Small business stimulus is a disaster. With no money released yet, lawmakers fail to pass additional stimulus or funding for small business. The need is incredible, the consequences severe, and yet Washington is unable to get things done. What seems like a bi-partisan win has turned into yet another bout of Republicans and Democrats publicly fighting among each other.
This continued dysfunction in Washington comes as the US Department of Labor releases is monthly report, citing unemployment claims at record highs. The Los Angeles Times reported 6.6 million people filed for unemployment benefits for the week ending April 4th. Bringing the total claims to just shy of 17 million, or an unemployment rate of approximately 15%. With unemployment setting records never before seen so quickly. Only the great depression has seen higher rates with 1 in 4 or 25% of the workers out of work.
Small Business Stimulus Programs Appear Overwhelmed & Underfunded
All of this comes as the New York Times publishes an article today titled, “Small businesses Wait for Cash as Disaster Loan Program Unravels.” by Stacy Cowley describes what has already been discussed in previous posts here and here. Essentially the government is overwhelmed and unable to meet the necessary demand of small businesses throughout the country to keep the economy from entering a complete tailspin.
A further example of small business stimulus being a disaster, is the economic injury disaster loan (EIDL) Ms. Cowley accurately stated what we already know, “In the face of the pandemic, the loan program is drowning in requests.” Originally offering loans of up to $2 million, the program is capped at $15 thousand per borrower. This proves highly ineffective and only adds fuel to the fire as the federal government continues to take a non-strategy, unprepared approach to dealing with this situation.
Federal & Local Government need to Recognize the Importance of Small Business Stimulus
If the government did indeed recognize the importance of, and empathize with, the small business crisis currently taking place they would not encourage unemployment by offering more than many could make while working. Nor would they discuss enacting a federal jobs program that would essentially compete with small businesses for employees in an economy that prior to the pandemic, was likely overheating as unemployment was at record lows.
To add insult to injury, again confirming small business stimulus is a disaster, is a confirmation of what most small business owners and entrepreneurs already suspected. The programs to include the EIDL and the Payroll Protection Program (PPP) have both proved essentially worthless in the near term. Our politicians in Washington have now stalled the much needed money to resupply both the EIDL and PPP programs as partisan fighting continues.
The lack of funds disbursement and the unnecessary and completely avoidable delay in providing additional funding to these programs essentially solidifies the expectation of an economic doom loop. The ‘doom loop’ states that the economy will not operate at or near efficiency for an extended period of time. As the Los Angeles Times reported in the article above, many economists expect our unemployment rates to only climb through the next few months with an optimistic lookout presenting unemployment at only 10% by year end. Likely this number will prove higher as governments begin advertising the discussion of extending shelter-in-place orders for an additional 30 days past April 30th.
Leaders Need to Take a Holistic Approach
The sincere problem in this entire pandemic response is the lack of a holistic approach to the problem. President Trump only recently convened a new task force with a mission statement of determining steps necessary to re-open the economy. He did this without once recognizing the small business stimulus disaster. Other think tank panels have discussed an idea of 18 months before a full resurgence of normalcy. These people simply prove the separation between the elites and the working class.
In what world does anyone think the government has the financial horsepower or the cohesiveness to see a complete stop to capitalism for 18 months? This is not an acceptable answer. This creates a solution that is clearly more painful than the problem. As citizens we need to promote a pride in employment and a focus on taking reasonable precautions to get back to work before people die of a multitude of other problems. These may include poverty, a loss of purpose, an inability to provide for those within one’s care, the loss of innovation and advancement of careers that save lives, and many other facets.
One is forced to ask the question, is this isolation or captivity?