The vast majority of those emergency funds have already been spent on everything from small business lifelines and stimulus checks to airline bailouts. There is no more money to save restaurants, and most efforts to save small businesses have expired or soon will be.
“Another round of Covid tax breaks is premature,” Mark Zandi, chief economist at Moody’s Analytics, “but lawmakers should be prepared to act quickly if the Omicron wave begins to undermine the economic recovery.”
86% of federal Covid funds have been disbursed
About $ 4.9 trillion, or 86%, of these funds has either been disbursed or committed.
For example, the federal government sent $ 815 billion in stimulus checks to families in three rounds. No further dunning checks were allowed.
Before closing in June, the Paycheck Protection Program granted more than $ 800 billion in loans to more than 8.5 million small businesses and nonprofits, keeping them afloat during the pandemic.
Washington has also provided around $ 80 billion in aid to prevent the collapse of the airline industry and minimize job losses there.
Neither the US Chamber of Commerce nor the Business Roundtable would comment on the need for additional help from Congress.
“The last straw for many restaurants and bars”
But restaurants, among the sectors hardest hit during the pandemic, demand that Congress provide support to help them weather Storm Omicron.
“Congress has come home, and their neighborhood restaurants and bars are going bankrupt,” Erika Polmar, executive director of the Independent Restaurant Coalition, said in a statement. “The latest wave of Covid-19 will be the last straw for many restaurants and bars struggling with rent delays, debt and declining consumer demand.”
Congress has provided $ 28.6 billion in grants, through the Restaurant Revitalization Fund, to help restaurants survive Covid. However, funding has dried up and restaurant groups say nearly 200,000 restaurants have applied but have not yet received funding.
For months, restaurant advocates have urged lawmakers to replenish emergency funding.
âThe spread of the Omicron variant couldn’t come at a worse time for restaurants,â Sean Kennedy, executive vice president of public affairs for the National Restaurant Association, told CNN in a statement. âAt the start of the holiday season, operators were already strained by rising procurement costs and staffing issues, now consumer confidence plummets as we enter the final weeks of the year. . “
The National Restaurant Association estimates that 90,000 restaurants have closed permanently or long term due to the pandemic and that the industry has lost nearly $ 300 billion in sales.
“Until Congress decides to replenish the Restaurant Revitalization Fund, every new variation that could impact the way consumers use restaurants threatens to force thousands to close permanently,” Kennedy said .
White House doesn’t rule out more aid
The Biden administration is not closing the door on the idea that additional emergency congressional assistance may be needed.
“We will continue to closely monitor the economic recovery and monitor whether future developments require targeted resources,” the White House official told CNN on Tuesday.
Asked about appeals for help from the restaurant industry, the official pledged to work with Congress on how best to support owners of small businesses, including restaurants, going forward.
About 91% of the US bailout funds that are legally available for distribution have either been committed or allocated to specific recipients or groups, the White House official said.
But more US bailout funds are expected to be released next year.
In addition to the $ 245 billion in funds that have been distributed to state and local governments so far this year, a second tranche of around $ 105 billion is expected to be released. This money can be used to keep school districts and daycares open, distribute vaccines, and help fill gaps in local government budgets.
âThe US bailout continues to provide essential support to our recovery and response to Covid. This is how it was designed,â the White House official said.
Deadline looming for small business disaster loans
Although the centerpiece of the small business bailout, PPP, has been shut down, some funds are still available for small businesses, but not for long.
While Congress recently withdrew about $ 30 billion from EIDL to help fund the bipartisan infrastructure law, the SBA said it “has sufficient funds available to continue supporting” all candidates until ‘up to their full amount. However, the SBA did not specify the amount of remaining funding.
The SBA said it has distributed more than $ 13.6 billion to nearly 13,000 beneficiaries under the Shuttered Venue Operators Grant, a federal program for theaters, concert halls and other businesses affected by Covid. While the SBA is still processing applications and appeals, it is no longer accepting new applications for this program.
Shutting down the Fed’s emergency programs
Meanwhile, Omicron strikes just as the Federal Reserve begins to relax its own emergency stance.
In March 2020, the Fed undertook a historic rescue of the economy and markets by lowering interest rates to zero and launching emergency lending programs.
These loan facilities, aimed at avoiding a financial crisis, have since been closed.
The Fed is also planning to raise interest rates to their lowest next year to fight inflation, although they remain close to zero for now.
Likewise, the Fed still buys tens of billions of dollars in bonds per month to support the economy, but it has started to slow down these purchases and plans to end them by spring.
“True test” for the economy
This is all subject to change, however, depending on what is happening with Covid.
“There could be a reassessment of the withdrawal of stimulus measures, including at the Fed. The Fed could be forced to wait a little longer on its first interest rate hike,” said Greg ValliÃ¨re, strategist Chief US Policy Officer at AGF Investments.
The good news is that the US economy is entering this wave from a position of relative strength.
Shots are historically low. Consumer spending has been strong. GDP is expected to accelerate this quarter. And the stock market, despite a few recent swings, remains near record highs.
Nela Richardson, chief economist at ADP, said she believes the economy is strong enough to ride the Omicron wave.
âSo much Covid relief money was spent early on that we can endure this difficult time, if it is short,â said Richardson. “It is a real test for the sustainability of the economic recovery. I do not think it is fragile.”
“Full-throat vaccine attack”
Much will depend on what happens next on the Covid front. While hospitals risk being overwhelmed, the return of health restrictions and Americans’ risk aversion could slow the economy in the coming months.
âIf the pandemic goes in a darker direction, and for now that seems like a real possibility,â Zandi said, âthe economy may need additional fiscal support to recoverâ.
Valliere said the picture should become clearer after the holidays.
“I don’t think we’re quite there yet,” he said.
Richardson urged policymakers to focus on vaccines, testing and boosters on the health front as well as overall investments in the economy, including workforce training and improvement the availability of affordable child care.
“A full-throated vaccine attack is warranted,” Richardson told CNN. “But short-term thinking about the economy has run its course in terms of benefits. We need to move on to long-term thinking about the economy.”