$3 trillion and counting…
As COVID 19 deaths surpass 50,000, the states fuss over “reopening” their respective economies, and meat processing plants are closing and reopening left and right, this week total new federal spending to rescue businesses and individuals impacted by the is now just shy of $3 trillion.
And before President Trump’s signature is even dry on the latest nearly $500-billion economic “stimulus” package, a fifth legislative package is being negotiated. House Speaker Nancy Pelosi (D, CA) alluded to such an animal earlier this month, but then went mum; Trump is calling for a “big, bold” legislative package, one that would provide economic assistance to tax revenue deficient state and local governments – a highly contentious political move – as well as infrastructure investment, payroll tax cuts and a host of other tax breaks for businesses particularly hard hit by forced closures, including restaurants, sports and entertainment venues.
At this point, some would compare this historic spending spree to the existing federal budget deficit – roughly $1.1 trillion; now expected to hit about $4 trillion – or the national debt, but that’s a pointless exercise given the U.S. economy – save for agriculture and food production – is effectively shuttered and the U.S. Treasury isn’t collecting a lot of money.
This fiscal phenomenon caused Senate Majority Leader Mitch McConnell (R, KY) this week to warn Pelosi and Trump it’s time to go slow on their vision of future spending lest the country founder in a sea of red ink. He opposes money to state and local governments to replenish tax coffers, actually suggesting states could declare bankruptcy instead of looking to the federal government.
The $483.4-billion package signed by Trump this week does three things: It adds another $321 billion – about $10 billion covers “administrative costs” – to the wildly popular Small Business Administration’s (SBA) Paycheck Protection Program (PPP), effectively a grant program to help small businesses rehire or retain workers; roughly $75 billion goes to hospitals and health care facilities, including rural operations, and $25 billion is desi9gnated for nationwide COVID 19 testing of various sorts and iterations.
No one expects the PPP funding to last very long judging by how quickly the first $350 billion in program funding disappeared. However, the new dollars will help pay those whose applications were approved, but the cupboard was bare.
The most recent law clears up any confusion about agriculture’s qualification for PPP funds, and dedicates $60 billion of the total dollars to small lenders, including state and federal credit unions. The latest package also makes clear farmers, ranchers and others qualify for SBA’s Economic Injury Disaster Loan Program which provides $10,000 per applicant grants and allows borrowing up to $2 million with almost no interest payments. Ag was excluded from this program in the last relief package. An additional $60 billion is pegged to the emergency disaster loan program, and if a farm has fewer than 500 employees, it qualifies. You read that correctly – “fewer than 500 employees.”
USDA continues to hammer together its $19-billion farmer/rancher relief program — $16 billion in direct payments, $3 billion in commodity purchases – and this week major agriculture groups complained Senate reports of the package’s department-set payment limit of $125,000 per commodity per farmer — $250,000 for all commodities per individual – needs to disappear. Some House and Senate lawmakers agree, and Senators from both sides of the aisle want to talk with Agriculture Secretary Sonny Perdue about the issue because, as Sen. Debbie Stabenow (D, MI), ranking member of the Agriculture Committee said this week, “Given the circumstances, certainly the USDA has flexibility” when it comes to payment limits. The legislation also says the relief payment rate for losses incurred after April 15 drops significantly. Major ag groups want to see that reduction disappear as well.
Lest we forget 2020 is an election year, all we need hear is the call from politicians on both sides of the aisle contending such multi-billion-dollar “lifelines” are nice, there’s a need for a “comprehensive, fully funded relief program.”