Stock Groups

The congressional spending bill battle had a message for Main Street


Elizabeth Frantz | Reuters

Main Street’s small-business owners are majority in favor of more federal financial aid. However, the outcome of last week’s battle at Congress over the spending bill to the federal government has shown that this may not be the case.

This should not be surprising. Fiscal hawks were unwilling to allocate more funding for the pandemic, even though Russia’s invasion in Ukraine was already underway a key spending issue on Capitol HillThe odds are long that Congress will provide additional financial assistance for small-business owners.

Even though there is an obvious need, this seems odd. According to CNBC|SurveyMonkey Small Business Survey for Q1 2022, as inflation continues to hit Main Street hard.

After the passage of the spending bill, there will be many other matters on the legislative docket that are not in line with small-business priorities. And given Putin’s aggression and what he does next to savage Ukraine and threaten Europe, the attention of Congress and the White House may move increasingly to international matters and away from domestic legislative plans or wish lists,” said Karen Kerrigan, president and CEO of the Small Business & Entrepreneurship Council.

Kerrigan stated that there are many domestic problems to be addressed in the current legislative session. These include prescription drug pricing and a modified version of President Biden’s Build Back Better plan. West Virginia Senator Joe Manchin can support the Plan. Kerrigan also mentioned that a Supreme Court nomination will take up legislative time.

Restaurant Revitalization Fund, Employee Retention Credit are two of the most promising measures available for small businesses. Although hope is not lost, it’s more challenging to carry out Covid legislation on an individual basis.

National Federation of Independent Business states that while small business were excluded from the spending bill’s final version, NFIB will push to restore it. Employee Retention CreditThe Covid-19 Supplemental Bill is due to be reviewed soon. NFIB is very concerned at the absence of policy for Main Street due to the many headwinds that small businesses face including increasing inflation, rising energy costs and worker shortages.

Kevin Kuhlman from NFIB, head of federal government relations, stated that small businesses don’t expect problems to go away anytime soon, as they have low expectations about future conditions.

Small business owners may still be eligible for tax credits of up to $8 billion through the Employee Credit. However, it was cancelled earlier than expected. NFIB believes it will have a greater chance to receive support than the larger Restaurant Revitalization Fund (aproximately $50 Billion), and that it can be more broadly supported because it targets one industry. 

The federal budget that was just passed has some good points. First, Congress passed the bill after continuing resolutions were exhausted and there was risk for fiscal 2023. Second, spending levels across most agencies are now higher than under Trump’s administration.

We are better off if we look at the bigger picture. Didier Trinh is the director of policy at Main Street Alliance. He said that while spending has increased, there’s still a pandemic. And we have to invest in social services.

And what became a major sticking point in the debate on Capitol Hill — the clawing back of American Rescue Plan funds from states to make the budget work, a battle the states ended up winning when that method of paying for the bill was scrapped — does include an upside for small businesses. Trinh stated that this is because the American Rescue Plan allowed states great flexibility when it came to determining how to allocate resources. Many of these funds were used to help small business.

He said, “Extracting this funding back for use as an offset to the bill was a mistake and states had every right not to be frustrated.” He added that “We want to preserve the funding that we promised in order for states to still be able to use it to aid small businesses.”

Main Street Alliance prefers state grantmaking to programs like controversial Paycheck Protection Program. offered loans that were forgivablea few loans in this status. Grants provide faster relief and are more effective. Trinh explained that grant administration at the local level is a skill state have.

It is uncertain how the situation will unfold at the state level. However, he indicated that state programs could be an option for small business owners who need additional support and not rely on federal legislation.

The White House was pushing for increased Covid spending as part of the federal budget bill. However, it was disappointing that the White House was focusing on public health and not business relief. Although small-business experts remain concerned about the health of the restaurant sector, the White House requested no targeted support.

CNBC has more information about the Small Business Playbook

Main Street must be realistic about what the odds are of ideas such as the RRF dying. Trinh stated that the Main Street Alliance believes more financial relief should be provided for restaurants as the Covid measure moves to a separate bill, to be discussed starting next week. However, he said it has a higher price tag to the ERC which, although less expensive, was a simpler and cheaper fix.

Kuhlman explained that any Covid-related bill has to be included in a larger legislative agenda. “There are fewer trains departing the station, which does make it more difficult, and a bit dimmer. But there is still time.”

This spending bill had to pass, meaning it offered the most chance for additional Covid relief. It is hard to predict how the Senate will react to a standalone Covid bill that includes small-business relief, given the constant objections of fiscal hawks to spending more on the pandemic.

Many Republicans understand the need for help in restaurants. These measures are supported by bipartisan support. However, Trinh stated that the Senate would continue to have problems passing standalone legislation with additional funds for the Employee Retention Credit and Restaurant Revitalization Fund. It was wrong to cut off the ERC one-quarter early, he stated. He said, “The belief that this is true isn’t partisan. But the question is: How can we generate political momentum to include it in a package?”

Kerrigan stated that there was not much support from the White House for any new relief, via RRF or PPP or ERC extension. The Administration touts what they’re doing now to assist small businesses in recovering and competing: Education and Training Support through SBA, other agencies, Federal Procurement Initiatives, and other programs.

Main Street’s message to Capitol Hill was that costs for small businesses are increasing and the challenges of being profitable. Trinh stated that “nothing is getting more expensive.”

SurveyMonkey they will pass on price increases to their customers, or may do so soon if inflation continues to rise.|SurveyMonkey Small Business Survey they are passing on cost increases to customers or will soon do so if inflation remains high. According to the survey, Main Street believes inflation will persist, which was confirmed last Friday. Treasury Secretary Janet Yellen said that is her current view, too.

“It’s not getting better in terms the economy outlook. That is why we believe another infusion from the federal government might buy more time for small businesses. Trinh stated that Yellen has predicted that inflation will continue to rise throughout the year, which is especially important considering Yellen’s comments. 

It will be difficult to get the White House’s attention and that of lawmakers in this context, as well as the Russia-Ukraine crisis and the run-up for the midterm elections. If they can find bipartisan support for a handful of key measures that small businesses could use to help Main Street with many core business issues and economic problems, the recently passed spending legislation did not indicate that the federal government was willing to look at the economic issue in this way.

Kerrigan explained that Republicans and Democrats remain far apart in addressing high-inflation issues and high gas prices. He also spoke out about how the Republicans can heal the labor markets and fix supply chain problems.

While there are many issues back at home that legislators on Capitol Hill focus on, they are not the ones that provide small businesses with confidence about the future support of Main Street.

The revival of earmarks is one area where there seems to be some agreement. The spending bill includes more than 4,000 for member ‘pet projects. Kerrigan stated that the bill was just in time to be eligible for election.

Click to find out more information and sign up at CNBC’s Small Business Playbook. .