting money away instead of investing, Hern said.
“That’s problematic, also,” he said “That’s the impact that small business confidence has on economies.”
Nationally, about 5 million PPP loans have been processed, with more than 80 percent for $150,000 or less, Hern said.
“There has been an expedited approach put in this bill about how you can get expedited forgiveness, in other words convert that to a grant from the federal government,” he said. “You just have to keep your documents … for three years in case you are ever audited.”
No mandatory audit would be associated with loans from $150,000 to $2 million, Hern said.
The Senate proposal also sets aside $25 billion for companies employing 10 or fewer employees and makes eligible for loans Chambers of Commerce with 300 and fewer employees.
“The first of March, we had the greatest economy in the history of the country, more people working, the lowest unemployment rates regardless of what demographic you looked at or what industry you looked at,” Hern said. “The impetus behind bringing our businesses in is the Chamber of Commerce. This was heard across America and we were able to get the 501©(6s) in there.”
As for consumer relief, the $600 per week federal supplement for unemployment is slated to end Friday under the CARES Act. The House bill would extend it through Jan. 31 and expand other unemployment-related benefits. The Senate proposal would continue payments up through October but at a reduced rate of $200 per week.
Under the Senate bill, however, beginning in October payments would increase so that, when combined with the state unemployment payment, it would represent 70% of lost wages.
“I think a lot of Americans want to work,” Hern said. “We just need to keep getting jobs open, so as we match jobs with workers, we can see our economy start to recover even quicker than we’re seeing it right now.”