WASHINGTON — Democrats are considering proposing a new round of direct cash payments to U.S. households and extending a similar benefit to the smallest businesses, as they struggle to get federal loans.
Sen. Ron Wyden and Rep. Richard Neal, the top Democrats on Congress’ two tax committees, want to include the payments in the next round of stimulus spending that Congress is likely to take up in May.
Their effort is sure to face objections from key Republicans, such as Majority Leader Mitch McConnell, who say they want to put the brakes on more deficit spending. But some GOP lawmakers have complained that small local businesses are getting shut out from small business aid.
Long waits at state unemployment offices and high demand for the Paycheck Protection Program — which offers forgivable loans to small businesses that keep employees on the job — have left many people and small business owners unable to claim swift relief.
“We must look at what the most vulnerable in our country are facing by putting money into their pockets with another round of stimulus payments so they can pay for essentials,” Neal, who chairs the House Ways and Means Committee, said on Thursday.
Wyden, the top Democrat on the Senate Finance Committee, wants to extend those cash payments to what he calls “the smallest of the small businesses.”
Wyden’s plan, and a similar proposal in the House, would give small businesses up to $75,000 as they struggle with closures and drop-offs in economic activity. Those payments would be limited to companies with $1 million or less in revenue and up to 50 employees. The payment would be capped at 30% of the business’s gross receipts.
That’s aimed and addressing a key criticism of the Paycheck Protection Program — that the smallest businesses aren’t able to claim the loans because banks are giving priority to larger eligible companies that have existing relationships with those institutions and generate larger fees.
The additional $320 billion for the PPP program that Trump signed into law Friday includes $60 billion for smaller banks and credit unions to loan to smaller businesses that were largely unable to tap the initial $349 billion round of funds. Many small businesses worry that the money will be claimed by the time their application gets to the front of the line.
“There are a lot of smaller small businesses,” Rep. Tom Suozzi, said on a call with reporters Friday. “We have to send a very clear message to the banks: We need you to help these mom and pop shops.”
Rep. Lee Zeldin, a New York Republican and key Trump ally, said he’s hearing from businesses that don’t qualify for the PPP loans but probably should.
“That should be start of the brainstorming for the next bill,” he said.
Wyden said cash payments for the smallest businesses are more practical because it would bypass the complex application processes of directing the funds through banks. Instead, it could go through the Internal Revenue Service, which already has data for these companies on hand.
The IRS has, so far, been successful in delivering $1,200 payments to low and middle-income adults plus an additional $500 for their children. The IRS says it sent 88 million of the more than 150 million payments by mid-April, with tens of millions more to be send out in the coming weeks.
Cash payments are “about as simple as it gets,” Wyden said on a call with reporters Friday. “It is much more efficient.”
Democrats are bringing a long list of priorities to negotiations on a further coronavirus aid measure, including funds for state and local governments, expanded unemployment benefits, workplace safety protections for front-line workers, and more funding for food stamps.
There’s still an appetite among lawmakers of both parties to add to the nearly $3 trillion already spent by Congress to combat the coronavirus pandemic and the damage to the economy.
“We need to face the facts,” said Rep. Peter King, a New York Republican. “There is going to be more money needed.”