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Herbert PPP urging dilutes pool, but it may just work

By Herald Editorial Board - | Apr 11, 2020

The U.S. Small Business Administration’s paycheck protection program, or PPP, is relatively large. $350 billion large to be more specific.

Given what COVID-19 infections have wrought on the U.S. economy, representatives in Congress, economists and panicked business owners seem to have placed their copies of “The Wealth of Nations” and “Capitalism and Freedom” squarely in the trash, probably applying pressure to make sure they stay there, too.

What else are they supposed to do? Seventeen million individuals have filed initial claims for unemployment benefits in the last three weeks. That doesn’t count individuals who have yet to file because they are unaware of the benefits, have been experiencing difficulty with the application process or simply have too much pride for a handout. That also doesn’t include folks who have had their hours reduced or workers that have had their pay cut. There’s a dire situation building in the labor market to say the least.

PPP, for the uninitiated, is designed to offer forgivable loans for small businesses (those with fewer than 500 employees) to retain their workers and continue paying their wages until stay-at-home recommendations and orders have been reversed.

Enter Gov. Gary Herbert, surprisingly from stage left, to encourage all of Utah’s small businesses to apply for a PPP loan.

To this point, Utah has been relatively lucky not to see the same level of COVID-19 cases as many of the hotspots around the country. Despite this, 33,000 Utahns filed for unemployment for the week ending April 4. That’s about one Cedar City removed from Utah’s economy last week.

Gov. Herbert’s heart is in the right place but, in the near term, there’s an arithmetic problem. There are 30 million small businesses in the United States. If all of them apply for a PPP loan, it would render the program helplessly ineffective.

There is, however, some calculated thinking that might just work. If enough businesses are submitting applications through this program, Congress may continue sweetening the pot.

There’s a proposal under consideration right now, in fact, to add an additional $250 billion to this stimulus package, or disaster relief if you prefer, to give small businesses some extra help. Should COVID-19 lockdowns persist, yet another round of pot-sweetening may be considered to help businesses, and subsequently their employees, through this downturn.

Let’s ignore for a moment the fabulously vacuous and pathetic unveiling that many companies are unable to make it even one month without a frail, trembling hand stretching forward in beggar’s fashion for a handout they didn’t earn. As we have previously stated, this won’t be a rigorous discussion on the merits of a laissez-faire system. Instead, our focus is on the solutions being proposed.

Utah is fortunate that its population is generous, relatively well prepared and its government is working through the fiscal policy tools available in a timely fashion to get to the other side of this. It’s laudable there has been a general willingness to provide assistance to each other.

Saying that, the unemployment situation is expected to worsen in the near term, many Utah businesses will find themselves unable to continue operations and a vicious cycle may soon be upon us.

Let’s hope Gov. Herbert’s contribution to overwhelm decision-makers in Washington, D.C. works. He’s definitely not the first state-level lawmaker to encourage similar action. This may be one of the few options state officials have to influence outcomes and prevent additional problems from arising locally.

Sure, the recommendation for every business to apply is probably unrealistic, but it just may work.

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