Elizabeth Frantz | Reuters
A majority of Main Street small business owners say they favor more financial assistance from the federal government, but the resolution of the battle in Congress last week over the federal government’s spending bill shows that it may not come .
This shouldn’t be a surprise. With fiscal hawks reluctant to provide more pandemic-related funds even before Russia’s invasion of Ukraine becomes a key spending issue on Capitol Hill, Congress will be providing another major round a long time ago. financial support for small business owners.
This is even if the need is clearly there. Just under two-thirds (62%) of small business owners support more federal government financial assistanceincluding 49% Republican small business owners, latest CNBC survey finds | Small Business SurveyMonkey for Q1 2022 as inflation continues to hit Main Street hard.
“Following the action on the spending bill, the legislative file will be stuffed with other stuff that leaves little room for small business priorities. And given Putin’s aggression and what he does next to devastate Ukraine and threaten Europe, the attention of Congress and the White House may shift increasingly to international issues and move away from national legislative blueprints or wish lists,” said Karen Kerrigan, President and CEO of the Council for Small Business and Entrepreneurship.
In addition, there are still many complex national issues to be resolved in this legislative session, from prescription drug pricing to a version of President Biden’s Build Back Better plan that may receive support from West Virginia Senator Joe Manchin. , as well as a Supreme Court Nomination in the Senate, which will “eat up legislative days,” Kerrigan said.
The specific measures for small businesses where hopes are highest are the Restaurant Revitalization Fund and the Employee Retention Credit. Hopes are not dead, but made more difficult by having to proceed autonomously in Covid legislation.
The National Federation of Independent Businesses says that while small businesses have been excluded from the spending bill, the NFIB will continue to push for the reinstatement of the employee retention credit in the Covid-19 supplemental bill which is expected to be reviewed soon. The NFIB is concerned about the omission from the policy for Main Street given the headwinds small businesses face including rising inflation, rising energy costs, supply chain disruptions. supply and labor shortages.
“Small businesses don’t expect these issues to subside anytime soon, as expectations about future business conditions continue to decline,” said Kevin Kuhlman, federal government relations manager at NFIB.
The employee retention credit, which was canceled earlier than it was supposed to be in the fourth quarter of 2021, has about $8 billion in tax credits that small business owners could still claim . And the NFIB thinks it has a better chance of receiving support than the much larger Restaurant Revitalization Fund, which is much larger (nearly $50 billion) and because it targets a single industry, it is potentially more difficult to obtain the broadest support.
There are positive elements to consider in the federal budget that has just been adopted. For starters, Congress was able to pass the bill after operating on ongoing resolutions and risk that continued through fiscal year 2023, and spending levels are higher than they were. under the Trump administration in many agencies.
“From the perspective of the common good, we are in a better place. We are increasing the level of spending while emerging from a pandemic and when we need social investments,” said Didier Trinh, director of policy. and political impact at the progressive Main Street Alliance.
And what has become a major sticking point in the debate on Capitol Hill – the recuperation of US bailout funds from states to run the budget, a battle that states ended up winning when this method of paying the bill has been dropped – includes a benefit for small businesses. Indeed, the U.S. bailout provided great flexibility for states to determine how to allocate financial resources and many used the funds to support small businesses, Trinh said.
“Extracting this funding to use as compensation for this bill was wrong, and the states had every right to be frustrated,” he said. “We want to protect the funding that was promised so states can still use it to help small businesses,” he added.
The Main Street Alliance favors the state grantmaking approach over programs like the controversial Paycheck Protection Program, which, while offering forgivable loans, has yet to granted many loans of this status. “Grants are much more effective and provide relief faster. States know how to manage grant programs at the local level,” Trinh said.
There’s no guarantee on how this plays out at the state level, but he said state programs are a good place for small businesses to turn to if they need more support. rather than relying on the federal government to pass new legislation.
It was not encouraging that in the White House’s own push for more Covid spending in the sweeping federal budget bill, the focus was on public health measures and not more business aid. Even though small business experts continue to worry about the health of the restaurant industry, the White House request did not include targeted support.
That doesn’t mean ideas like the RRF are dead, but Main Street needs to be realistic about the odds. As the Covid measures transition to a standalone bill to be debated starting this week, Trinh said the Main Street Alliance still strongly believes there should be more financial relief for restaurants as the RRF Original was only meeting a third of demand, although he noted that’s a much higher price than the ERC, which was prematurely repealed, is a relatively simple and less expensive solution.
Ultimately, any stand-alone Covid bill will have to find its way to be attached to a larger legislative agenda and “there are fewer trains leaving the station and that makes it trickier, and a little darker, but it’s time,” Kuhlman said.
The Spending Bill was “must pass” legislation, which meant it was the best chance for any further Covid relief. And in the Senate, it’s hard to gauge how a stand-alone Covid measure, including small business relief, will fare given that tax hawks continually oppose additional pandemic-related spending.
Many Republicans understand that restaurants still need help, and these measures have bipartisan support, but Trinh said the Senate will continue to have problems passing stand-alone legislation with more funds for employee retention. . Restaurant credit or revitalization funds. “Cutting the ERC a quarter earlier was a mistake,” he said. “The belief in this is not partisan, but the question is how do you get the political momentum to include it in a package.”
“There was never really traction inside the White House for further relief (via RRF or PPP) or expansion of the ERC,” Kerrigan said. “The administration is touting what it is currently implementing and doing to help small businesses recover and compete: support for education and training through the SBA and other agencies, federal procurement initiatives and other programs, rather than additional Covid relief.”
The underlying message from Main Street to Capitol Hill is that the costs of owning a small business are rising, and so is the challenge of maintaining a certain level of profitability. “Nothing gets cheaper,” Trinh said.
More small business owners tell CNBC survey | SurveyMonkey Small Business Survey that they pass cost increases on to customers or soon will if inflation remains high. The survey found that most Main Street residents believe inflation will be persistent, and last Friday Treasury Secretary Janet Yellen said that was her current view as well.
“It’s not getting any easier in terms of the economic outlook, which is why we think another infusion of support from the federal government could buy small businesses some time. Especially since Yellen says the level of inflation will remain high for the rest of the year,” Trinh said.
However, getting the attention of the White House and lawmakers amid the Russia-Ukraine conflict and the approaching midterm elections will not be easy. Just a few key measures for small businesses, if they could find bipartisan support, could go a long way in helping Main Street address many basic business and economic challenges, but the spending legislation just passed does not indicate that the federal government is inclined to think about economic issues in this local way.
“The bottom line is that Democrats and Republicans are far apart on solving issues like inflation and high gas prices, healing the labor market, and how to fix supply chains,” said Kerrigan.
There are plenty of homecoming issues that Capitol Hill lawmakers are focused on, but not ones that give the small business community much confidence that more support for Main Street is coming.
“Where there seems to be some idea of consensus is on reviving earmarkings. There are over 4,000 in this spending bill dedicated to members’ ‘pet projects’. Just in time for an election year,” Kerrigan said.
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