
Senate passes bill to provide benefits to individuals and small businesses - motte
https://www.npr.org/2020/03/18/817737690/senate-passes-coronavirus-emergency-aid-sending-plan-to-president
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ta1234567890
Loans, even cheap ones, are a very shity way of "helping" small businesses and
individuals.

For example, a local restaurant where I live, will have to shut down for good
in the next few days as they won't be able to afford their lease. If they get
a loan for the lease, they'll be on the hook for that money with no guarantee
of being able to pay it back and with way too much uncertainty in terms of
when they'll be able to reopen the business.

It would be really bad for them to shut down, but it could be even worse if
they take out a loan and then are not able to pay it back. Very bad situation
to be in.

Same applies to individuals who will soon not be able to pay rent or other
obligations. Loans are not a solution.

~~~
dcolkitt
> Loans, even cheap ones, are a very shity way of "helping" small businesses

Really disagree on this point. The primary value of a business is their
assets, brands and expertise. All of those things will be just as valuable
after the pandemic as they were before. Assets don't just disappear because
they're not used.

This is just as true for small businesses as it is for big business. Any
business that was profitable on Dec 31, 2019, will very likely be profitable
on Jan 1, 2021. The biggest challenge for those businesses is surviving
operating cash flow losses over the next three months. This is extra
challenging in the current environment because financial markets are freezing
up.

Yes, business owners will eat some loss to their personal wealth. Regardless
of what happens there's no way to make up for the fact that the economy is
shrinking this quarter. At an aggregate level, we'll all be slightly poorer
then we expected to be. The point of a well-structured bailout isn't to make
sure that nobody anywhere ever loses money. It's to prevent otherwise healthy
businesses from permanently failing due to a temporary disruption in credit
markets.

If a small business owner loses a year of income it sucks. If an entire small
business capsizes, that has widespread economic impact because the economy
incurs distress costs and loses its organizational and competitive expertise.

~~~
buckminster
The business may no longer be profitable because it is now servicing a large
debt it didn't previously have. And unlike regular business debt, the money
wasn't invested into something productive. This could go very wrong.

Then again, if the business is going bankrupt anyway, who cares how much it
ends up owing?

~~~
dcolkitt
Let's take a typical small business, and say it does $1 million a year in
revenue. Cost of goods sold is $600,000 and fixed operating expenses are
$350,000. Net margins are 5%, as is typical in small retail businesses. (These
numbers are almost dollar for dollar from a local merchant-proprietor I know.)

Let's say the quarantine results in revenue falling by 70% over the next four
months. Without a reduction in fixed costs, the business experiences a $76,000
operating loss. (About equal to 1.5 years of pre-tax profits.) Assume a
10-year amortized loan at 4%.

The cost of servicing the loan comes out to approximately $9500 a year. Which
only reduces the ongoing annual cash flow by less than 20%.

~~~
brayhite
You’re assuming that four months have gone by and they didn’t have to sell
assets to pay bills. Or relocate. Or lay off employees. Or employees quit
because they couldn’t be paid with the loss of revenue.

You’re modeling makes a lot of assumptions and discounts too many human-driven
variables.

~~~
dcolkitt
> You’re assuming that four months have gone by and they didn’t have to sell
> assets to pay bills.

That's exactly why the government is giving them loans. To cover the fixed
costs during a period of temporary disruption.

------
codegeek
Here is the bill that already passed both house and senate that has relief for
small businesses as well. Short summary:

The programs funded by the bill address issues such as

\- developing, manufacturing, and procuring vaccines and other medical
supplies;

\- grants for state, local, and tribal public health agencies and
organizations;

\- loans for affected small businesses;

\- evacuations and emergency preparedness activities at U.S. embassies and
other State Department facilities; and

\- humanitarian assistance and support for health systems in the affected
countries.

The bill also allows HHS to temporarily waive certain Medicare restrictions
and requirements regarding telehealth services during the coronavirus public
health emergency.

[https://www.congress.gov/bill/116th-congress/house-
bill/6074](https://www.congress.gov/bill/116th-congress/house-bill/6074)

Another one that is now in senate:

[https://www.congress.gov/bill/116th-congress/house-
bill/6201](https://www.congress.gov/bill/116th-congress/house-bill/6201)

------
zie
with very little information of what this new bill actually does, and no links
for further information. dissapointed.

------
themodelplumber
From a quick skim:

\- $61M to the FDA for various uses relevant to COVID-19 response.

\- $20M to the Small Business Administration for admin expenses incidental to
carrying out the disaster loan program.

\- $2.2B to Department of Health and Human Services for
preparations/preventions/responses to COVID-19; Not less than $950M to be used
for grants or co-op agreements with states, tribes, etc. Minimum of $475M to
be allocated within 30 days.

\- $836M to National Institutes of Health for COVID-19
prep/prevention/response. Including not less than $10M to go toward training
to reduce hospital employee and first-responder exposure to COVID-19.

\- $3.1B to Public Health and Social Services Emergency Fund for developing
innovations and enhancements to manufacturing platforms toward COVID-19
response. Emphasises creating affordable medication, among other things.

\- $300M to same, for purchase of vaccines, therapeutics, diagnostics.

\- $264M to Department of State for COVID-19 response.

\- $1M to USAID for Office of Inspector General oversight activities relevant
to the funding

\- $435M to Global Health Program funding / Bilateral Economic Assistance,
administered by USAID.

\- $300M to International Disaster Assistance

\- $250M to Economic Support Fund (Economic, security, and stabilization
purposes)

\- Telehealth Services During Certain Emergency Periods Act of 2020

~~~
rapind
"$250M to Economic Support Fund (Economic, security, and stabilization
purposes)" sounds rather disappointing. Just a drop in the bucket no?

~~~
IAmEveryone
The ESF is a foreign-facing economic support fund. The idea is to stabilise
Middle- and South-American countries, for example, to avoid mass migration. Or
at least that's what we tell Republicans. The real purpose is obviously to
help the poorest countries, because that's what you do when you can.

And, yes, $250M is a rounding error. But the foreign aid budget is famous for
being estimated as 20% of the federal budget if you survey the general
population, when in reality it's <0.5%. So this isn't unusual or anything.

~~~
rapind
Understood. Thanks for clarifying.

------
mnm1
So does this provide sick leave for companies that only offer vacation (paid
time off) but no actual sick leave? Or are employees working at those places
given the middle finger again and told to use their vacation days that don't
exist (the WA sick leave act is like this)?

Also, what does a business with < 50 employees have to do to get exempt? Is
there a deadline to apply? Or will we have to wait to get sick only to find
out that we're given the middle finger and can't take it because our company
is going to exempt itself?

------
lend000
Regarding the small business loans, I think a better incentive would be at the
state level, to comp prorated property taxes on all commercial property for
the next few months, but only if the owners also comp rent for all renters on
the property during this time.

You may think that the landlords would be making more money by not accepting
the comp, since the rent will have some premium on top of property tax, but
the ones with some foresight may realize that they will lose more money if
their tenants go out of business and they have vacancy periods, possibly only
to find new renters at a lower price in the event of recession.

------
steveeq1
Historically, how long does it take to go to hyperinflation when past
governments started doing this? I need to know.

~~~
ttul
If GDP contracts 10% this year - a real possibility - there is literally zero
chance of inflation. The real enemy is deflation.

~~~
ma2rten
Can you explain that?

~~~
ttul
Prices increase when there is more demand for things than there is supply. If
the economy collapses by 10%, then it’s likely that people will be offering
deals on products to stimulate demand. That means prices going down, not up.

~~~
ma2rten
Okay, but as companies shut down, supply chains are disrupted and employers
implement measures to enact social distancing, why wouldn't supply also go
down?

Does the GPD going down necessarily mean that there is less demand and not
less supply?

------
QuantumGood
The loans support the supply & infrastructure -type bills the business must
pay. It helps them more than the business.

------
ars
Anyone know what other countries have done in terms of economic stimulus?

~~~
dillonmckay
Lockdowns

------
madengr
So what did they actually pass? The article is short on details.

------
ck2
I have absolutely no problem with any of this but I am wondering about those
who foam at the mouth against "socialism" and if they realize that is exactly
what this is. You can call it anything you want to feel better "bailout" etc.
but it's 100% socialism

I wonder if the hotel industry is also going to get only loans or instead
unfettered cash with no need to repay, let's see how that one works with
double standards.

~~~
tzm
Well, everyone becomes a socialist in a time of crisis.

------
nathanaldensr
"Bold and significant" eh? Kind of like the "bold and significant" test kits
that never materialized, or the "bold and significant" quarantine process we
_should 've_ instituted as soon as the first patient was discovered.

~~~
tathougies
> or the "bold and significant" quarantine process we should've instituted as
> soon as the first patient was discovered.

The US was quarantining americans returning from covid countries with CDC
quarantine orders (federally enforceable) since Jan 31?

~~~
ookblah
LOL minus the diamond princess or the obvious one from like the woman from
Iran? people were falling thru the cracks like candy, i happen to know 1 or 2
people that were confused they weren't even screened at the border.

i suggest you do more than just take any announcement from the WH at face
value, especially when there are numerous sources saying otherwise.

~~~
tathougies
Links? The people returned from diamond princess were subject to a 14 day
quarantine at army bases?
[https://www.cdc.gov/media/releases/2020/s0215-Diamond-
Prince...](https://www.cdc.gov/media/releases/2020/s0215-Diamond-Princess-
Repatriation.html)

But, yes america has an obligation to repatriate american citizens, and
subjecting them to quarantine is the right thing to do.

I have no doubt people were falling through cracks though. America has an
incredibly open border with lax enforcement, mainly due to partisan bickering.
Hopefully, this will get everyone on board with border security

~~~
ookblah
i'm saying the diamond princess people were probably the few that were
properly quarantined given the news coverage. the flight entry points during
that time didn't even bother, just asked a few questions on where you were
coming from.

------
grecy
After a little nudge the has USA jumped on board with other developed
countries and offers sick leave, family leave, more unemployment assistance
and free testing and treatment for a given illness.

I will be fascinated to watch the reaction if and when it's taken away again.

~~~
tathougies
The US didn't really need a nudge. The White house and speaker of the house
have said they were going to do this since last week. The US is ahead of other
countries, given that our hospitals are not overrun already, and we've already
started planning financially.

~~~
grecy
What I meant was the US is finally starting to adopt a few more socialist
policies that are common-place in the Developed World.

~~~
adventured
They're not Socialist policies, that's a confusion over what Socialism is
(total state control of the means of production, as one of several
requirements).

What you're referring to is called a welfare state. They're welfare state
policies, not Socialist policies. The US has been a welfare state nation for
many decades now, and increasingly so.

For example, there are no Socialist nations in Europe at present, including
Norway, Sweden, Finland, Denmark, or France. Those are overwhelmingly market
based economies that have large welfare states.

~~~
grecy
I disagree with you. Not everything is so black and white that it must be one
thing or another. Socialism doesn't have to be "Total state control of the
means of production", it can be piecemeal and applied to some parts of a
society or economy and not others.

Heathcare for all is not "welfare". It's the government taking tax dollars and
then paying for things for all citizens. It's how the USA currently pays for
Police and Prisons and the Military and corn subsidies and elementary school
teachers among a million other things that are not welfare.

What I'm saying is the US is adopting more socialist ideas, and it's spreading
the tax dollars around to more and more citizens in more types of ways, like
the rest of the developed world has been doing for decades very successfully.

As I said, I'll be fascinated to see the reaction if and when it's taken back
after COVID-19.

~~~
tathougies
> What I'm saying is the US is adopting more socialist ideas, and it's
> spreading the tax dollars around to more and more citizens in more types of
> ways, like the rest of the developed world has been doing for decades very
> successfully.

Rubbish. The Defense production act invoked today is from WWII and extremely
limited in scope. After the crisis is over the government will be forced to
give up these powers. And thank goodness. This is no way to run a free country
in normal times.

~~~
grecy
> _And thank goodness. This is no way to run a free country in normal times_

I take it you're aware of Denmark, Sweden, Norway, Australia, Canada, New
Zealand and virtually ALL the other developed countries on the planet who
function this way every day of the year and do very well.

~~~
tathougies
Australia, Canada, and New Zealand don't have the same kinds of guarantees on
freedom the United States does, frankly. I don't know much about the other
three's laws and can't comment.

~~~
grecy
Now I'm genuinely curious, as I lived 23 years in Australia. What freedoms are
you talking about?

