Treasury Secretary Steven Mnuchin on Wednesday strongly backed the move for new legislation to put more money into the economy but said the aid must be targeted at helping specific businesses reopen.
In testimony before the Senate Small Business Committee, Mnuchin said unemployment was too high and that administration officials wanted to work on further economic incentives. Possible avenues he floated included changes to the small business-focused Paycheck Protection Program and tax credits.
“We’re open-minded, but we absolutely believe small businesses — and by the way many big businesses in certain industries — are absolutely going to need more help,” he said.
Mnuchin and Small Business Administration head Jovita Carranza appeared before the panel as lawmakers take stock of economic relief programs and consider how to direct aid in followup legislation that will likely be negotiated in the coming weeks.
The focus of the hearing was the $670 billion Paycheck Protection Program, which Congress created to rapidly send loans to small businesses to avert layoffs. The program, which allows the loans to be converted into grants if businesses maintain payroll, has proven to be hugely popular despite a rocky rollout, approving more than $511 billion through 4.5 million loans.
Senators from both parties pointed to the program as a factor in the unexpected May job gains reported Friday. Mnuchin said it has kept “tens of millions of employees connected to their jobs.” He said he was “pleasantly surprised” by recent economic data because he “thought we were actually going to bottom in June and not May.”
But, he said, “I definitely think we are going to need another bipartisan legislation to put more money into the economy,” though it needs to be aimed at certain recipients. He cited the travel, leisure and restaurant industries.
“Whatever we do going forward needs to be much more targeted particularly to the industries and small businesses that are having the most difficulty in reopening as a result of Covid-19,” he said. “We look forward to working with you and the rest of the committee over the next few weeks as we think about that.”
Mnuchin also said “we’re going to need to fix unemployment” insurance.
“We knew there was issues with the enhanced unemployment where in certain cases we were paying people more not to work than work. I think we’ve seen from the recent numbers that didn’t have a big impact because people want their jobs. But we will have a significant amount of unemployment and we’re going to need to look at doing something there.”
In addition, he said officials will “seriously look at” whether “to do more direct money to stimulate the economy.”
The small business aid programs that were the focus of the Senate Small Business hearing may be extended and revamped as part of the negotiations. More than $130 billion remains available for loans under the Paycheck Protection Program, and lawmakers are also looking at ways to direct the money to underserved borrowers including minority-owned businesses.
Sen. Ben Cardin of Maryland and other Democrats said they planned to introduce a bill that would let businesses with 100 or fewer employees apply for a second Paycheck Protection Program loan.
The proposal from Cardin and Sens. Chris Coons of Delaware and Jeanne Shaheen of New Hampshire would require that businesses seeking to double dip must “have already expended an initial PPP loan, or be on pace to exhaust the funding, and must demonstrate a revenue loss of 50 percent or more due to the Covid-19 pandemic,” according to a summary.
“I know the jobs numbers were better than expected last week, but 13 percent unemployment is still not acceptable,” Shaheen said. “And we don’t want another whole round of layoffs because we have small businesses who got help and now can’t get additional help when they need it.”
One of the hurdles senators said they faced in drafting new aid efforts is that they lacked data on where relief money is going. For the first time, Mnuchin signaled the administration would not willingly disclose the identities of PPP loan recipients.
He said the names and amounts of specific PPP loans were “proprietary information” and in the cases of sole proprietors and other businesses was “confidential information.”
As lawmakers have tried to conduct oversight of the small business aid programs, they’ve faced roadblocks from the Trump administration. Senators have been asking for weeks for more specific data on where the money is going, with limited success.
Cardin, the top Democrat on the committee, said he was “extremely disappointed” that the Government Accountability Office has had the same problem in not getting information from the administration.
“How can we know which businesses still need help if we do not know which businesses have received help?” he said.
Mnuchin said the administration was working with the GAO “to make sure they’re comfortable and they do have access to information.”