Treasury Secretary Steven Mnuchin told a congressional committee that if lawmakers can’t agree on a coronavirus relief package, they should aim for a stand-alone bill to expand the Paycheck Protection Program.
Appearing before the House Oversight and Reform Select Subcommittee on the Coronavirus Crisis on September 1, Mnuchin said further funding the small business loan program is something that both sides can agree on. “It’s the easiest to pass on a stand-alone basis,” he said.
The small business loan program expired on August 8, but it still has about $130 billion left unused. Mnuchin said the money should be repurposed for another round and suggested adding another $120 billion into the program. The money should be redirected to the hardest-hit businesses and industries, he said.
A proposal by Sens. Marco Rubio, R-Fla., and Susan M. Collins, R-Maine, would allow smaller businesses to apply for a second PPP loan if they meet criteria, including a 50 percent drop in year-over-year quarterly receipts. That could be changed to 35 percent, as suggested by a “skinny” package proposed by Republicans in August.
Despite the program’s popularity, it has been criticized for the lack of oversight provided by the Small Business Administration and Treasury. A congressional staff memo shared during the hearing said millions of dollars from the $349 billion program have been diverted to fraud and abuse.
Mnuchin said loans larger than $2 million will automatically go through an audit, but the report shows that many loans under the threshold were fraudulently applied for. The report also found that many companies applied for and received multiple loans, and that loans went to companies excluded from doing business with the government.
Lawmakers were expected to approve a new COVID-19 relief package by the end of July, before unemployment benefits ran out, but have since reached an impasse. "I am willing to sit down at the negotiating table with [House Speaker Nancy Pelosi, D-Calif.] with no conditions at any time,” Mnuchin told the committee. He said the Trump administration similarly believes that more help is needed to drive the economic recovery.
Payroll Tax Legislation Possible
Mnuchin defended the president’s much-maligned executive memorandum instructing Treasury to temporarily suspend collection of payroll taxes through the end of the year, and he rejected accusations that it would cripple Social Security. He said the order was meant to give people money in the short term and countered statements by Democrats that it will eventually have to be paid back by workers, telling lawmakers that Trump would ask Congress to permanently defer those taxes.
Mnuchin said that paying for any forgiven taxes would come from the general fund, and that Treasury wouldn’t use the social safety net to pay for the deferred taxes.