Congress Says Yes to Billions for Ukraine, But No to Restaurants. Why?

Did the Senate last week compound a problem of governments' own making at the expense of thousands of restaurants and workers?

The juxtaposition of two major spending bills in US Senate within hours of each other Thursday was not lost on the Independent Restaurant Coalition (IRC).

President Biden signed into law Saturday legislation providing $40 billion in aid related to Russia’s invasion of Ukraine, $7 billion more than he requested. Only 11 Senate Republicans and 57 House Republicans voted against it. The funds will supply military equipment for Ukraine’s defense ($6 billion), replenish US weapon stockpiles ($9 billion), bolster US European Command operations ($4 billion), and provide humanitarian aid ($14 billion). Another $2 billion goes for technical and regulatory assistance to Ukraine’s nuclear agency.

But on Thursday, the Senate could only muster 52 votes to end debate on The Small Business Covid Relief Act to provide $48 billion in Covid relief to thousands of small businesses fitting one of the several categories, from restaurants to transportation service providers. Sixty votes were needed. The money would replenish the Restaurant Revitalization Fund (RRF), established by the American Rescue Plan Act about a year ago. It’s out of money, and other types of companies harmed by government pandemic-related shutdowns were left out. The bill was jointly sponsored by Senators Ben Cardin (D-MD) and Roger Wicker (R-MS). GOP Senator Bill Cassidy of Louisiana also supported the legislation.

The IRC is not happy.

“Neighborhood restaurants nationwide have held out hope for this program, selling their homes, cashing out retirement funds, or taking personal loans in an effort to keep their employees working and their doors open,” said Erika Polmar, the IRC executive director.

“We estimate more than half of the 177,300 restaurants waiting for an RRF grant will close in the next few months as a result of Congressional inaction.”

“Tens of thousands of neighborhood restaurants, bars, breweries, wineries, distilleries, caterers, food trucks, and others are out of options and need your help. The $28.6 billion Restaurant Revitalization Fund (RRF) helped over 101,000 small businesses keep their doors open and their staff employed,” the IRC’s member associations and companies wrote last week before the Senate vote.

“Unfortunately, this program’s limited funding failed to support roughly two-thirds of the eligible businesses that applied. Nearly 200,000 small businesses have been left behind and now four out of five of these restaurants and bars are in danger of closing permanently, threatening all of the livelihoods they support. These businesses — many of which have received no government relief to date — simply do not have weeks to wait as the pandemic continues to impact our economy. Over 90,000 restaurants have already permanently closed; without the passage of this bill many more will do the same, taking with them hundreds of thousands of American jobs.”

Covid restrictions seem to have hit New York City restaurants especially hard. The New York Post wrote in March, once government restrictions were finally lifted: “Table reservations were down 53.2% citywide since 2020. In January, that number hit a crushing 72%. But the real bad news can be found in new data from the state comptroller’s office, which shows that from the end of 2019 to the end of 2021, employment in New York City’s restaurant sector plummeted 25.4% — about 78,000 jobs lost.”

“I don’t get it and (they) are begging for help,” a family member texted me from New York following the Senate’s vote. “I had a call with my good friend . . . crying to me he has to close his doors. Rent is through the roof and they get no help for the forced closing through Covid. . . real people are losing everything, especially in restaurants.”

“So this is a matter of basic fairness,” Senator Cardin told his colleagues before the vote. “It is also a matter of need. These restaurants—many of which are ready to go out of business—they need the money to pay off their debts that they took out to stay open, and they are competing with restaurants next door that have gotten that relief, and they can’t compete on a level playing field.

“This has been a bipartisan bill from the beginning,” Cardin added. “We started with this last August, a bipartisan group working on it. We have placed guardrails on this bill. There is no double-dipping. You can’t have both. The PPP money has to be subtracted. It has to be used for permitted uses such as paying down your debt or construction of outdoor seating or protective equipment.”

Still, the conservative National Taxpayers Union and Heritage Action urged Senators to vote no. Aside from the inflationary impact of pumping more money into the economy - there were no real spending offsets in either bill - many believe that states are awash in enough cash to address the issue at their level. And the severity of the issue seems to vary between locales based on how governors and states handled the pandemic.

I hope my favorite Italian restaurant in downtown Philadelphia can remain in business.

The 43 Senators who voted no (5 were absent, not enough to change the outcome) have remained largely quiet in response. But Senator Rand Paul (R-KY) opined. Paul told FOX Business: “COVID-19 is over, and yet Congress is ready to spend $48 billion of borrowed money to bail out yacht and limousine businesses, minor league sports, and luxury gyms under the guise of pandemic relief.

“Now is perhaps the most inappropriate time to spend more taxpayer dollars on a poorly targeted spending spree while Americans struggle with the effects of price increases and supply chain issues caused by Congress’ last $6 trillion Covid spending extravaganza,” Paul added.

In April, Senator Rand Paul recognized Hunter’s Bar-B-Q in Albany, Kentucky, as US Small Business of the Week. They appear to still be in business.

In February, Paul - the ranking Republican on the Senate Small Business Committee - began raising questions about how RRF monies were spent. He apparently never received an answer. The Washington Examiner opined on Paul’s efforts:

The RRF was supposed to provide restaurants "with funding equal to their pandemic-related revenue loss up to $10 million per business." However, it was discovered that applicants for the funds were being prioritized on the basis of race and gender — an occurrence that was not supposed to have happened. Many felt that this was unconstitutional and discriminatory and filed a lawsuit. In response, a Texas court issued an injunction and ordered payments to stop being distributed.

The government's fiscal irresponsibility and reckless administrative application were the impetus for Paul's letter. While many in the Biden administration have sought to sweep the RRF mess under a metaphorical rug, Paul is vigorously pursuing the truth and trying to make sure such mishaps are not repeated. He is tired of the bureaucratic incompetence that haunts government spending.

Furthermore, the senator realized before many that the RRF had a myriad of problems and was destined to fail. For starters, it was underfunded at an amount of $28.6 billion. Next, there were numerous problems with its implementation. The RRF was created mainly for small businesses and "mom and pop shops" that were struggling, not major corporations. Instead, incompetent officials in the Biden administration erroneously gave money to many businesses that were supposed to be ineligible. This resulted in an exhaustion of available funds in RRF and left hundreds of thousands of eligible businesses with nothing.

Long before his days at Fox News, when he consulted political campaigns, the late Roger Ailes once said that the media was about getting its headline, someone being right or wrong. “Nuance confuses the press,” he added. This story has plenty of nuances, so the media and politicians are oddly placid about last week’s vote. Probably because there’s no easy response. And when you’re explaining, you’re losing.

Government-imposed shutdowns shuttered retail outlets, including most of the nation’s one million restaurants, and displaced 15 million workers. Some were shut down (see: New York) longer and more severely than others (see: South Dakota). Some survived on catering and carryout sales; others could not. Some received government assistance until the money ran out. Others did not, and taxpayers’ funds were misappropriated. The US Secret Service says criminals stole $100 billion in Covid relief funds. Fraud siphoned $163 billion from Covid unemployment assistance. The Department of Labor has only recovered about $4 billion.

Affected small businesses, especially restaurants, can’t seem to win. First, many can’t get promised government assistance, while their better-heeled and politically connected competitors did. Second, they’re having difficulty finding workers, or at least did while staff were collecting an additional $600 per week in Covid unemployment assistance. They were being paid more not to work. Supply chain snafus have added insult to injury. Meanwhile, data is emerging that many restaurants have been struggling back to life since the pandemic started. That’s a long “two weeks to slow the spread.”

Government, again, isn’t just The Problem, as Ronald Reagan famously said. It begats problem after problem. Maybe, in retrospect, there was a better way, at the outset, for the government to manage the pandemic and provide support to those affected. As the Great Barrington Declaration advised, governments should have focused on protecting the vulnerable and letting others go on with their lives. Maybe the government should have focused more on keeping business payrolls funded instead of free “loans” and generous unemployment benefits incentivizing workers to stay home. Maybe they should have thought about the inflationary consequences of growing the money supply by about 40 percent. Hindsight being 20/20, this all seems clear now. For some of us, it was clear then.

Meanwhile, the victims of these policies and their implementation are the people government was supposed to help. The villains here are not the Senators who voted no on this bill nor the Senate’s filibuster rule. They’re the politicians and incompetent government administrators who created badly designed relief schemes that were corruptly implemented. There were better proposals offered and ignored as the pandemic raged. This is little comfort to those losing livelihoods and staring bankruptcy, if not worse, in the face. For many Senators, this was a tough vote to bailout the Biden Administration for its own malfeasance. At least on this bill.

What would I have done? I don’t know for sure since people like me don’t get elected to the US Senate (what state would you have me represent?), but I would probably have voted “yes” with a helluva floor speech that reads a lot like this post. I would be demanding a few heads and “blue slipping” (refusing to confirm) any Biden Administration nominee until audits were completed, committee hearings held, people held accountable, and changes made. But other than Rand Paul, every Republican was stone silent. Where were they?

Unfortunately, partisanship and egos got in their way as the pandemic was heavily politicized. Politicians should stop trying to bribe us with our own money.