[Senate Hearing 116-319]
[From the U.S. Government Publishing Office]


                                                   S. Hrg. 116-319


                  IMPLEMENTATION OF TITLE IV OF THE CARES 
                                    ACT

=======================================================================

                                HEARING

                               BEFORE THE
                               
                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                                   ON

                  EXAMINING TITLE IV OF THE CARES ACT

                               __________

                              JUNE 2, 2020

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs
                                
                                
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                Available at: https: //www.govinfo.gov /                
                
                              __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
42-248 PDF                  WASHINGTON : 2021                     
          
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            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                      MIKE CRAPO, Idaho, Chairman

RICHARD C. SHELBY, Alabama           SHERROD BROWN, Ohio
PATRICK J. TOOMEY, Pennsylvania      JACK REED, Rhode Island
TIM SCOTT, South Carolina            ROBERT MENENDEZ, New Jersey
BEN SASSE, Nebraska                  JON TESTER, Montana
TOM COTTON, Arkansas                 MARK R. WARNER, Virginia
MIKE ROUNDS, South Dakota            ELIZABETH WARREN, Massachusetts
DAVID PERDUE, Georgia                BRIAN SCHATZ, Hawaii
THOM TILLIS, North Carolina          CHRIS VAN HOLLEN, Maryland
JOHN KENNEDY, Louisiana              CATHERINE CORTEZ MASTO, Nevada
MARTHA McSALLY, Arizona              DOUG JONES, Alabama
JERRY MORAN, Kansas                  TINA SMITH, Minnesota
KEVIN CRAMER, North Dakota           KYRSTEN SINEMA, Arizona

                     Gregg Richard, Staff Director

                Laura Swanson, Democratic Staff Director

                        Catherine Fuchs, Counsel

                    Tanya Otsuka, Democratic Counsel

           Corey Frayer, Democratic Professional Staff Member

                      Cameron Ricker, Chief Clerk

                      Shelvin Simmons, IT Director

                    Charles J. Moffat, Hearing Clerk

                          Jim Crowell, Editor

                                  (ii)


                            C O N T E N T S

                              ----------                              

                         TUESDAY, JUNE 2, 2020

                                                                   Page

Opening statement of Chairman Crapo..............................     1
    Prepared statement...........................................    37

Opening statements, comments, or prepared statements of:
    Senator Brown................................................     3
        Prepared statement.......................................    38

                               WITNESSES

Thomas Quaadman, Executive Vice President, Center for Capital 
  Markets Competitiveness, U.S. Chamber of Commerce..............     5
    Prepared statement...........................................    39
    Responses to written questions of:
        Senator Brown............................................    55
        Senator Cortez Masto.....................................    56
        Senator Jones............................................    56
Douglas Holtz-Eakin, President, American Action Forum............     7
    Prepared statement...........................................    46
    Responses to written questions of:
        Senator Cortez Masto.....................................    59
        Senator Jones............................................    60
        Senator Sinema...........................................    60
Heidi Shierholz, Senior Economist and Director of Policy, 
  Economic Policy Institute......................................     8
    Prepared statement...........................................    50
        Senator Brown............................................    61
        Senator Cortez Masto.....................................    63
        Senator Jones............................................    66

              Additional Material Supplied for the Record

Letter submitted by CUNA.........................................    68
Letter submitted by NAFCU........................................    70

                                 (iii)

 
              IMPLEMENTATION OF TITLE IV OF THE CARES ACT

                              ----------                              


                         TUESDAY, JUNE 2, 2020

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met by videoconference at 10 a.m., Hon. Mike 
Crapo, Chairman of the Committee, presiding.

            OPENING STATEMENT OF CHAIRMAN MIKE CRAPO

    Chairman Crapo. This hearing will come to order. This 
hearing is another remote hearing by video.
    A few videoconferencing reminders: Once you start speaking, 
there will be a slight delay before you are displayed on the 
screen. To minimize background noise, please click the mute 
button until it is your turn to speak or ask questions. If 
there is a technology issue, we will move to the next Senator 
until it is resolved. I remind all Senators and the witnesses 
that the 5-minute clock still applies, and there is a box--
should be--on screens showing the 5 minutes. I am going to keep 
tapping that tap to remind you of the clock so that we can stay 
on time, because we are also pushed up against a vote again 
today at 11:45. At 30 seconds remaining, I will try to remember 
to give a gentle tap. To simplify the speaking order process, 
Senator Brown and I have again agreed to go by seniority for 
this hearing.
    Also, for all of the Members, once you have checked in or 
signed into the remote hearing system, you are recorded as 
present. There are some who have wondered whether they had to 
stay engaged and proved their presence. Once you are checked 
in, you are signed into the Committee hearing.
    With that, we will welcome everyone to this virtual 
hearing, and we welcome the following witnesses: Mr. Thomas 
Quaadman, executive vice president of the U.S. Chamber Center 
for Capital Markets Competitiveness; Dr. Douglas Holtz-Eakin, 
president of the American Action Forum; and Dr. Heidi 
Shierholz, senior economist and director of policy at the 
Economic Policy Institute.
    Congress and the Administration have taken extraordinary 
actions to mitigate the impact of the COVID-19 pandemic and 
provide conditions that will lead to a forceful economic 
recovery.
    The Coronavirus Aid, Relief, and Economic Security Act, or 
CARES Act, has been central to that effort.
    Today we will focus on Title IV of the CARES Act, which 
provided a $500 billion infusion into the Exchange 
Stabilization Fund, and the Department of Treasury to assist 
that fund, the bulk of which is being used to support the 
Federal Reserve's emergency lending facilities.
    This unique lending authority, known as 13(3) authority, is 
authorized under Section 13 of the Federal Reserve Act and 
plays a critical role in stabilizing markets.
    We will receive testimony from each witness on the impact 
that the 13(3) facilities have had so far on the economy, what 
the policy tradeoffs are of expanding or restricting the term 
sheets of the 13(3) facilities, how the unused funds from Title 
IV should be prioritized or leveraged, and an overall focus on 
Title IV implementation.
    Beginning on March 17, 2020, and before the CARES Act was 
signed into law, the Federal Reserve had already announced six 
13(3) facilities.
    On April 9, 2020, after the passage of the CARES Act, the 
Federal Reserve Board and Department of Treasury announced new 
and expanded lending programs to provide up to $2.3 trillion in 
loans. This was a powerful step forward to support the flow of 
credit in the economy.
    At the Banking Committee hearing with Secretary Mnuchin and 
Chairman Powell on May 12, 2020, Secretary Mnuchin noted that 
the mere announcement of the Corporate Bond Facility, without 
putting up $1 of taxpayer money, unlocked the entire primary 
and secondary market for corporate bonds.
    The Federal Reserve's recent Financial Stability Report 
highlighted a similar effect on financial markets resulting 
from the announcement of other facilities, noting that 
``Indicators of market functioning improved after the 
announcement of the CPFF, the MMFL, and the PDCF.''
    Although the announcement of many of these facilities can 
help move markets toward more normal functioning, becoming 
operational is key to achieving their full potential.
    With respect to the Federal Reserve's emergency lending 
facilities, I look forward to hearing how announcing and 
operationalizing the facilities have impacted the economy and 
financial markets so far; how the facilities have provided or 
stand to provide necessary credit to households, businesses, 
States, and local governments; ways that the facilities could 
be improved; and how existing term sheets could be further 
expanded or opportunities to build upon the efforts of existing 
facilities.
    The Main Street Lending Facilities and Municipal Liquidity 
Facility extend a lifeline to States, local governments, 
tribes, and businesses by supporting over $1 trillion of 
lending with $110 billion of Title IV funds.
    Incorporating widespread restrictions in these facilities 
could render the facilities ineffective and leave businesses 
and their employees without critical resources they desperately 
need.
    Excessive restrictions not only risk ineffectiveness for 
the Main Street Lending Facilities, but also for other 
facilities as well.
    For example, on May 11, the Fed updated the term sheet for 
the Municipal Liquidity Facility to lower the population 
thresholds for cities and counties, despite not being included 
in the CARES Act at all.
    While this was a step in the right direction, it still 
leaves many smaller and rural communities without direct access 
to financial resources, including no cities or counties in 
Idaho.
    Each of these facilities, especially those funded by the 
CARES Act, provide an opportunity to support businesses, 
employees, States, and local governments whose lives have been 
suddenly turned upside down by the Government's effort to stop 
the spread of COVID-19.
    The work to get these facilities up and running has been of 
immense importance, and it now must be ensured that they are 
structured to achieve the greatest impact for those in need.
    I appreciate each one of you joining us today.
    Senator Brown.

           OPENING STATEMENT OF SENATOR SHERROD BROWN

    Senator Brown. Thank you, Mr. Chairman, for holding this 
hearing.
    The pandemic has been the ``great revealer.'' It reminds us 
how vulnerable many Americans are and how the economy and 
Government policy tilt in favor of the wealthy, the powerful, 
and the privileged.
    A grocery store worker in southwest Ohio told me recently, 
``I do not feel safe at work; they do not pay me much. They 
tell me I am essential, but I feel expendable.''
    Long before this pandemic, millions of Americans knew that 
we have a system that treats them like they are expendable. 
Their hard work is not paying off. For some it feels like the 
system is broken, and for black and brown workers, it never 
worked to begin with.
    It is those black and brown communities across our country 
who have been hit hardest by the coronavirus. They are more 
likely to get sick, they have less access to health care, they 
make up the communities hurt by Jim Crow and redlining laws, 
they disproportionately make up our essential workers. It is 
not because they do not work as hard; it is not because of 
individual choices. We all work hard; we are all trying to do 
something productive for our family and our community; we all 
want to build a better country for our daughters and for our 
sons.
    No, it is because of a system that has been making it 
harder for their work to pay off and putting their lives at 
risk for generations--long before this virus appeared.
    It does not matter if they are jogging in their 
neighborhoods, if they are protesting injustice, if they are 
asleep in their beds, or if they are driving to the store. 
Black men and women know that systemic racism puts their lives 
and the lives of their children at risk. All the time.
    This is their everyday.
    When Breonna Taylor was killed by police in Louisville, 
when George Floyd was killed by police in Minneapolis, people 
came to the streets across this country to peacefully protest. 
It is an expression of fear and grief and frustration and 
anger. It is same grief we had in Cleveland when 12-year-old 
Tamir Rice was gunned down by police in a park.
    More black sons and daughters and mothers and fathers 
killed by police officers, the very people who are supposed to 
protect all Americans. More death, when many are already 
grieving the loss of family members and friends to the 
coronavirus and grappling with the economic stress that this 
pandemic has caused.
    Black communities led the Nation in mourning the killings 
of George Floyd and Breonna Taylor over the last week--leading 
calls for justice and long-term changes to dismantle systems of 
oppression.
    In the midst of that trauma and grieving, millions of those 
same Americans still go to work, day after day, week after 
week.
    Our job is to show victims of systemic racism at the hands 
of their own Government that the same Government will protect 
them from this pandemic--that we hear them, that we see them, 
that we fight for them, and that their lives matter.
    Our response to this crisis must be to stand behind the 
people who make this country work--all workers, whether you 
punch a clock or swipe a badge, whether you earn a salary or 
work for tips, whether you are raising children or caring for 
an aging parent, whether your hard work is not paying off now, 
or whether it has never paid off the way it should.
    Not everything, of course, is about money. But the work we 
do on this Committee should show Americans that the Government 
is actually on their side. Our work on this Committee needs to 
address wealth inequality, needs to make sure everyone is 
treated fairly.
    Instead, we are repeating the mistakes of the past, helping 
the rich and powerful, and the corporations they run, while 
leaving most Americans again to fend for themselves. We have 
committed trillions of dollars to bail out corporations, 
without requiring those corporations to take care of their 
workers.
    Dr. King said, ``One day our society will come to respect 
the sanitation worker. For the person who picks up our garbage, 
in the final analysis, is as significant as the physician, for 
if he does not do his job, diseases are rampant. All labor has 
dignity.''
    It is black and brown workers who have been robbed of their 
dignity on the job--far, far too often.
    If we want to be a country where every person has dignity, 
we need to start by recognizing that all labor has dignity.
    But so far, our response to this crisis is not the response 
of a Government that believes that.
    Congress can always find trillions of dollars for 
corporations--for tax cuts, for bailouts. When hardworking 
families need help with rent or to put food on the table, this 
President and this Senate says we simply cannot afford it.
    The President and his Administration had already made 
racial and economic inequality worse in just 3\1/2\ short years 
and undone civil rights protections. They have been pretty 
clear they are willing to put workers' lives at risk--to reopen 
stockyards, or even just to juice the stock market.
    And last night, the President of the United States--think 
of that--turned the arm of the State on peaceful protesters, 
tear-gassing citizens he is supposed to serve and exploiting a 
house of worship as he held up a Bible, all to stage a photo 
op.
    President Trump and his administration and his sycophants 
in Congress believe that millions of Americans are expendable. 
It is not a coincidence that many of the people they consider 
expendable are black and brown workers.
    Since the President is unwilling to protect people, whether 
that is protecting their lives or protecting their financial 
future, it is up to us, Mr. Chairman, in this Committee and 
this Senate to fill the leadership void.
    I hope today's witnesses shed light on what we must do to 
make sure the economic recovery is not uneven and unjust, like 
the last one.
    Mr. Chairman, I will close with this:
    Whenever people bring up the ways the system has failed so 
many Americans--online, at a hearing, or at a protest march--
there are always the naysayers--always white, usually men, 
often pretty well off--who say, ``How can you be so negative? 
Why do you want to dwell on all the worst parts of our 
country's history? Don't you love our country?''
    My response to our country's naysayers and sunshine 
patriots is this: How can you be so pessimistic as to believe 
this is the best that America can do? Do you really think that 
the American people, with our ingenuity and optimism and our 
tenacity, do you really think we cannot create a fairer economy 
and a more just Government? Do you really truly believe we 
cannot have a society that works for everyone--black and white 
and brown, women and men, no matter who you are, no matter what 
kind of work you do?
    Protesting, working for change, organizing, speaking out, 
demanding our country do better--those are some of the most 
patriotic things all of us can do.
    I love my country, and if you love this country, you fight 
for the people who make it work. All of them.
    Thank you, Mr. Chairman.
    Chairman Crapo. We will hear from the witnesses in the 
order I introduced you. I remind you that we would like you to 
follow the 5-minute clock as well, and even in your answers, 
when you are being asked questions, often what happens is a 
question will be lobbed to you just as the 5-minute clock is 
expiring. When that happens, I encourage you to respond very 
quickly so we can move on. And if it requires a long answer, 
then offer to provide that answer in writing.
    With that, we will go to you, Mr. Quaadman.

STATEMENT OF THOMAS QUAADMAN, EXECUTIVE VICE PRESIDENT, CENTER 
 FOR CAPITAL MARKETS COMPETITIVENESS, U.S. CHAMBER OF COMMERCE

    Mr. Quaadman. Thank you very much. Chairman Crapo, Ranking 
Member Brown, and Members of the Committee, thank you for the 
opportunity to testify on the implementation of Title IV of the 
CARES Act.
    By mid-March the United States, because of COVID-19, was 
faced with an unprecedented economic shutdown, a sharply 
declining stock market, and nonfunctioning credit markets. As 
you sit here today, the cost has been significant. Forty 
million Americans are unemployed and countless businesses have 
shuttered, many permanently. Without swift Government 
intervention, this situation would have been more severe and 
painful.
    Title IV of the CARES Act has helped to bridge the gap and 
allowed some green shoots to appear. The PPP has provided 
relief to millions of small businesses, allowing them to 
survive. Through the actions of Congress, Treasury, and the 
Federal Reserve, nine 13(3) credit facilities have been funded 
or established. Each of these covers an important segment of 
the economy or financial markets. This comprehensive approach 
has helped to stabilize the financial markets while collecting 
the resources necessary to restart the economy. The Commercial 
Paper Facility has allowed the commercial paper markets to 
operate and fill the daily cash management needs of businesses.
    The mere existence of the Primary Dealer Credit Facility, 
Primary Market Corporate Credit Facility, and Secondary 
Corporate Credit Facility have restarted the corporate debt 
markets. This has allowed businesses to raise over $1 trillion 
of private capital in a short period of time to fund their 
operations and manage their way through the crisis.
    The Municipal Liquidity Facility is critical for State and 
local governments to tap the bond markets and meet their 
funding needs. The Chamber supported the Fed's expansion of 
this program. The resurrection of TALF has kept the 
securitization markets operating. This is critical for 
consumers to meet their financial needs. We also believe this 
program should be expanded to assist commercial real estate to 
help avoid potential market disruptions.
    These programs have helped businesses small and large. 
However, the Chamber has been very concerned that mid-sized 
businesses could fall in a chasm where they receive no support. 
There are approximately 20,000 mid-sized firms that employ 
close to 40 million workers. Many of these businesses may be 
too large for the PPP and too small to enter the private debt 
markets. The Main Street Lending Program will help these firms 
access the funds necessary to tide them over as the economy 
slowly reopens. During reopening, initial demand may be 
sluggish, and it may take time for supply chains to be 
reactivated. We appreciate the efforts of the Treasury 
Department and Federal Reserve to get this financial support up 
and running.
    This is a new and unique use of 13(3) powers. While we 
would have liked this program in operation sooner, it was more 
important to get the terms of the facility finalized so that 
there could be clear rules of the road. This will give 
borrowers and lenders the certainty they need to operate.
    More action may be needed as well. We appreciate the 
attention that FSOC and FHFA have given to the issue of 
mortgage service providers that are extending forbearance to 
homeowners for mortgage payments. Future events may dictate if 
a 13(3) facility will be necessary for mortgage service 
providers. We are also exploring the potential of a 13(3) 
facility upon accounts receivable to deal with other industries 
such as utilities, which are providing forbearance for 
consumers but encountering their own financial difficulties.
    These different efforts by Congress, the Administration, 
and Federal Reserve have been a necessary use of power to help 
the economy and American workers during an unprecedented 
emergency. These actions should be targeted, tailored, and 
temporary. The economic shutdown and restart cannot be done by 
the flick of a switch. Businesses need to know the rules to 
understand how these programs work and how they must comply 
with the law. Strong oversight is also needed to ensure 
accountability for the use of taxpayer dollars. The Chamber 
took a similar position with TARP through the support of the 
TARP Transparency Act and firmly believe that those who break 
the laws should be punished. At the same time, oversight should 
not be politicized and used to name and shame companies. 
Businesses that have been deemed eligible by Congress for these 
programs should not be targeted because they happen to operate 
in particular industries. This goes against the intent of the 
CARES Act and will force businesses to walk away. This will 
harm workers and make the recovery longer and more difficult to 
achieve.
    Thank you for the time today, and I look forward to your 
questions.
    Chairman Crapo. Thank you very much, Mr. Quaadman.
    Dr. Holtz-Eakin.

 STATEMENT OF DOUGLAS HOLTZ-EAKIN, PRESIDENT, AMERICAN ACTION 
                             FORUM

    Mr. Holtz-Eakin. Chairman Crapo, Ranking Member Brown, and 
Members of the Committee, thank you for the privilege of being 
here today to testify on Title IV of the CARES Act. Let me make 
several points briefly, and then I look forward to answering 
your questions.
    Point number one is this is a historically dramatic 
downturn. In the past 2 months, we have seen, for example, 6 
million Americans file claims for unemployment insurance in a 
single week. That is ten times larger than the previous high 
back in the Great Recession. We have seen 20 million Americans 
lose their jobs in the month of April--again, ten times larger 
than the previous high back in the demobilization after World 
War II. We saw the unemployment rate jump by over 10 percentage 
points in April--again, ten times higher than the previous 
single monthly increase. And the Congressional Budget Office 
anticipates that in the second quarter of 2020, the U.S. 
economy will shrink by 11 percent. In the worst year of the 
Great Depression, 1932, the economy shrunk by 12 percent.
    Unlike the Great Depression, however, policymakers have 
acted quickly and dramatically to offset this downturn. When we 
saw a massive liquidity crunch hit financial markets, the 
Federal Reserve stepped in quickly, lowering its policy rate to 
zero percent, pledging an open-ended, unlimited amount of 
liquidity, and then reopening lending facilities for commercial 
paper, primary dealers, and money markets to restore the 
functioning of financial markets quite effectively and to 
prevent what was a serious Main Street crisis from turning into 
a financial crisis. And the Congress passed the CARES Act, a 
fiscal policy of unprecedented size, done at remarkable speed, 
and I believe Congress is to be congratulated for how quickly 
it acted and the scale on which it approached the crisis.
    My second point is that while much of the CARES Act has 
supported the economy, the Title IV lending is essentially 
missing in action. We have seen the CARES Act provide checks to 
individuals and families in the United States. It established 
the pandemic unemployment insurance, and those aspects of the 
CARES Act have produced a great amount of support. In a report 
that came out last week, we saw that personal income in April 
rose by $2.1 trillion at an annual rate, and $3 trillion of 
that was Government social benefits. This is the dramatic 
impact of the CARES Act on household finances. It was 
sufficient that the saving rate went up to 33 percent. 
Households have money and they are putting it away for the 
months to come.
    We have seen the PPP, the Paycheck Protection Program, 
provide dramatic support for the economy. The PPP has many 
flaws, and my understanding is the Senate is about to address 
some of that. But despite its flaws, it managed to get over 
$500 billion out the door during the month of April, the single 
worst month in the history of the U.S. economy.
    At the same time, Title IV established all sorts of 
potential lending facilities: the Primary Market for Corporate 
Credit, the Secondary Market for Corporate Credit, Term Asset 
Backed Securities; and, importantly, the Main Street Lending 
Program for those smaller and mid-sized companies that may not 
have direct access to commercial paper and other borrowing 
mechanisms; and the Municipal Liquidity Facility for strapped 
State and local governments.
    While the CARES Act provided about $500 billion for these 
activities, essentially none of that has gone out the door, the 
publicly available data suggests less than 1 percent. It is 
puzzling to me that a Federal Reserve that could act so quickly 
and on such a large scale in the face of a liquidity crunch and 
a Treasury which could combine with the SBA to provide the PPP 
quickly and on a large scale could not in 2 months provide any 
support for these mid-sized companies. Survey data would 
suggest that the typical mid-sized company has about 2 months' 
worth of cash, at which point they will be threatened with 
closing the doors. We are at that point now, and I would urge 
the Treasury and the Congress to urge the Treasury to get 
together and provide more support for this part of the economy. 
This is, as Dr. Quaadman mentioned, a big employer, and I am 
worried that we are losing those mid-sized businesses because 
the facilities are not available and the terms at which they 
will be offered will be unattractive.
    Thank you. I look forward to answering your questions.
    Chairman Crapo. Thank you, Dr. Holtz-Eakin.
    Dr. Shierholz.

STATEMENT OF HEIDI SHIERHOLZ, SENIOR ECONOMIST AND DIRECTOR OF 
               POLICY, ECONOMIC POLICY INSTITUTE

    Ms. Shierholz. Chair Crapo, Ranking Member Brown, and 
Members of the Committee, thank you for the opportunity to 
testify today.
    Many concerns have been raised about Title IV, for example, 
the egregious lack of conditions that would link loans to 
keeping people on payroll. This should be corrected and 
accompanied by great levels of transparency and oversight. But, 
in my view the biggest problem with these lending programs is 
that they are loans, not grants. In an economy where 
nonessential activity has been basically shut down for an 
extended period, it is not illiquidity that is often the 
threat. It is bankruptcy. Further, households will face huge 
challenges just meeting basic needs during this period, and 
having a large tranche of aid that does nothing to directly 
alleviate their suffering or to keep them from needing to slash 
their spending, making the recession worse and the recovery 
weaker, is a huge missed opportunity. Most destructively, the 
$454 billion in Title IV that is solely for ensuring the Fed 
against losses in the event borrowers default on their loans 
and which likely will not even be spent because the Fed will 
likely see gains not losses on these loans, that money may very 
well have convinced many policymakers and the public that 
substantial aid is being provided, and this could be a 
disaster. If people are convinced that the Fed can handle the 
emergency response and, as a result, a further massive fiscal 
stimulus does not happen, we are virtually guaranteed to face 
an extended period of extremely weak growth and high 
unemployment.
    The official unemployment rate was 14.7 percent in mid-
April when the survey was taken. That does not come close to 
reflecting all COVID-related job losses. If all workers who are 
out of work as a result of the virus had shown up as unemployed 
in the data, the unemployment rate would have been 23.5 percent 
in April instead of 14.7 percent, and since that survey was 
taken, another roughly 18 million workers have applied for 
unemployment benefits.
    Typical forecasts that, by the way, bake in additional 
fiscal aid, including direct aid to State and local 
governments, these typical forecasts predict that the official 
unemployment rate will be around 25 percent in June, that it 
will still be in double digits at the end of 2020, and that it 
will be around 8 percent at the end of 2021. And as a reminder, 
8 percent is really high, the highest the unemployment rate 
ever got in either the early 1990s or the early 2000s recession 
was 7.8 percent.
    The most important provisions to help generate a rapid 
recovery is aid to State and local governments which are facing 
revenue shortfalls as large as $1 trillion in coming years. 
Loans they have to pay back in 3 years are not going to cut it. 
Because of their balanced budget requirements, if they do not 
get direct fiscal aid, they will have no choice but to slash 
spending and lay workers off, and we know how bad this will be 
because we just lived through it. The lack of sufficient aid to 
State and local governments in the aftermath of the Great 
Recession led to State and local austerity that delayed the 
recovery from the Great Recession by over 4 years. If direct 
Federal relief closes the $1 trillion State and local revenue 
shortfall, it will save over 5 million jobs by the end of 2021, 
and without that aid those jobs will be lost.
    It is also crucial to extend the expansions of unemployment 
insurance that were part of the CARES Act, particularly the 
$600 per week in UI payments. Importantly, first, it is useful 
to remember that regular UI benefits replace a maximum of half 
of prior earnings, and a huge share of recipients receive much 
less than half given extremely low caps. So as a result, the 
extra $600 has been by far the most effective part of our 
economic policy response to the corona shock so far. It has 
meant that workers who earned less than the average worker 
before the crisis are receiving benefits that are higher than 
100 percent of their prior wage. But, in fact, for the purposes 
of generating a rapid macroeconomic recovery, the more money 
getting into the pockets of low- and middle-wage workers, the 
better. These workers are likely to be in households that will 
have little choice but to quickly spend any unemployment 
benefits they get on necessities, boosting the economy.
    Further, at the end of July, when the extra $600 per week 
is set to expire, the official unemployment rate will likely be 
well over 20 percent, and the unemployment rate that takes into 
account everyone who is out of work as a result of the virus 
will be even higher. It would be terrible policy on economic 
and humanitarian grounds to use cutbacks to UI benefits that 
make them too stingy to live on as a cudgel to try to get 
people to find a job quickly when the labor market is that 
weak.
    If the Federal Government provides sufficient direct fiscal 
aid during this crisis so that individuals and State and local 
governments are not forced to make drastic cuts to their 
spending, then confidence and demand will be high when the 
economy reopens, and we could get a relatively robust bounce-
back. But if the Federal Government does not provide fiscal 
relief, the country will face an extended period of weak growth 
and high unemployment that will do sweeping and unrelenting 
damage to the economy and to the people and businesses in it.
    Thank you.
    Chairman Crapo. Thank you very much.
    I will ask my first question to you, Mr. Quaadman. What 
type of demand is expected among businesses for loans under the 
Main Street Lending Facility?
    Mr. Quaadman. Thank you very much, Mr. Chairman. From 
discussions that we have had with many mid-sized firms, we 
expect that there will be much demand for these loans. There 
has been some muted enthusiasm for this because of the lack of 
clear rules, and, clearly, the Fed has come out with a term 
sheet, an additional term sheet in the last week. So as those 
parameters are becoming more clear, we do expect that there is 
going to be more demand for these loans. And I think it is 
important to remember as well, while we have been dealing with 
this revenue cliff for the past 60 or so days, we are still 
going to go through a phased reopening of the economy so that 
there is going to be this need for companies to work their way 
through this financial situation.
    Chairman Crapo. All right. Thank you very much.
    Dr. Holtz-Eakin, do you believe that there are additional 
improvements or is sufficient clarity already provided by the 
Fed with regard to the Main Street Facility?
    Mr. Holtz-Eakin. I still believe that the Main Street 
Facility is too stringent and that when the Congress passed the 
CARES Act, it essentially said to the Treasury be prepared to 
lose half a trillion dollars on behalf of the private sector 
and its workers so that we can support this economy. And while 
Secretary Mnuchin has testified that he is willing to take 
risks and lose money, it looks like they are still running 
these facilities to break even. And so I would take those term 
sheets and make them more generous. And why not have fixed 
interest rates instead of variable interest rates? Why not put 
$100 billion into Main Street? Congress has put the money in 
the Exchange Stabilization Fund. That will have greater 
leverage, get to more mid-sized companies. And why have all the 
principal amortizing in an even fashion? Put it in a balloon at 
the end and let the terms be longer. There is no reason not to 
do any of those things. So to focus on the budgetary impact at 
the expense of the economy is the most fundamental error we 
could make at this moment, and I think we are making it.
    Chairman Crapo. All right. Thank you.
    Dr. Shierholz, you indicated that you felt that with regard 
to State and local government, if I understood you right, 
really a loan is not the most effective way to assist them. As 
you know, Congress is considering additional support for State 
and local governments. You are indicating, am I correct, that 
that should come in the form of grants?
    Ms. Shierholz. Absolutely. I think that what State and 
local governments are facing now is a huge decline in their tax 
revenue. That is still going to be there in years to come. They 
are not going to--in order to keep them from becoming a huge 
drag on the recovery, we need to make sure that those budget 
shortfalls are filled in. It is one of the most important 
things we can do to generate a robust recovery.
    Chairman Crapo. All right. Thank you.
    I am moving around quite a bit here, but I want to get to 
several other things in my minute and a half that is left. I 
will go to Dr. Holtz-Eakin with regard to the Municipal 
Liquidity Facility. I have said many times that the threshold, 
which has been reduced now to 250,000, still does not even 
cover a single county or city in Idaho. The response to that is 
that they can access these resources through the States. Do you 
believe that the way that the Municipal Facility is set up will 
actually facilitate the kind of revenue getting--well, I would 
say the kind of assets getting to the States, the smaller 
cities and counties across the country?
    Mr. Holtz-Eakin. Well, I have great confidence the States 
could take advantage of this facility, and I hope they do. That 
has certainly been the strategy for replacing revenue used in 
the business sector, and it will limit the amount that Congress 
has to do directly. But I have no confidence that that will 
remedy the problems that the smaller municipalities or counties 
might be having, and in the absence of a guarantee of that 
sort, I think you need to be concerned about the facility 
threshold at this time.
    Chairman Crapo. All right. Thank you. And with regard to--I 
will just kind of wrap up with a comment, really. Mr. Holtz-
Eakin, you had indicated you think that really one of the 
biggest issues here is that the 13(3) facilities are still not 
in action.
    Mr. Holtz-Eakin. Right.
    Chairman Crapo. And I just want to kind of go over some 
statistics here. The PPP program, as I understand it, has put 
out something in the neighborhood of $530 billion, over 4 
million loans. The Congressional Budget Office put the price 
tag for the checks to individuals--which has not all come out 
yet, but much of it has--at $293 billion and $268 billion for 
unemployment insurance. So we are seeing in those areas that 
the Government was able to move quickly. And your point 
primarily is that we need to engage and get implemented the 
13(3) facilities as quickly as possible.
    Mr. Holtz-Eakin. Yes. I find it very puzzling that they 
have not done this to date. It has been 2 months. I know they 
say that announcements have had important impacts on rates, but 
there is nothing less interesting than a market rate at which 
no one transacts.
    Chairman Crapo. Understood.
    Mr. Holtz-Eakin. It impacts the people.
    Chairman Crapo. All right. Senator Brown.
    Senator Brown. Thank you, Mr. Chair.
    Ms. Shierholz, there is a stark difference in our country, 
as we know, between black Americans and white Americans in 
almost every aspect of life: police brutality, our justice 
system, health outcomes. Black people are dying at a 
disproportionately higher rate than white people, before the 
pandemic, during the pandemic. Americans are angry about these 
disparities, and we should be angry about the senseless 
killings of George Floyd, of Breonna Taylor, of Ahmaud Arbery, 
and so many others. We are outraged that armed white protesters 
are allowed to storm State capitols while peaceful black 
protesters are met with tear gas. I assume all of you on this 
panel noticed that, right?
    These very different realities extend to jobs and income as 
well. Black and Latinx workers face higher unemployment rates 
than white workers. Women across the board, including black and 
brown women, have higher employment rates than men. We know all 
those things.
    Dr. Shierholz, how do economic crises like this one affect 
different racial groups? What do you do to change these 
outcomes?
    Ms. Shierholz. Thank you for that question, Senator. So 
recessions hit black and Latinx men and women harder, with 
higher job loss and greater income decline. One key reason is 
that black and Latinx men and women are concentrated in 
different jobs than white men and women, and the reason for 
that is systemic racism. It is due in part to discrimination in 
hiring and promotions, but that is not the only thing. It is 
also due to systemic differences in access to educational 
experiences and credentials that dictate what kind of jobs 
people can get, and those differences in access are rooted in 
structural racism. It is also due to the fact that even aside 
from educational differences, we still have a lot of 
occupational segregation in this country, and that is rooted in 
structural racism. And it is due to black and Latinx workers 
not having access to job-finding networks that white workers 
have access to and on and on and on.
    Senator Brown. Thank you.
    Mr. Quaadman and Dr. Holtz-Eakin, following up on that, I 
know you see, both of you recognize the disparity between black 
and white unemployment. Is it because of structural and 
systemic racism? Just give me a yes or no, if you would. Dr. 
Holtz-Eakin, you first. Is this disparity between black and 
white employment because of structural and systemic racism?
    Mr. Holtz-Eakin. It is primarily education. That is the 
source of the educational differences, so then your answer is 
yes.
    Senator Brown. Mr. Quaadman, yes or no?
    Mr. Quaadman. Senator Brown, at the Chamber we recognize 
that the inequality and injustice in the African American 
community is real and stand in solidarity against racism and 
advocate for diversity and equity and inclusion in our society.
    Senator Brown. Thank you. I am glad you at least 
acknowledge the structural barriers African Americans and 
people of color face. I think also that statement you just gave 
notwithstanding, Mr. Quaadman, I think you need to ask 
yourselves how your organizations, the companies you represent, 
the antiworker policies you promote are perpetuating systemic 
racism. And I would go here, Mr. Quaadman: There is so much 
corporate America must do to combat systemic racism. Millions 
of mostly black and brown workers risk their safety during this 
pandemic. We know who most of them--who many, many of the 
essential workers are. They are more likely to be women than 
men. They are disproportionately people of color. They are 
working for companies that did not pay them nearly enough to 
begin with. These same companies now, Mr. Quaadman, are 
spending millions on ad campaigns to thank workers and assure 
them that, as they like to say in these ads, ``We are all in 
this together.'' Well, saying ``thank you'' is not enough. If 
we are really all in this together, will the U.S. Chamber take 
the position that its member companies must permanently and 
substantially increase the pay of all workers?
    Mr. Quaadman. Thank you very much for that question, 
Senator Brown. Back in October, the Chamber launched Project 
Growth and Opportunity where we wanted to highlight social 
problems and how companies are actually trying to solve those 
social problems on their own.
    Additionally, in April, in conjunction with Rick Wade, who 
heads our diversity programs at the Chamber, we started a 
dialogue with our financial services firms to ensure that they 
were trying--that they were providing resources to minority 
businesses during the pandemic, and we supported the CDFI set-
asides as well.
    Additionally, with many of the guides----
    Senator Brown. I am sorry to interrupt. I appreciate those 
efforts. But it is not showing up in paychecks, and you know 
that. These workers have always been essential to your 
companies, not just now. They are the ones who make you 
successful. You know many of these workers are eligible for 
Medicaid and SNAP benefits, for housing vouchers, and the 
earned income tax credit and child tax credit. And it is 
fundamentally that your companies simply do not pay.
    A last question. Ms. Shierholz, many of these companies 
receiving billions in taxpayer monies to stay afloat, they lay 
off workers; they force them to risk their safety at work for 
too little pay. Again, we know many of these are black and 
brown workers. What is the best way to ensure they stay afloat? 
From an economics perspective, does it make sense that some of 
the most essential workers are the lowest paid?
    Ms. Shierholz. Right, the essential role played by so many 
low-wage workers and so many black and brown workers in grocery 
stores, utilities, care work, on and on, often without adequate 
personal protective equipment and without a union and voice on 
the job is increasingly highlighting the glaring inequalities 
and inefficiencies in the U.S. labor market. These workers need 
safe workplaces and protective equipment, premium pay, and the 
opportunity to have a union and a voice on the job. And then I 
think it is also useful to note that from a public health 
perspective, we all benefit if essential workers have access to 
paid sick leave, safe workplaces, an ability to point out and 
correct unsafe conditions without fear of retaliation.
    Senator Brown. Thank you.
    Mr. Chairman, thank you.
    Chairman Crapo. Thank you.
    Senator Toomey.
    Senator Toomey. Thank you, Mr. Chairman.
    Just a quick follow-up to this discussion about the 
disparity in economic outcomes. Dr. Holtz-Eakin, if I recall 
correctly, suggested that the biggest explanation is probably 
unequal educational opportunities, which no doubt that is 
probably the single biggest contributing factor. Of course, 
throughout most of our country, if you are wealthy, you get the 
luxury of choosing the school that your children attend, and so 
since a good education for kids is so important to virtually 
all parents, wealthy and even some upper-middle-income 
families, they will make that choice, and they will send their 
kids to a school that will get a good outcome. But we 
systematically deny that freedom to low-income people, and we 
simply trap them in the school that corresponds to their zip 
code without giving them the opportunity to choose a school 
that might work better, might give them more opportunities. So 
when we discuss the inequity or the disparity in economic 
outcomes, I hope we will keep in mind that there is a mechanism 
that could create much more opportunity especially for low-
income families.
    I also think we ought to keep in mind just how terrific it 
would be if we can get through this and get back to the way our 
economy was just a few short months ago when we had the 
strongest economy of my lifetime--I am 58 years old--but 
booming economic growth, record low unemployment, record low 
unemployment for minority communities, wage growth accelerating 
and accelerating fastest for the lowest-income Americans, 
income inequality diminishing. It was really a terrific 
economy, and then along came this pandemic and the 
corresponding shutdowns which did so much damage. We need to 
recover from this as quickly as we can and get back to the 
tremendous circumstances we had that were improving rapidly.
    I would like to touch on something that has been touched on 
peripherally, but I think it is worth underscoring. When we 
passed this legislation and authorized these 13(3) facilities, 
one of the things we hoped for was that maybe the mere 
existence of these programs, the mere authorization for the Fed 
to stand up facilities to buy corporate bonds, for instance, 
maybe that would help to free up the capital markets and allow 
capital to flow in the private markets. And this is so 
important because, of course, large companies are huge 
employers. Across America they employ tens of millions of 
people. And we did not want a short liquidity squeeze to cause 
them to go under and prevent those jobs from ever coming back.
    What I find remarkable is the extent to which the capital 
markets responded, and maybe Dr. Holtz-Eakin would comment on 
this, but my understanding is while we were going through the 
severest economic retraction since the Great Depression, a 
full-blown pandemic, an unprecedented shutdown of our economy, 
and literally locking people in their homes, despite all of 
that, our capital markets responded with record issuance of 
corporate debt. And large companies--and that is who we are 
talking about here, large companies--were able to access the 
capital markets at a rate about twice, two times, what they did 
last year, raising over $1 trillion and enabling themselves to 
shore up their balance sheets so that they could get through 
this time, and if they have, hopefully keep as many people 
employed as they possibly can, and to the extent they could 
not, bring them back, and all of this with the Fed doing almost 
nothing in terms of actual intervention in the market, my 
understanding is they have bought about $3 billion worth of 
corporate bonds through ETFs, and these other facilities have 
not yet been fully funded.
    Now, the Main Street Lending Program, that is a different 
category, a different size company, a different program. But 
would you just comment on the success of restoring confidence 
in our markets and what has happened? And it is not just the 
top credit quality. My understanding is this is pretty much 
across the credit quality spectrum.
    Mr. Holtz-Eakin. So as I mentioned briefly in my opening, 
the Fed has done an outstanding job of keeping this shutdown of 
the real economy from turning into a financial crisis. It moved 
aggressively with open-ended promises of liquidity. It set up 
facilities on its own authorities, which helped enormously. And 
the corporate credit facilities, the announcement effect there 
is a real thing that has been beneficial, and you are right 
about the numbers. Private corporations have accessed credit 
markets to a remarkable degree in the midst of this crisis, and 
the benefit accrues to American workers who did not get laid 
off or will have the ability to come back quickly. I think that 
is all tremendous.
    My point is simply that stopping there and not moving to 
the mid-sized companies with the Main Street Program is a 
mystifying decision.
    Senator Toomey. Yeah, so I think that is a really important 
point, and I urge the Fed and the Treasury to move as quickly 
as they can on the Main Street Lending Program, and I share 
some of your concerns that the terms may be so onerous that we 
might not get the take-up that we are hoping for. In fairness, 
I think starting this program from scratch is a big 
undertaking, and it does take a little while to pull this all 
together. But I think the next question that is a really 
important one and I think we will start to find out very soon 
is whether the terms are such that borrowers will take up, 
those borrowers who need the money.
    I have exceeded my time limit, so I apologize, Mr. 
Chairman, but thank you very much.
    Chairman Crapo. Thank you.
    Senator Reed? Have you got your mute button on, Senator 
Reed?
    Senator Reed. Can you hear me now?
    Chairman Crapo. Yes.
    Senator Reed. Thank you, Mr. Chairman. My technological 
expertise once again becomes obvious to all.
    Dr. Holtz-Eakin, thank you for your testimony and for your 
great work over time. Dr. Shierholz made a very compelling case 
for support for State and local governments, and I have been 
supportive of that since the very initial discussions with the 
CARES Act, and I also have legislation pending. Twenty million 
jobs, that is how many State and local government people are 
employed. About 8.5 percent of our GDP is State and local 
government. If we do not provide them additional grants, would 
that be a major miscue, a mistake in terms of recovery?
    Mr. Holtz-Eakin. Is this for me or for----
    Senator Reed. That is for you, Dr. Holtz-Eakin.
    Mr. Holtz-Eakin. I am agnostic. I leave it to Congress to 
decide whether they should be grants or loans. But if we do not 
have a robust State and local sector, we will not get a robust 
recovery.
    Senator Reed. All right. And that I think is a function not 
only of simply putting the money and keeping people employed, 
but so much of our economic activity depends on things like 
building inspectors being able to inspect construction sites, 
health workers being able to do their jobs when they are 
essentially laid off, furloughed. Oh, by the way, the teachers 
taking children to school so that men and women, adults, can go 
to work, all of that, without it, would just cause a 
catastrophe.
    Does that make sense to you, Doctor?
    Mr. Holtz-Eakin. That is a concern. One of the interesting 
things that came out last Friday in the April payroll income 
and expenditure report was that we have not seen a big decline 
in Government payrolls. It has been a private sector recession 
to date, and I think the key would be to make sure that it does 
not develop into one in the State and local arena.
    Senator Reed. Well, what is happening--and my State might 
be an example--we have a July 1st deadline for our budget. We 
have a constitutional amendment it has to be balanced. They are 
going to have to make some excruciating decisions, and the 
impact will be significant and huge.
    Dr. Shierholz, I know you want to comment.
    Ms. Shierholz. I just wanted to say that we have already 
seen a loss of nearly 1 million State and local jobs. By mid-
April we had already lost more State and local jobs than were 
lost in the entire Great Recession, which actually--I did not 
actually think that those losses would come so early, but the 
fact that they are coming so early does, you know, underscore 
how important that is.
    Senator Reed. Dr. Shierholz, in terms of this local 
funding, it is critical to so many other aspects of the 
economy, as I suggested before. Without schools, parents will 
be inhibited to go back to work because they have no place to 
care for their children. Without inspectors, you cannot get 
projects done. So there will be a multiplier effect in terms of 
the diminishment of State and local payrolls.
    Ms. Shierholz. Yeah, I think that is important to note when 
you think of, yes, there will be a ton of State and local 
government workers laid off, but you think of all of the 
services that they provide, the impact that that will have, and 
then the fact that those workers are not getting income anymore 
means all of the stuff that they buy, people will not be needed 
to produce that stuff because they will not be able to buy it 
anymore. So we just have this really vicious cycle, and that is 
why State and local austerity is so damaging to the recovery.
    Senator Reed. Let me make another point and change the 
subject very briefly. Dr. Shierholz, we are looking at these 
unemployment compensation benefits that will expire. When they 
expire, we are now looking at a situation where people will 
become desperate, literally. And no one anticipates a fast, 
rapid recovery to 5 percent unemployment or 3 percent, or 3.5 
percent unemployment, our record unemployment. In fact, they 
are looking at long-term sustained unemployment of significant 
levels. Without extending unemployment benefits that are not 
tied to a deadline, which I think is wrong, but tied to the 
actual state of the economy, i.e., a certain percentage of 
unemployment, we are going to find ourselves in a deep, deep 
hole. Is that accurate?
    Ms. Shierholz. Yes, Senator, I am glad you brought that up. 
There is just a huge amount of uncertainty around how the 
economic impact of this will unfold. So assigning arbitrary end 
dates to provides to sustain the economy like unemployment 
insurance just makes no sense when the process could be handled 
automatically by having provisions phase out as, for example, 
the unemployment rate declines. I think your key point is that 
automatic stabilizers--using automatic stabilizers would not be 
any more expensive than the cumulative cost of multiple 
extensions in the program, but it would prevent incredibly 
destructive lapses in critical programs while Congress is 
negotiating extensions, and having automatic stabilizers would 
alleviate the terribly corrosive uncertainty by giving 
businesses and households confidence around budgeting and 
planning. It is just good governance.
    Senator Reed. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you.
    Senator Cotton? Is Senator Cotton on?
    [No response.]
    Chairman Crapo. Senator Tillis, are you on?
    [No response.]
    Chairman Crapo. Senator McSally, are you on?
    [No response.]
    Chairman Crapo. Senator Moran?
    [No response.]
    Chairman Crapo. I am going to go to Senator Menendez. I see 
you.
    Senator Menendez. Thank you, Mr. Chairman. Thank you to all 
the witnesses.
    You know, the last jobs report indicated that the State and 
local governments shed more jobs in 1 month than the entirety 
of the Great Recession. And projections released by Moody's 
revealed that every State in the Nation is already or will soon 
face historic budget shortfalls. And if Congress does not act 
soon to help State and local governments, they are going to 
have to cut life-saving services, lay off or furlough more 
teachers, public safety, emergency health personnel. It would 
be the height of irony that those who we need the most in the 
midst of a pandemic would ultimately be laid off.
    So, Dr. Shierholz and Dr. Holtz-Eakin, can you tell us, in 
the last recession what were the consequences of a drag on the 
economy by State and municipal layoffs and what will we be 
facing again in the absence of any assistance to State and 
local governments?
    Mr. Holtz-Eakin. Go ahead.
    Ms. Shierholz. Go ahead.
    Mr. Holtz-Eakin. No, no. That is fine.
    Ms. Shierholz. I will go quickly and then turn it over. So 
we do have good evidence from the aftermath of the Great 
Recession. The Federal Government did not provide enough aid, 
and simple calculations--and I can forward these to you--show 
that the State and local austerity in the aftermath of the 
Great Recession delayed the recovery by over 4 years. And we 
will be facing that and more in the aftermath of this recession 
because budget shortfalls are so much more dramatic right now.
    Mr. Holtz-Eakin. So I think in this moment there are some 
things that are obvious. One, there is an enormous amount of 
pandemic-related expense that the State and local governments 
have incurred, and it is appropriate for the taxpayer to pick 
that up in whole or in part. It is serving the entire Nation.
    I think it is also clear that there are some structural 
problems in some State and local budgets that are not a result 
of the pandemic and not really something you should be 
addressing at the moment.
    And then there is the really hard question, the subject of 
this hearing: How much help can be provided quickly through the 
Municipal Liquidity Facility and how much will you have to end 
up providing through the appropriations process in the 
Congress? And I do not know the answer to that, but I am 
troubled by the fact that we do not have what appears to be a 
live option in the Municipal Liquidity Facility right now.
    Senator Menendez. I agree. Mr. Quaadman, let me stay on 
this subject. What is the impact on businesses and communities 
if States, cities, and counties have to cut investments in 
infrastructure, public health, public safety, or raise sales or 
income taxes to pay for essential services?
    Mr. Quaadman. Senator, thank you for that question. It 
creates a tremendous negative impact on businesses, 
particularly small businesses that depend on those essential 
services. Also, the delay of infrastructure projects, which are 
usually the first to go, are also going to be harmful as well 
to workers and firms also.
    Additionally, as you also allude to, if you were to have a 
large tax increase in the middle of the recession, as State and 
local governments would be forced to do, that is about the last 
thing we need if we are going to try and go on the road to 
recovery.
    Senator Menendez. Thank you.
    Dr. Holtz-Eakin, in a podcast last week, you suggested--and 
I think you have talked a little bit about that here--that the 
Fed's Municipal Liquidity Facility has not been particularly 
successful so far possibly because the terms are too tight. 
Currently, any loans under the Municipal Liquidity Facility 
would have to be paid back within 3 years. Wouldn't you agree 
that just like in the Great Recession, the fiscal pressures on 
States and localities are probably going to still be there 3 
years from now? Wouldn't a longer term make more economic 
sense? Why would you not ultimately offer the States and 
localities the same type of conditions you are offering the 
private sector?
    Mr. Holtz-Eakin. I think the terms on the Main Street 
Lending Program and the Municipal Liquidity Facility should 
have longer terms. I do not see why they are not 10 years. 
There is a great opportunity here to be helpful, and there is 
no reason to rush the repayment in any way.
    Senator Menendez. And at the end of the day, you will make 
money. Maybe not a lot, but you will make some money.
    Mr. Holtz-Eakin. You know, in this moment I do not think 
that is the top consideration. I am afraid they are thinking 
that way.
    Senator Menendez. I agree.
    Mr. Holtz-Eakin. And so I worry about the terms from that 
perspective.
    Senator Menendez. Do you think that the rates that exist--I 
am concerned that the price of credit the Fed is offering to 
the State and local governments would be--they are offering 
more expensive loans to some investment grade municipalities 
than it would to highly indebted private companies through the 
Main Street Lending Program. Do you think these rates are going 
to discourage State and local governments from using the 
facility?
    Mr. Holtz-Eakin. I think that is a concern, and, you know, 
in some cases, if you look at the terms on the Main Street 
Program, they are variable rates. That is a kind of uncertainty 
that we do not need to incur at this point. They could offer 
fixed-rate loans to these individuals, and I think they should.
    Senator Menendez. Well, bipartisan legislation I have with 
Senator Cassidy and others that I think we need to deal with, 
$500 billion for States and municipalities divided in ways that 
ultimately respond to the actual crisis at hand. Thank you very 
much. I have some other questions I will submit for the record.
    Chairman Crapo. Thank you.
    Senator Cotton.
    Senator Cotton. Thank you, Mr. Chairman. Apologies for the 
technical difficulties earlier.
    The Federal response to the Wuhan coronavirus has obviously 
been extraordinarily costly, and I think we all agree that 
vigorous oversight of these expenditures that we have 
undertaken are necessary and proper, and part of that oversight 
responsibility needs to be in making sure that money is used 
exclusively on our economic recovery and trying to save as many 
jobs and as many businesses as possible.
    Mr. Quaadman, in your testimony you warned against 
politicizing the oversight process, not to push policy 
preferences that are unrelated to or distract from our core 
mission of ensuring a strong and steady recovery. I hope there 
is general agreement that every dollar that we spend should be 
directed toward reducing joblessness and combating the virus. 
But of the last two pieces of legislation that the House of 
Representatives passed, there is quite a bit of grab bag 
policies in there, one banning photo identification for mail-in 
ballots. Mr. Quaadman, do you view banning photo identification 
for mail-in ballots to be central and vital to the economic 
recovery from this coronavirus?
    Mr. Quaadman. Thank you very much, Senator Cotton, for that 
question. I think it is important to remember here that this 
economic downturn is a result of Government orders. This is not 
part of the business cycle; this is not part of a market 
failure. So, therefore, while I said we agree that there should 
be strong oversight, if there are going to be industries that 
are going to be targeted because they are not liked, that 
should not be--if they are eligible as decided by law. 
Similarly, we also believe that once it becomes a game of 
``gotcha,'' companies are actually going to stay away from 
these facilities, from these lending programs, and it is 
actually going to frustrate the intent of the CARES Act, and it 
is going to harm workers and make it longer for the economy to 
recover.
    Senator Cotton. I agree with those points, and I will come 
to an example of that in a moment. But it sounds like you do 
not think that banning photo identification for mail-in ballots 
is vital to our economic recovery.
    Mr. Quaadman. Not in this context. That should be taken up 
in another context.
    Senator Cotton. Ms. Shierholz, is banning photo 
identification for mail-in ballots vital and essential to 
economic recovery?
    Ms. Shierholz. What we need to ensure right now is that 
people have access to voting, so we need to be extremely open 
about what we can do in this very difficult time to make sure 
that people--that our democracy is functioning and people are 
able to vote.
    Senator Cotton. OK. I will take that as a no.
    Mr. Quaadman, you recommend disfavored industries and using 
this crisis to try to push pet policies. One requirement of the 
House bill was going to mandate that all domestic passenger 
flights be carbon neutral within 5 years. Do you think that is 
vital to our economic recovery, if it is even technologically 
feasible?
    Mr. Quaadman. Not at this time, and even airlines that have 
talked about going carbon neutral talked about it in a much 
longer time length. In fact, what we should be concentrated on 
is how we are going to have a viable airline industry and air 
cargo industry moving forward and how a smaller airline and 
cargo industry can be in place and be able to grow from that 
point on.
    Senator Cotton. Thanks. What about you, Mr. Holtz-Eakin? Is 
it essential to our economic recovery from this pandemic that 
we mandate all domestic flights be carbon neutral, whatever 
that even means?
    Mr. Holtz-Eakin. No, but I would encourage the Congress to 
keep a close eye on the supply chain and the adequacy of the 
supply chain going forward.
    Senator Cotton. Of course. That is vital.
    And, Ms. Shierholz, is it vital to mandate that all 
domestic flights be carbon neutral in the next 5 years?
    Ms. Shierholz. What we need to do in the aftermath of this 
is make sure that we are making the investments that will set 
things up so that the climate crisis--we are getting a test 
run--right?--on what the climate crisis could look like with 
this crisis we are facing now. And so putting things in place, 
whether or not it is right now or in the longer run, to make 
sure that we are able, we are ready to fight future crises is 
absolutely the right thing.
    Senator Cotton. Thank you. So I will just conclude by 
saying I am pleased that the Senate so far has opposed some of 
the most extraneous, unrelated policies proposed by the House 
of Representatives. As we conduct oversight on the CARES Act 
and as we consider future legislation, I think it is vital that 
we continue to focus on counteracting this virus, getting 
people back to work, getting businesses open again, and getting 
our economy back on its feet. And, obviously, this pandemic has 
had a far-reaching impact. I see Senator Cortez Masto there. We 
all know what this has done to Las Vegas and the hospitality 
industry in all of our States. We know what it has done to the 
defense industry and shutting down small and mid-sized 
suppliers for our large defense contractors. The ramifications 
and the impact of this virus are far-reaching, and we are still 
learning some of the economic impact that it has had. I just 
hope that we keep our focus on that impact and that we do not 
try to pursue unrelated, extraneous policies that we all might 
favor in both parties and within our single policies, that we 
focus on getting people back to work and businesses open and 
getting the economy back on its feet.
    Thank you.
    Chairman Crapo. Thank you.
    Senator Tester.
    Senator Tester. Thank you, Mr. Chairman. And I apologize 
for the lack of video, but that is probably better for you 
guys.
    I just want to start by associating myself with Ranking 
Member Brown's comments at the beginning here. Look, I was 13 
years old when the Kent State shootings went on, and I think we 
are heading down that road. And I never want to tell my 
colleagues what to do, but we need bipartisan pushback about 
what the President of the United States has been doing the last 
few days and, quite frankly, even longer than that, from 
telling folks to drink Clorox to taking IGs out of our ability 
to have independent inspections to now threatening military 
action against civilians. This is ridiculous.
    That aside, I want to get to our panelists, and I want to 
thank them for being here today. I am worried, as I hear most 
of you, quite frankly, that small businesses in Montana and 
across this country are not getting what they need to deal with 
this COVID-19 crisis, from Treasury in particular.
    Would you guys agree with that, number one? And if you do 
agree with that, what do you think Congress should do to set 
things right for small businesses? Go ahead.
    Mr. Quaadman. Senator Tester, this is Tom Quaadman with the 
U.S. Chamber. First off, I think the Phillips-Roy legislation 
that passed the House is now coming over to the Senate provides 
some relief--provides some ability to change some of the 
parameters that are making it more difficult for small 
businesses to comply with some of the forgiveness portions of 
the loan. The other is that the PPP program has undergone many 
different changes where there have been a continual number of 
FAQs that have come out that have shifted the goalposts. So, 
therefore, we also think that small businesses should be in 
compliance at the time when they have got their loan as well. 
So I think those are some of the things where we do need some 
clarity.
    Senator Tester. Do other folks want to comment on that?
    Ms. Shierholz. I can jump in quickly. I just think we 
cannot overlook the fact that things like aid to State and 
local governments, extending the expansions of unemployment 
insurance, those things are incredibly important for small 
businesses because they will maintain people's spending. People 
will not be able to spend in small businesses if they do not 
have their incomes. So that kind of general stimulus is 
incredibly important to all businesses.
    Senator Tester. Dr. Holtz-Eakin.
    Mr. Holtz-Eakin. I think this is a really important issue. 
The crisis was a rolling set of liquidity crunches that went 
through vast swaths of the economy, and the small and mid-sized 
businesses simply do not have the cash to survive this, often 
do not have access to corporate commercial markets, and this is 
the lifeline that will keep them from closing their doors, keep 
their workers from being disconnected from their employment. 
And both of those things the economic infrastructure make the 
recovery harder. And so I think the Treasury should be moving 
with tremendous speed to provide access to these funds at very 
generous terms, and I would encourage you to call, write, or 
change the laws to have that happen.
    Senator Tester. Thank you. I thank all three of you. I have 
got about a minute and 40 seconds left. I am going to ask two 
questions, and I want you to be very concise, and we can get 
through all three of you. It looks like there is going to be 
another economic package coming. How big do you think that 
package should be? And what are your top three priorities of 
any package that we are going to pass? I will start with you, 
Mr. Quaadman.
    Mr. Quaadman. Thank you, Senator Tester. We are actually 
putting together our CARES Act 2.0 letter now. We think that 
additional bridge financing is something that should be 
important, and other issues, including child care, which are 
important reopening issues for companies should be addressed, 
and we will share that letter with you in the next several 
days.
    Senator Tester. Do you have an overall size of a package 
that you think will be necessary to help keep this economy, as 
crippled as it is, moving forward?
    Mr. Quaadman. We are still looking at that because the 
needs of the business community and the economy today are 
different than when the CARES Act passed back in March and 
April.
    Senator Tester. Correct. Moving forward, I would love to 
get your input on that. If you would put that to us, that would 
be good.
    Heidi, would you like to speak to that?
    Ms. Shierholz. Sure. So I think the key, the most important 
thing is direct fiscal aid to State and local governments, 
expansions of unemployment--or continuation of the unemployment 
insurance expansions in the CARES Act, and the key thing is we 
need all of those provisions tied to economic conditions so 
they do not expire at arbitrary dates. That actually makes it 
kind of tricky to know exactly how much it will cost, but I 
think the size of the House bill is on the order that we are 
looking for, but we need to be prepared to do more if the 
economy remains weak.
    Senator Tester. Dr. Holtz-Eakin.
    Mr. Holtz-Eakin. I would encourage you not to think of it 
in terms of dollar size but in terms of problems that must be 
addressed. And people will reopen this economy; Governments 
will not. And they will reopen it when they feel safe. That 
means workers must be able to work safely in the workplaces, 
and reconfiguring workshop will be expensive. We should focus 
on helping businesses do that. Businesses have concerns about 
liability that are legitimate, and you should be concerned 
about that. And let us make the environment one in which people 
can go to work successfully and businesses can operate safely. 
That is the key.
    Senator Tester. Thank you, panelists.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you.
    Senator Tillis.
    Senator Tillis. Thank you, Mr. Chairman. Sorry I was not 
able to speak in turn. I am actually on two different 
committees, Judiciary and Banking. Thank you for holding this 
Committee.
    Mr. Quaadman, I have a question actually maybe for you and 
for Mr. Holtz-Eakin, which really follows on what Senator 
Tester was just talking about. If you look at the CARES Act, 
can you give me a really concise stop, start, and continue sort 
of view of the CARES Act and what you would like to see in a 
follow-up package?
    Mr. Quaadman. Thank you very much, Senator Tillis. As I 
said earlier, we do believe that some of the PPP guidelines 
should be changed with that. I also agree with Dr. Holtz-Eakin 
as well that some of the term sheets or some of the parameters 
around the Main Street Lending Program are going to make that 
more difficult. And we think that it should also be important 
for Congress possibly to set some policy parameters to help 
with that demand as well.
    Senator Tillis. Will that be outlined in the letter that 
you discussed with Senator Tester? Is that going to be outlined 
in the letter coming from the Chamber?
    Mr. Quaadman. Yes, and with other communications as well, 
Senator Tillis.
    Senator Tillis. OK. Mr. Holtz-Eakin, your thoughts?
    Mr. Holtz-Eakin. I think continuing to provide liquidity to 
small and mid-sized businesses, PPP and the Main Street Lending 
Program as reconfigured. I think the biggest decision you face 
is how to transform the $600 Federal bonus, which made eminent 
sense when you wanted people to stay home and not work out of 
fear of transmitting the virus, and now with the desire to have 
more people working, it will be a big impediment to the success 
there. Our work says that 63 percent of workers would make more 
on unemployment insurance than they would going back to their 
job, so you need to maintain the purchasing power of households 
while providing work incentives, and that is a key decision 
that you face.
    Senator Tillis. I think the key to that is tailoring it to 
where we get it more into what we believe congressional intent 
was, was to try and keep the employees whole and not create 
this disincentive and potentially a braking factor on economic 
recovery or job recovery.
    I have another question that really relates to other 
actions that we may take here. You know, the number of links in 
the global supply chain that were in China are concerning to us 
in several areas. I think that it is right for us to take a 
look at supply chain resiliency, identify ways to incent 
businesses to maybe move some of that capacity back to the 
United States, or minimally to a more, let us say, predictable 
partner in the global supply chain. But I do think that if we 
are not careful, we could impose--instead of providing 
incentives or carrots, to take a look at reformulating supply 
chains. If we come in with a stick, we may find ourselves 
creating artificial deadlines and constraints on reformulating 
the supply chains that I think could have a very negative 
impact on job creation and prices.
    Mr. Quaadman, have you and your members discussed this?
    Mr. Quaadman. Yeah, thank you, Senator Tillis. In fact, 
companies were already reviewing their supply chains and seeing 
how they should be reoriented after the tensions with China 
last year. Frankly, to some degree the pandemic has actually 
stunted some of that because of the business shutdowns. So I 
think this is something that the business community is already 
looking at and agree with you that this should be done through 
the condition of market forces rather than a stick, as you 
said.
    Senator Tillis. I think it is very important to have your 
members, particularly those who are already looking at supply 
chain resiliency and future strategies, to make sure you are 
communicating to Congress the complexities and the kinds of 
timelines that you are looking at, because we have to keep in 
mind that just because we may be able to manufacture something 
here, it does not mean that everything that we use to source it 
and get it ready to be manufactured can be and will not be in 
the United States. So we have to be very mindful of our policy 
decisions that could impact and potentially disrupt supply 
chains, make them less reliable. And I think that that is 
something that you, manufacturers, and a lot of other 
organizations should weigh in on so that we get that right when 
we move forward with policy.
    Mr. Holtz-Eakin, I see you shaking your head. Do you agree 
with that?
    Mr. Holtz-Eakin. I do. I am deeply concerned that strong 
edicts, for example, just move all capital out of China, will 
miss the point that if you face a risk, diversification is one 
part of the strategy dealing with it, and that if we want to 
have dedicated capacity, as, for example, we have done with 
national security and defense production, we should provide 
market incentives to produce it. And so have a richer R&D 
credit for those who do work in the U.S., provide greater--make 
things permanent, all those things make sense to me.
    Senator Tillis. Thank you. I have got other questions on 
the deficit and a number of other things that I will defer. 
Thank you, Mr. Chair.
    Chairman Crapo. Thank you.
    Senator Warner? And you need to unmute.
    Senator Warner. I got it. One second.
    Chairman Crapo. You are good.
    Senator Warner. OK, great. Thank you, Mr. Chairman.
    Let me get right at it since I lost a couple seconds there. 
First of all, I want to go back to some of the comments that 
Senator Toomey made I tend to agree with around the Main Street 
Facility. I want to start with Dr. Holtz-Eakin. My sense is, as 
well intentioned as CARES was--we were very generous to the 
airline industry. We created traditional Fed tools, 13(3) for 
the commercial paper market for larger enterprises. Even with 
some of the design flaws in PPP, we should have clearly had a 
requirement to show economic loss. I think we are going to find 
a lot of companies that had no economic loss benefiting from 
that program. But, again, pretty darn well for small 
enterprises.
    The mid-sized marketplace, though, these 500 to 10,000 
employees, may not be public, we have created this cliff 
effect. And I share Senator Toomey's concerns about how long it 
is taking for Main Street to get out. I am very concerned that 
there is no take-up rate that will be not an indication of lack 
of need but potentially design flaws. We actually put into the 
legislation--and so far the Fed and Treasury have not acted on 
this--a requirement for a below-market lending facility for 
this middle area. And I know, you know, the Fed has appropriate 
concerns about protecting its resources, but, Dr. Holtz-Eakin, 
what would you say if you had to pick one or two or three 
design changes in Main Street that you think would help the 
program become more effective?
    Mr. Holtz-Eakin. So lower the minimum loan size from 
$500,000 to half that; extend the term from 4 years to, say, 
10; do the amortization of principal over a longer period, put 
maybe a balloon at the end. You know, this is about not 
bleeding cash out of these firms. It is about providing them 
cash. And you could have fixed interest rates, as I mentioned 
earlier. There are a whole variety of the terms that I think 
could be modified to make it more attractive and should be 
modified. The Congress gave the Treasury an enormous amount of 
resources to make sure that the Fed is whole. I understand the 
Fed's concerns about being whole in this. They have their own 
obligations. But the resources are there, and this has to get--
this can get done and should get done.
    Senator Warner. And I agree, and I have, you know, some 
sympathy for Secretary Mnuchin, that, you know, I think we want 
him to be able to have some of those Treasury dollars be at 
risk because that is going to mean the program is going to be 
more leaning in and leaning forward. But I hope--and he said 
this in testimony, but I hope we would see even more leaning 
in.
    Dr. Shierholz----
    Mr. Holtz-Eakin. Sir, just one more thing quickly.
    Senator Warner. Yeah.
    Mr. Holtz-Eakin. You could have those special purpose 
vehicles take 100 percent of the loan. Having the banks hold it 
may slow all this down. So put the risk in the SPV and let the 
Treasury cover it. That could help a lot.
    Senator Warner. Amen, and, again, I hope we can in a 
bipartisan way work together.
    Dr. Shierholz, I want to talk about a couple things in my 
remaining minute. One, you made a comment about the expansion 
on unemployment. I 100 percent agree on that. I know there has 
been some controversy about the $600-a-week plus-up. I think it 
really has helped a lot of struggling families. But I think the 
bigger, more significant change that took place was the 
expansion to cover, you know, big workers, 1099-ers, 
independent contractors. I can tell you in my State only about 
30 percent of the working qualifies for traditional 
unemployment, and I hope my colleagues on both sides of the 
aisle will realize this expansion of the universe covered, we 
really need to maintain it. I think we are talking about a 
different form of capitalism moving forward, and that is a good 
expansion that I hope will continue.
    I want to specifically raise an initiative that I have been 
working with Senator Jones and others on called the ``Paycheck 
Security Act'', and there are more conservative versions that 
Senator Hawley has brought, and Senator Gardner. But this 
notion of as we think about next phase and winding down of 
direct Government support to those furloughed workers who have 
lost their jobs, where we in essence cut out the middleman and 
in a sense model what happens in Europe where they have not 
seen the spike in unemployment, and, candidly, reconnecting 
workers with their employers might also put back in place 
health insurance. So I would love for you to comment on that, 
if you would.
    Ms. Shierholz. Yes, I think that things like the Paycheck 
Security Act is something we should have done from the very 
beginning, as you said, like many of our peer countries in 
Europe did. We should do it now. This idea to keep people 
connected to their jobs, to get money to businesses, to pay 
their workers, even if those workers are not working, but to 
keep that employment relationship strong, it is just the 
smartest possible way to ensure a quick bounce-back once the 
economy is able to reopen so workers and employers do not have 
to go through this scramble to rehire people that will just 
delay the recovery and they can get right back to work. And it 
also means that as few families as possible face the real 
trauma and potentially lasting effects of job loss. So it is 
something we should have done from the beginning, but we should 
absolutely institute it now.
    Senator Warner. Thank you. I know, Mr. Chairman, my time is 
up. I would just simply ask that at some future hearing we 
really do need to focus on as well the notion--that as well 
intentioned all these programs area, there is going to be some 
percentage--I am afraid double digit--of jobs that may not come 
back and how we rethink in a forward-leaning way worker 
retraining. I think we are going to have to break the mold.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you. Understood.
    Senator McSally.
    Senator McSally. Thank you, Mr. Chairman, for holding this 
hearing, and thanks to the witnesses for sharing your expertise 
today.
    I want to talk about the Main Street Lending Facility. We 
have a number of smaller and medium-size businesses in Arizona 
we have been in touch with where, you know, if you have 499 
employees you are able to get access to the PPP. But if you 
have 510, it is going to be this Main Street Lending Facility 
that is going to help you stay afloat and get through this. But 
with the underwriting requirements and the minimum loan amount 
of 500,000, that is a barrier for a number of businesses maybe 
with 500 to 600 employees. And as we put the CARES Act 
together, with all of these provisions in there, we wanted to 
ensure that there was support that was widely available with a 
maximum amount of flexibility.
    So I was wondering, both Mr. Quaadman and Mr. Holtz-Eakin, 
if you could share your perspective on what changes you might 
suggest to the Main Street Lending Facility as far as the 
minimum amount or anything else that could help these 
businesses that are right there on the cusp to make sure that 
there is not a barrier for them to get access to these 
resources.
    Mr. Quaadman. Senator McSally, thank you very much for that 
question. We share many of your concerns about that the Main 
Street Lending Program might be too constrained as it is. Some 
areas that we think should be changed, one is the length of the 
loan. We think it should be at least 6 years. We also share 
some of the concerns also raised by Senator Warner about the 
penalty interest rate. There has been some copying of some of 
the rules from the PPP, such as affiliation rules, that we do 
not think work here because these are more complex firms than 
in PPP. We think that this should also be tailored, and also 
the risk retention rules for banks create some disincentives on 
the lender side as well. So we think that this is where there 
needs to be maximum flexibility for both borrowers and lenders.
    Mr. Holtz-Eakin. I think that is a tremendous list. I 
concur entirely. And I have been through some of those before. 
In addition, you know, I think the Treasury should--you know, 
by acknowledging we are going to have riskier borrowers and 
providing more generous terms, put more money into the Main 
Street Facility, $100 billion instead of $75 billion, and it 
has the resources, it should go ahead and do that.
    Senator McSally. Great. Thanks. Another niche business that 
we have seen really get hurt in Arizona are boutique hotels. 
They employ tens of thousands of Arizonans. The tourism 
industry has obviously come to a standstill. Part of the 
criteria is they cannot obtain credit elsewhere and must be 
creditworthy. They were creditworthy before all of this. So 
this, again, could be a barrier for them because of the 
pandemic, not because of their previous financial situation 
that they were in. So flexibility related to the 
noncreditworthy issue for things like boutique hotels would you 
also support?
    Mr. Quaadman. Yes, Senator McSally, we support that. We 
also support the expansion of, you know, having other credit 
rating agencies as well. And I think you raise a very good 
point about the hospitality industry as well, because that is 
going to be the last industry that starts to come back.
    Mr. Holtz-Eakin. I think you face a very difficult policy 
design question. The initial design was to just glut businesses 
with liquidity. The Fed did its part with financial markets, 
PPP, and the Title IV was a way to do that for the nonfinancial 
businesses. But as we go forward, the problem will no longer 
turn out to be liquidity. It will be the viability of some of 
these business models in the face of a world that still has a 
virus and will have to operate in the face of that virus. And 
so how you can support businesses to operate in the presence of 
the virus I believe is the key policy question going forward, 
not just cash.
    Senator McSally. Thank you. And then one last question in 
my remaining time about nonprofits that have over 500 
employees. There are so many of these. I will give you the 
example of Childhelp, which is headquartered in Arizona, which 
is doing amazing things to help abused children. Now more than 
ever they need to be able to have the support and, as you see, 
some contributions are going down, but their services and their 
need is going up at this very critical time. But since they are 
above 500, they are just in this place where, you know, they 
are not going to be able to get access to PPP.
    Do you think we need a nonprofit facility to be able to 
address entities like Childhelp and others that are in this 
situation, that they have higher demand but they have just got 
some challenges and they just still need access to be able to 
provide these services?
    Mr. Holtz-Eakin. I think that is certainly an idea you 
should think hard about, because, you know, the goal was to 
keep doors open and to keep workers attached to their 
employers. That has nothing to do with being a for-profit or 
not-for-profit, so you should start with the going-in 
proposition that everyone is eligible and carve out only those 
who clearly you do not want to assist.
    Mr. Quaadman. Senator, we have also supported changes to 
both the PPP program and the Main Street Lending Program to 
include not-for-profits as well for many of the same reasons 
that Dr. Holtz-Eakin raised.
    Senator McSally. Wonderful. And I know I am out of time, 
but, Ms. Shierholz, do you have anything to share on the 
nonprofit side?
    Ms. Shierholz. I fully agree with the other witnesses.
    Senator McSally. OK. Fantastic. Thank you. Thanks, Mr. 
Chairman.
    Chairman Crapo. Thank you.
    Senator Warren.
    Senator Warren. Thank you, Mr. Chairman.
    I want to start by thanking Senator Brown, Ranking Member 
Brown, for his comments today about what is happening around 
us. We cannot come together and just ignore everything that is 
going on and the racist violence that has killed George Floyd, 
Ahmaud Arbery, Breonna Taylor, and so many others. This has got 
to be a moment when we commit ourselves to change and to real 
accountability, and I hope that is where we will all be putting 
our energies.
    I know that right now we are talking about how to get the 
economy open again, so I have got some questions about that for 
our witnesses, and let me start with you, Mr. Quaadman. The 
Chamber of Commerce has been hosting webinars on reopening of 
businesses, and recently at one of those webinars, Chamber 
President Suzanne Clark said, and I want to quote her here: 
``Public health officials can say when. Government leaders can 
lift restrictions. Business owners can open their doors. But 
employees have to be comfortable and consumers have to be 
comfortable if they are going to leave their homes.''
    So, Mr. Quaadman, do you agree that employees and consumers 
are not going to feel comfortable leaving their homes unless 
they know that they are going to be safe when they go to work 
or conduct business?
    Mr. Quaadman. The Chamber has taken a position throughout 
this pandemic that decisions need to be driven by data and by 
pronouncements by public health officials. We have also 
developed with our guides with reopening as well as with our 
webinars different guidelines that we have taken from various 
different sources for ways----
    Senator Warren. Let me just stop you there, Mr. Quaadman. I 
appreciate your going over all you are doing, but it was really 
a pretty simple question. Do you agree that customers and 
employees are not coming back until they feel comfortable that 
they are going to be safe?
    Mr. Quaadman. Customers and employees should be safe going 
back into stores and into marketplaces.
    Senator Warren. OK. And they are not coming back if they do 
not feel safe.
    Mr. Quaadman. That is what the data seems to show.
    Senator Warren. Good, because I agree with you on that. But 
tens of thousands of workers have become sick, many have died, 
after being exposed to coronavirus in their workplaces. We do 
not have perfect data, but we do know that more than 9,000 
health care workers have fallen ill with COVID-19. We know that 
grocery store workers and meatpacking workers have died. And in 
New York City alone, we know that more than 80 transportation 
workers have died from this disease.
    Now, the Occupational Safety and Health Administration, 
which is part of the Department of Labor, is charged with 
ensuring that workers are safe on the job. That is their job. A 
key way that OSHA does this is by investigating complaints and 
taking enforcement actions when businesses put employees at 
risk.
    So, Ms. Shierholz, you have served as Chief Economist at 
the Department of Labor, and you now study the labor market. Is 
OSHA on the case right now to help keep workers safe?
    Ms. Shierholz. They are not at all, and I think their 
record in this pandemic speaks for itself. Given the threat of 
the coronavirus and the huge number of essential workers who 
have gotten sick or died, it is absolutely clear that an 
emergency temporary standard to address the increased risk is 
needed, but DOL under President Trump has decided not to issue 
one, and they are receiving thousands of COVID-19-related 
complaints. But OSHA has basically abdicated its responsibility 
for enforcing even the existing standards. They have issued 
only one citation related to the coronavirus so far. OSHA under 
the Administration is not doing its job, and front-line workers 
are paying the price, and we will all pay the price because it 
will make it harder to reopen the economy.
    Senator Warren. So the agency that is tasked with enforcing 
protection for workers is essentially shrugging their shoulders 
as workers get sick and die. And instead of calling on OSHA to 
do its job, Republicans in Congress and lots and lots of 
lobbyists, including the Chamber of Commerce, are calling for 
companies to be shielded from liability for anyone who gets 
sick at their businesses, whether it is workers or customers.
    Ms. Shierholz, as you know, companies are not liable simply 
because a worker or a customer gets sick. Companies are liable 
only if they fail to take reasonable precautions, like if they 
jam workers together without masks or they fail to clean up 
common areas that everyone is touching. So let me ask: Does a 
liability shield for companies that make workers--does it make 
workers or customers any safer, or does it bring in any more 
customers into the store to help in an economic recovery?
    Ms. Shierholz. Thank you for that question, Senator. I want 
to be really clear about this. Removing legal accountability 
from businesses would not make people safer. It would 
jeopardize the health and safety of workers and consumers, and 
it would threaten the overall economic recovery. There have 
been a huge number of examples of companies failing to provide 
workers with necessary protection, and that will just 
proliferate if businesses do not face any liability. It is 
important for reopening.
    Senator Warren. Thank you, and I am sorry to run out of 
time here, you know, but it is really important to emphasize 
that giving companies a pass when it comes to the safety of 
their workers or their customers is not only morally bankrupt; 
it is bad economic policy. Keeping customers safe, keeping 
workers safe is the only way we are going to reopen this 
economy, and to do that we need to implement good safety 
standards that we apply across the board. Thank you.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you.
    Next is Senator Cortez Masto.
    Senator Cortez Masto. Thank you, Mr. Chairman. Thank you, 
Ranking Member.
    Let me start by also associating myself with the comments 
of Ranking Member Brown earlier in the hearing. I have to say 
it is to me completely outrageous and just unacceptable. Last 
night in Las Vegas during the protests, there were shootings 
that left one person dead and a police officer in critical 
condition. That is unacceptable, it is outrageous. And when I 
see the President of the United States doing a photo op with a 
Bible, without healing this country and calming people down, 
taking away the fear, addressing what we see in this country 
right now, which is people are afraid from a health crisis to 
an economic crisis to a civil rights crisis, and this President 
doing nothing but acting like he is on a red carpet, holding a 
Bible. Let me suggest he open the Bible and learn from its 
teachings and how we treat one another with respect and we 
focus on what is necessary in this country right now.
    I cannot stress enough what we need to do, and everybody 
has a role and a responsibility to play. I thank you all for 
being here on this panel. I so appreciate all of the 
constructive comments that were made today. The goal here is to 
ensure that we come out of this crisis and we stimulate this 
economy so that everybody comes out of this together.
    Now, I know Nevada and you know this, Las Vegas 
particularly, Reno and Las Vegas are so hard-hit because they 
are hospitality industries. And I will tell you in Las Vegas 
during the foreclosure crisis, it devastated us. The last 
recession devastated us. It took us 7 years to come out of it. 
We had one of the highest unemployment rates in the country; 
219,000 people in the State of Nevada lost their homes. We know 
the impact. And so to me and the entire delegation in Nevada, 
our goal is to make sure we are focused on our economy so that 
we can spring back that much quicker.
    So here is my question to all three of the panelists. What 
I have not heard yet, and I am curious about your thoughts on 
this, is as we go into the next legislative package, how do we 
talk about workforce development? I have not heard that yet, 
and I think--I have heard that we have a really high 
unemployment rate right now in Nevada and across this country. 
We know that some of that is going to continue on for the next, 
I think, year or so. So what should we be doing with respect to 
workforce development, particularly as we look to putting 
together the next package?
    Let me open it up to the panel, and, Dr. Shierholz, let me 
start with you. Any thoughts on how we should address it and 
how we make that investment in workforce development?
    Ms. Shierholz. Yeah, this is a really interesting question. 
Thank you for this question. I will take maybe an interesting 
tack here, which is right now our most important workforce 
development strategy is to bring back aggregate demand because 
it really will be going forward for a long time the reason 
workers are out of jobs is not because they do not have the 
right skills; it is because aggregate demand is too low, demand 
just is not there. And so that loops back around to getting aid 
to State and local governments, increasing unemployment 
insurance benefits, all of the kind of measures to stimulate 
the economy are, sort of ironically, the thing to do right now 
for developing our workforce.
    Senator Cortez Masto. Thank you. Dr. Holtz-Eakin? Or 
whoever. Yeah, please.
    Mr. Holtz-Eakin. I would like to politely disagree with 
that. This period strikes me as comparable to the period after 
September 11, 2001, when we had a threat to the U.S. 
population, and as a corollary, we had to somehow figure out 
how to operate the economy in the presence of that threat. What 
we saw in that period was a lot of problems with supply, the 
need to inspect cargo, you know, we put up the TSA, and we had 
bad economic growth. We had a very unsatisfying performance. 
And we tried aggregate demand in 2002, 2003, 2005, and 2008, to 
not great effect. So I think the focus should be on finding a 
way to make supply more resilient in the face of the virus so 
that we can operate this economy going forward. I think that 
should be something--not exclusively but something that has to 
be part of your consideration. And over the long term, you are 
exactly right. If we are going to have elevated unemployment 
over 2 years from now, unemployment insurance is not the answer 
to that. That is not a solution. Keeping a $600 bonus in 
perpetuity will be harmful, not helpful. We need to get real 
strategies that give workers skills and allow them to move to 
more vibrant parts of the economy if the job that they used to 
have does not come back.
    Senator Cortez Masto. Thank you.
    Mr. Quaadman.
    Mr. Quaadman. Thank you, Senator. Up-skilling the workforce 
we believe is an important priority coming out of this crisis. 
The composition of the workforce, the different jobs people are 
going to be involved in in the coming years is going to be 
different. We recently had a group of our--we had an event with 
our technology group where we had a broad discussion on that. 
In each phase of the crisis here, we have formed different task 
forces to deal with different issues. We are coming up with a 
new round of task forces that are going to start within the 
next few days, and up-skilling the workforce is going to be a 
part of that, and we will be happy to have a discussion with 
you on these issues.
    Senator Cortez Masto. Thank you. I appreciate that. Thank 
you for the conversation. I notice my time is almost up. I will 
submit the rest of my questions for the record.
    Thank you all for participating with us today.
    Chairman Crapo. Thank you.
    Next is Senator Jones, and he will be followed by our final 
questioner, Senator Sinema, who will be on the telephone. 
Senator Jones.
    Senator Jones. Thank you, Chairman Crapo. I really 
appreciate this. And thanks to all our panelists for joining.
    You know, we have talked so much about what we need to be 
doing to open essential--get the essential economy reopening, 
but it seems to me that so much of what we have been doing is 
not just to save businesses and save livelihoods, but to also 
save lives. And I appreciate Senator Brown's comments because, 
clearly, while we had a robust economy before this pandemic, so 
much of that economy was not working for so many people in 
America. In a State like Alabama, there were so many folks who 
were working, but yet did not have health insurance through 
their employer and were not eligible for Medicaid because our 
State did not expand Medicaid. And there was some reluctance to 
allow States to use the CARES money that we had for the 
expansion of Medicaid, which I do not fully understand.
    But I also want to point out that when we talk about 
certain things about rebuilding our economy and rebuilding and 
getting things open, you want to rebuild it in a better way so 
that it can help all people. And I think that that is what we 
have to be looking at, whether it is trying to make sure that 
people have access to the ballot box easier, because, you know, 
not everyone in my State has a printer like I do. Not everyone 
in my State has a copier like I do. They cannot get to someone 
to notarize their ballots, and they are afraid to go stand in 
the ballots, and we do not have early voting, we have to vote 
in that 12-hour period. So there are a lot of things that we 
have to do as part of our package to both look at the essential 
economy, but also to save lives and to save those livelihoods.
    I want to go back to some comments that I have heard. I 
know there has been a fair amount of testimony regarding State 
and local governments, and, Mr. Quaadman, I would like to ask 
you, you mentioned earlier there is a connection between State 
and local government recoveries and these grant monies and 
those businesses. Has the Chamber of Commerce taken any kind of 
formal position with regard to grants or monies to go to State 
and local governments? Because that seems to have been 
politicized in a way that everyone agrees that it should not be 
lately, and I am wondering if the Chamber has taken a specific 
position with regard to funding for State and local government.
    Mr. Quaadman. Thank you, Senator Jones. We have been very 
supportive of the Municipal Liquidity Facility. In fact, in my 
testimony we have also made a recommendation for a set-aside of 
10 percent within a State, that that can go to noneligible 
Government entities, so, you know, some of the counties and 
cities that Chairman Crapo was referencing earlier.
    We also believe that there should be some form of aid to 
State and local governments, and that should be tied directly 
to revenue shortfalls so that it is directly tied to the drop-
off there. And we are going to have more to say about that as 
we are coming together, as I said earlier, with some of our 
recommendations for a CARES Act 2.0.
    Senator Jones. Great. And, you know, Dr. Shierholz had 
talked about grant monies. Has the Chamber taken a position 
between loans that may put folks down the road still in a 
difficult position with their balanced budgets versus the grant 
monies to try to keep people employed because so much of our 
workforce in this country is employed by State and local 
government?
    Mr. Quaadman. We are still reviewing that. I do not believe 
we have taken a position on that just yet.
    Senator Jones. All right. If you do that, I would like to 
get that whenever you do, if that is possible.
    Mr. Quaadman. Will do, Senator.
    Senator Jones. I would like to finally ask the panel--and I 
appreciate Senator Warner's comments about the Paycheck 
Security Program and, Dr. Shierholz, your statements about 
that. But I would like to talk a little bit more about 
minority-owned businesses. It seems that so many minority-owned 
businesses these days are really struggling. They did not get 
the initial PPP. They did not get the EIDL loans because their 
credit suddenly sunk. What is going to be the long-term impact? 
And I would like to ask Dr. Shierholz and if you could, Mr. 
Quaadman, also chime in about what the Chamber is going to do 
to try to specifically help minority-owned businesses. But what 
is the long-term impact? What can we do specifically for 
minority-owned businesses in this country?
    Ms. Shierholz. Thank you for the question. What we know is 
that so far much of the Government support has gone to well-
connected companies, which, due to many factors, with 
structural racism at the core, disproportionately excludes 
minority businesses. But minority businesses, too, as you point 
out, have seen a huge drop in their revenues and will have no 
choice but to declare bankruptcy if they do not receive relief. 
So it is just extremely important that we make sure that 
various forms of aid are getting to minority businesses, not 
just the most well connected.
    Senator Jones. Mr. Quaadman, is the Chamber going to 
specifically look--I mean, frankly, minority businesses have a 
lot of barriers to begin with. Is the Chamber looking at 
specific programs to help minority-owned businesses?
    Mr. Quaadman. Thank you, Senator Jones, and I can probably 
exemplify more in writing, but we have supported CDFI set-
asides with the latest round of PPP funding. And as I said 
earlier, we are also working with Rick Wade who heads up our 
diversity programs. Starting in April, we have started a 
conversation with financial services members to talk about how 
we can get more resources to minority- and women-owned 
businesses. So this is a priority of the Chamber as well.
    Senator Jones. Great. Thank you.
    Thank you, Mr. Chairman. I will have some more questions 
for the record.
    Thank you.
    Chairman Crapo. Thank you.
    Our final questioner is Senator Sinema.
    Senator Sinema. Thank you, Mr. Chairman. I think I have 
been unmuted. Can you hear me?
    Chairman Crapo. Yes, we can hear you.
    Senator Sinema. Wonderful. Thank you. So thank you to all 
our witnesses for being here today.
    You know, through passage of the CARES Act, Congress made a 
commitment to business owners across the country to provide 
meaningful relief. In Arizona, the Federal Government has not 
kept its promise because small business owners have been forced 
to jump through bureaucratic hoops, unemployment has 
skyrocketed, and stimulus payments have been lost in the mail 
for weeks. For too many families and small businesses, relief 
has been difficult to come by.
    So today we have an opportunity to talk about the Federal 
Reserve's emergency facilities which, if implemented properly, 
will ensure U.S. businesses, cities, counties, and towns can 
access the financing they need to maintain operations, create 
value, and protect jobs.
    So, Mr. Quaadman, thank you for being here. I appreciate 
you urging an adjustment of the Fed's term sheets so that these 
loan programs can provide needed liquidity to businesses to 
weather this economic storm. I also appreciate your calls to 
expand eligibility for the Municipal Lending Facility so 
smaller cities, towns, and counties can access this vital 
financing.
    Congress can complement this effort by passing our 
bipartisan SMART Act, which is legislation to provide an 
additional $500 billion to State, local, and tribal 
governments. Additional support ensures continuity in vital 
local government services, empowers our local leaders with the 
resources they need to fight the coronavirus, and strengthens 
our economy as we work to recover.
    So, Mr. Quaadman, on April 16th, you provided 
recommendations to the Federal Reserve on how to better tailor 
the Main Street Program. Doctors and public health experts warn 
of a second wave of coronavirus in the fall. How vital is it to 
get Main Street lending done correctly right now given the 
likelihood of a recurrence in the fall?
    Mr. Quaadman. Thank you very much, Senator Sinema, and we 
appreciate our past partnership on legislative initiatives such 
as the JOBS Act.
    Number one, we think it is very important and vital that 
Main Street lending get off the ground and get off the ground 
in an efficient way to deal with the issues that we are trying 
to deal with now and to try and work through the summer. We are 
also extremely concerned, as you have alluded to, that there 
could be a second wave of coronavirus that could have economic 
implications. We are actually reviewing a proposal that we have 
been talking about with some members for some time now about 
possibly creating a bridge loan program that could help 
businesses get through a second wave, but possibly do so in 
such a way that could also be done without necessarily a grant, 
but also to help minimize some of the risk to the Federal 
Treasury as well. So we may have more to talk about that very 
soon.
    Senator Sinema. Well, thank you. I appreciate your 
perspective, and my hope is to encourage Congress and the 
Administration to begin doing some long-term planning for these 
scenarios so our economy is resilient and can manage these 
challenges better as we move forward.
    My next question relates to our path forward. As we have 
seen, lending facilities, just like the Paycheck Protection 
Program, employee retention tax credits, individual rebate 
checks, and other aspects of the CARES Act, can be vital tools 
for stabilizing and rebuilding the economy. Effective 
implementation is key, and understanding the capabilities and 
limitations of each policy tool is very crucial. For example, 
if a bank is too overwhelmed or the SBA's IT system is outdated 
resulting in a business not getting its PPP loan, then the 
program is not working as expected. This experience should 
teach Congress that in a crisis the speed and efficiency of 
financial relief matters to everyday Arizonans.
    So what I am concerned about is the capability of 
institutions, both Government and private, to quickly deliver 
prescribed financial relief. For example, Dr. Holtz-Eakin, you 
have spoken on the Federal Reserve's limited ability to help. 
You have also stated the fastest remedy would be to provide 
businesses with grants or loans, which Congress tried to do 
but, of course, execution was lacking.
    We have a number of options for our fourth coronavirus 
response package to help businesses and families get back on 
their feet. We are considering additional rebate checks, more 
grants and loans, leveraging banks, insurance, the Tax Code, or 
other mechanisms all to get relief and certainty to people that 
need it. And that is a lot to consider, so I want to make sure 
we get it right.
    So my last question is for those who wish to respond, what 
is the fastest and most efficient mechanism to provide 
financial assistance to small and medium-size businesses? And 
what is the fastest and most efficient way to provide relief to 
families?
    Chairman Crapo. And if you could please be brief. We are in 
a vote already.
    Mr. Holtz-Eakin. I will be happy to respond in writing.
    Mr. Quaadman. I can do the same, Senator, but I would just 
say that our well-capitalized banking system is an important 
bulwark to get this done.
    Ms. Shierholz. And I will jump in and say I know we have 
talked a lot about the importance of State and local aid which 
would support all of that, and we can do that very quickly by 
having the Federal Government take over Medicaid payments as a 
way to get money out. We should absolutely be doing that.
    Senator Sinema. Thank you so much.
    Mr. Chairman, thank you, and I appreciate all of our 
witnesses being here today. I look forward to seeing their 
responses in writing as well.
    Chairman Crapo. Thank you. That concludes our questions, 
and we are in a vote. However, Senator Brown has asked for a 
brief concluding remarks, and then we will wrap it up.
    Senator Brown. Thank you, Mr. Chairman. As you know, I like 
to do this, but I also respect the way you run this Committee 
and keep it short. So thank you.
    Thank you very much to the three witnesses for your insight 
and the comments you made.
    This comes down, Mr. Chairman, to standing up for the 
people who make our country work, and we cannot do that until 
we talk about what is broken. I am frustrated, as so many of my 
Democratic colleagues on this panel clearly are, I am 
frustrated, especially given all that is happening right now, 
that so many of my colleagues refuse to see the role of 
systemic racism in this problem. It is not just about 
education. Education does not explain the massive disparity in 
black people's incomes even when they have the same education 
as their white peers. It does not explain the difference in 
maternal mortality rates held constant for education.
    If my colleagues were serious about education--and I know 
my colleague from Pennsylvania especially talked about it--they 
would be talking about investing more in public schools, 
something they rarely do. The last crisis was longer, it was 
deeper because we ignored the people who got hurt the most, 
especially black and brown people who suffered most from the 
foreclosure crisis. You have heard me in this Committee a 
number of times say my wife and I live in zip code 44105 in 
Cleveland, Ohio. That zip code in 2007 had more foreclosures 
than any zip code in the United States. I still see the 
devastation from that, and those are the people getting hit 
hardest by this crisis. Whether it is segregation, whether it 
is denying people the ability to vote, whether it is fighting 
for the right to organize in the workplace, we have always 
found ways to keep Americans from getting ahead. The difference 
is my colleagues and I on my side of the aisle think we 
actually must do something about it.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you, Senator Brown. And that does 
conclude today's hearing. I again thank our witnesses for your 
expertise and for giving us the time to be here as a part of 
this panel.
    For Senators who wish to submit questions for the record, 
those questions are due on Tuesday, June 9th, and I ask the 
witnesses to respond to those questions as quickly as you can.
    Again, thanks to each of you for participating in the 
hearing today, and this hearing is adjourned.
    [Whereupon, at 11:51 a.m., the hearing was adjourned.]
    [Prepared statements, responses to written questions, and 
additional material supplied for the record follow:]
               PREPARED STATEMENT OF CHAIRMAN MIKE CRAPO
    This hearing is another remote hearing via video.
    A few videoconferencing reminders: once you start speaking, there 
will be a slight delay before you are displayed on screen. To minimize 
background noise, please click the mute button until it is your turn to 
speak or ask questions. If there is a technology issue, we will move to 
the next senator until it is resolved. I remind all senators and the 
witnesses that the 5-minute clock still applies. You should all have 
one box on your screens labeled ``clock'' that will show how much time 
is remaining. At 30 seconds remaining, I will gently tap the gavel to 
remind senators their time has almost expired. To simplify the speaking 
order process, Senator Brown and I have again agreed to go by seniority 
for this hearing.
    With that, today we welcome to this virtual hearing the following 
witnesses: Mr. Thomas Quaadman, Executive Vice President, U.S. Chamber, 
Center for Capital Markets Competitiveness; Dr. Douglas Holtz-Eakin, 
President, American Action Forum; and Dr. Heidi Shierholz, Senior 
Economist and Director of Policy, Economic Policy Institute.
    Congress and the Administration have taken extraordinary actions to 
mitigate the impact of the COVID-19 pandemic and provide conditions 
that will lead to a forceful economic recovery.
    The Coronavirus Aid, Relief and Economic Security Act, or CARES 
Act, has been central to that effort.
    Today we will focus on Title IV of the CARES Act, which provided a 
$500 billion infusion into the Exchange Stabilization Fund, the bulk of 
which is being used to support the Federal Reserve's emergency lending 
facilities.
    This unique lending authority, known as 13(3) authority, is 
authorized under section 13 of the Federal Reserve Act, and plays a 
critical role in stabilizing markets.
    We will receive testimony from each witness on the impact that the 
13(3) facilities have had on the economy, what the policy trade-offs 
are of expanding or restricting the term sheets of the 13(3) 
facilities, how the unused funds from Title IV should be prioritized or 
leveraged, and an overall focus on Title IV implementation.
    Beginning on March 17, 2020, and before the CARES Act was signed 
into law, the Federal Reserve had already announced six 13(3) 
facilities.
    On April 9, 2020, after the passage of the CARES Act, the Federal 
Reserve Board and Department of Treasury announced new and expanded 
lending programs to provide up to $2.3 trillion in loans. This was a 
powerful step forward to support the flow of credit in the economy.
    At the Banking Committee hearing with Secretary Mnuchin and 
Chairman Powell on May 12, 2020, Secretary Mnuchin noted that the mere 
announcement of the Corporate Bond Facility, without putting up $1 of 
taxpayer money, unlocked the entire primary and secondary market for 
corporate bonds.
    The Federal Reserve's recent Financial Stability Report highlighted 
a similar effect on financial markets resulting from the announcement 
of other facilities, noting that ``Indicators of market functioning 
improved after the announcement of the CPFF, the MMFL, and the PDCF.''
    Although the announcement of many of these facilities can help move 
markets toward more normal functioning, becoming operational is key to 
achieving their full potential.
    With respect to the Federal Reserve's emergency lending facilities, 
I look forward to hearing: how announcing and operationalizing the 
facilities have impacted the economy and financial markets so far; how 
the facilities have provided or stand to provide necessary credit to 
households, businesses, States and local governments; ways that the 
facilities could be improved; and how existing term sheets could be 
further expanded or opportunities to build upon the efforts of existing 
facilities.
    The Main Street Lending Facilities and Municipal Liquidity Facility 
extend a lifeline to States, local governments, tribes, and businesses 
by supporting over a trillion dollars of lending with $110 billion of 
Title IV funds.
    Incorporating widespread restrictions in these facilities could 
render the facilities ineffective and leave businesses and their 
employees without critical resources they desperately need.
    Excessive restrictions not only risk ineffectiveness for the Main 
Street Lending Facilities, but also for other facilities, as well.
    For example, on May 11, the Fed updated the term sheet for the 
Municipal Liquidity Facility to lower the population thresholds for 
cities and counties, despite not being included in the CARES Act at 
all.
    While this was a step in the right direction, it still leaves many 
smaller and rural communities without direct access to financial 
resources, including no cities or counties in Idaho.
    Each of these facilities, especially those funded by the CARES Act, 
provide an opportunity to support businesses, employees, States and 
local governments whose lives have been suddenly turned upside down by 
Governments' effort to stop the spread of COVID-19.
    The work to get these facilities up and running has been of immense 
importance, and now it must be ensured that they are structured to 
achieve the greatest impact for those in need.
    I appreciate each one of you joining us today.
                                 ______
                                 
              PREPARED STATEMENT OF SENATOR SHERROD BROWN
    Thank you, Mr. Chairman for holding this hearing.
    The pandemic has been the ``great revealer.'' It reminds us how 
vulnerable many Americans are, and how the economy and Government 
policy tilt in favor of the wealthy, powerful, and privileged.
    A grocery store worker in Ohio told me recently, ``I don't feel 
safe at work and they don't pay me much. They tell me I'm essential--
but I feel expendable.''
    Long before this pandemic, millions of Americans knew that we have 
a system that treats them like they're expendable. Their hard work 
isn't paying off. For some it feels like the system is broken--and for 
black and brown workers, it never worked to begin with.
    It's those black and brown communities across our country who have 
been hit hardest by the coronavirus--they are more likely to get sick, 
they have less access to health care, they make up the communities hurt 
by redlining and Jim Crow laws, and they disproportionately make up our 
essential workers. It's not because they don't work as hard, it's not 
because of individual choices--we ALL work hard, we're ALL trying to do 
something productive for our family and our community, and we ALL want 
to build a better country for our daughters and our sons.
    No, it's because of a system that has been making it harder for 
their work to pay off, and putting their lives at risk for 
generations--long before this virus appeared.
    It doesn't matter if they are jogging in their neighborhoods, 
protesting injustice, asleep in their beds, or driving to the store. 
Black men and women know that systemic racism puts their lives and the 
lives of their children at risk. All the time.
    This is their everyday.
    When Breonna Taylor was killed by police in Louisville and when 
George Floyd was killed by police in Minneapolis, people came to the 
streets across this country to peacefully protest. It is an expression 
of fear, grief, frustration, and anger. It is the same grief we had in 
Cleveland when 12-year old Tamir Rice was gunned down by police in a 
park.
    More black sons and daughters and mothers and fathers killed by 
police officers, the very people who are supposed to protect all 
Americans. More death, when many are already grieving the loss of 
family members and friends to the coronavirus and grappling with the 
economic stress this pandemic has caused.
    Black communities led the Nation in mourning the killings of George 
Floyd and Breanna Taylor over the last week--leading calls for justice 
and long-term changes to dismantle systems of oppression.
    And in the midst of that trauma and grieving, millions of those 
same Americans still go to work, day after day, week after week.
    Our job is to show victims of systemic racism at the hands of their 
own Government that the same Government will protect them from this 
pandemic--that we hear them, that we see them, that we are fighting for 
them. And that their lives matter.
    Our response to this crisis must be to stand behind the people who 
make this country work--all workers, whether you punch a clock or swipe 
a badge, earn a salary or make tips; whether you're raising children or 
caring for an aging parent. Whether your hard work isn't paying off 
now, or whether it's never paid off the way it should.
    Not everything is about money. But the work we do on this Committee 
should show Americans that the Government is on their side. Our work on 
this Committee needs to address wealth inequality and to make sure 
everyone is treated fairly.
    But instead, we are repeating the mistakes of the past and helping 
the rich and powerful, and the corporations they run, while leaving 
most Americans to fend for themselves. We have committed trillions of 
dollars to bail out corporations, without requiring those corporations 
to take care of their workers.
    As Dr. King said--``One day our society will come to respect the 
sanitation worker. For the person who picks up our garbage, in the 
final analysis, is as significant as the physician, for if he doesn't 
do his job, diseases are rampant. All labor has dignity.''
    It's black and brown workers who have been robbed of their dignity 
on the job--far, far too often.
    If we want to be a country where every person has dignity, we need 
to start by recognizing that all labor has dignity.
    But so far, our response to this crisis is not the response of a 
Government that believes that.
    Congress can always find trillions of dollars for corporations--for 
tax cuts, for bailouts. But when hardworking families need help with 
rent, or to put food on the table, this President and this Congress say 
we can't afford it.
    The President and his administration had already made racial and 
economic inequality worse, and undone civil rights protections. They've 
been pretty clear they're willing to put workers' lives at risk--to 
reopen stockyards, or just to juice the stock market.
    And last night, the President of the United States turned the arm 
of the State on peaceful protesters, teargassing the citizens he's 
supposed to serve and exploiting a house of worship, to stage a photo-
op.
    President Trump and his Administration believe that millions of 
Americans are expendable--and it's not a coincidence that many of the 
people they consider expendable are black and brown workers.
    Since the President is unwilling to protect people--whether that's 
protecting their lives, or protecting their financial future--we must 
fill the leadership void.
    I hope today's witnesses can shed light on what we must do to make 
sure the economic recovery isn't uneven and unjust, like the last one.
    I'll close with this:
    Whenever people bring up the ways the system has failed so many 
Americans--online, at a hearing, or at a protest march--there are 
always naysayers--always white, usually men, often pretty well off--who 
say, how can you be so negative? Why do you want to dwell on all the 
worst parts of history? Don't you love our country?
    My response to our country's naysayers and sunshine patriots is 
this: how can you be so pessimistic as to believe this is the best we 
can do? Do you really think that the American people--with our 
ingenuity and optimism and tenacity--do you really think we can't 
create a fairer economy and a more just Government? Do you truly 
believe we can't have a society that works for everyone--black and 
white and brown, women and men, no matter who you are or what kind of 
work you do?
    Protesting, working for change, organizing, demanding our country 
do better--those are some of the most patriotic things all of us can 
do.
    I love my country--and if you love this country, you fight for the 
people who make it work. ALL of them.
    Thank you, Mr. Chairman.
                                 ______
                                 
                 PREPARED STATEMENT OF THOMAS QUAADMAN
 Executive Vice President, Center for Capital Markets Competitiveness,
                        U.S. Chamber of Commerce
                              June 2, 2020
    The U.S. Chamber of Commerce is the world's largest business 
federation, representing the interests of more than 3 million 
businesses of all sizes, sectors, and regions, as well as State and 
local chambers and industry associations. The Chamber is dedicated to 
promoting, protecting, and defending America's free enterprise system.
    More than 96 percent of Chamber member companies have fewer than 
100 employees, and many of the Nation's largest companies are also 
active members. We are therefore cognizant not only of the challenges 
facing smaller businesses, but also those facing the business community 
at large.
    Besides representing a cross-section of the American business 
community with respect to the number of employees, major 
classifications of American business--e.g., manufacturing, retailing, 
services, construction, wholesalers, and finance--are represented. The 
Chamber has membership in all 50 States.
    The Chamber's international reach is substantial as well. We 
believe that global interdependence provides opportunities, not 
threats. In addition to the American Chambers of Commerce abroad, an 
increasing number of our members engage in the export and import of 
both goods and services and have ongoing investment activities. The 
Chamber favors strengthened international competitiveness and opposes 
artificial U.S. and foreign barriers to international business.
    Chairman Crapo, Ranking Member Brown, and Members of the Committee 
on Banking, Housing, and Urban Affairs: My name is Tom Quaadman, 
executive vice president of the Center for Capital Markets 
Competitiveness (CCMC) at the U.S. Chamber of Commerce. Thank you for 
the opportunity to testify today regarding implementation of Title IV 
of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
    The last few months have brought incredible hardship to all 
Americans. The lives lost and affected by the coronavirus pandemic are 
a national tragedy, and many people remain gravely concerned about the 
health of their loved ones. But, every day we hear more stories of 
Americans doing extraordinary things to help their families or those in 
their communities and are reminded that even in these difficult times, 
America's spirit of service is alive and well.
    The pandemic has also led to the swiftest and most significant 
economic downturn the United States has ever faced. In the span of 2 
short months, tens of millions of Americans have lost their jobs, 
millions of businesses have been ordered to limit their activities or 
shut their doors entirely, and households have struggled to pay their 
mortgages, rent, utilities, and other regular expenses. Governments at 
all levels have had to take extraordinary and unprecedented actions to 
keep our economy afloat and allow workers to continue to get a 
paycheck.
    Title IV of the CARES Act authorized $454 billion for the Treasury 
Department's Exchange Stabilization Fund to be used for the creation of 
Federal Reserve credit facilities under Section 13(3) of the Federal 
Reserve Act. Since passage of the CARES Act, the Federal Reserve 
announced the establishment of several facilities to support lending to 
main street businesses, municipalities, and other markets that are 
critical to the functioning of our broader economy. These 13(3) 
facilities--once fully operational--will eventually support around $3 
trillion of lending to the economy.
    The Chamber commends the ongoing work of the Senate Banking 
Committee and the recently established Congressional Oversight 
Commission (COC) to conduct rigorous oversight of these lending 
programs. The ultimate goal of policymakers should be to ensure that 
the credit provided under the CARES Act flows to the businesses and 
households that most need it, while rooting out any waste, fraud, and 
abuse that would undermine or impede economic recovery.
    While American businesses have been impacted as never before by the 
pandemic, make no mistake that American businesses will be the linchpin 
in our road to recovery. Whether it is reorienting assembly lines to 
produce personal protective equipment, taking extraordinary measures to 
help employees or devastated communities, or working their hardest to 
find a vaccine and treatment for the coronavirus, businesses have 
stepped up and will continue to do everything in their power to meet 
this national challenge.
    The Chamber's views on the current state of our economy and 
recovery efforts are discussed in greater detail below.
The Current Economic and Employment Crisis
    The economic shock brought on by the pandemic is unprecedented in 
both its speed and severity. Since the beginning of March, over 40 
million Americans have lost their jobs and filed for unemployment as 
business revenues have dried up and some segments of our economy have 
come to a complete halt. 1st quarter GDP declined by 5 percent, and 
some forecasters estimate that 2nd quarter gross domestic product could 
decline by over 40 percent. \1\
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     \1\ ``GDP Could Decline by 42 Percent in the Second Quarter, 
According to the Atlanta Fed'', CNBC, May 15th, 2020
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    The pain is especially pronounced in certain industries. Based upon 
April employment data, the food, travel, and events industry has lost 
more than 46 percent of its workforce; retail has lost 14 percent; and 
the service industry has lost over 17 percent. \2\ Many of these 
workers are hourly earners and can ill-afford a sustained interruption 
to their ability to earn a livelihood.
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     \2\  https://www.uschamber.com/series/above-the-fold/analysis-
breaking-down-the-unemployment-crisis-industry
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    A recent study from the University of Chicago also demonstrates how 
the crisis has disproportionately impacted lower-wage workers. The 
study found that only 37 percent of the U.S. workforce is fully able to 
``work from home.'' \3\ This demographic is largely made up of white 
collar, technology-oriented jobs that can be done from a laptop. The 
stay-at-home orders and mandated shutdowns do not affect these workers 
as much as they do blue collar or service-oriented positions. While the 
CARES Act and Government assistance programs can be an important bridge 
for workers that have lost their jobs and are seeking a return to work, 
they are by no means a long-term solution.
---------------------------------------------------------------------------
     \3\ ``How Many Jobs Can Be Done From Home?'' Jonathan Dingel, 
Brent Neiman. April 16th, 2020.
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    The current outlook for small and medium-sized businesses has been 
similarly grim. In early April, the Chamber, in partnership with 
MetLife, released the results of a survey which found that under 
current conditions, 43 percent of small businesses believed they had 
less than 6 months until a permanent closure was inevitable. \4\ 
Middle-market businesses--which employ over 40 million workers--have 
also been faced with incredibly difficult decisions regarding their 
future operations and workforce.
---------------------------------------------------------------------------
     \4\ ``Special Report on Coronavirus and Small Business'', U.S. 
Chamber and L. April 3rd, 2020, https://www.uschamber.com/report/
special-report-coronavirus-and-small-business.
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    The Chamber has urged Congress and regulators to consider the 
unique circumstances that led to the dire economic situation we face. 
This crisis was not caused by any type of market or regulatory failure 
and did not originate as part of the normal business cycle. Businesses 
and workers have been harmed through no fault of their own and the 
lending programs established over the last 2 months are, for many 
businesses, their only viable source of financing.
Importance of Lending Programs for Businesses, Employees, and the 
        Broader Economy
    The Chamber supported the inclusion of several programs in the 
CARES Act intended to help businesses weather the current storm and 
retain their employees.
    These programs included the Paycheck Protection Program (PPP) 
administered by the Small Business Administration (SBA) and which 
provides for forgivable loans--with certain conditions--for businesses 
with no more than 500 employees. As recently reported by the Treasury 
Department, the PPP has originated more than $530 billion in loans to 
over 4 million borrowers, making the program one of the more critical 
tools to helping small businesses survive.
    The CARES Act also provided $454 billion in funding for Federal 
Reserve lending facilities under Section 13(3). As noted by Treasury 
Secretary Mnuchin to this Committee recently, since mid-March Treasury 
has approved the establishment of several facilities, including:

    The Commercial Paper Funding Facility

    The Primary Dealer Credit Facility

    The Money Market Mutual Fund Liquidity Facility

    The Term Asset Backed Securities Loan Facility

    The Primary Market Corporate Credit Facility

    The Secondary Market Corporate Credit Facility

    The Main Street Lending Program

    The Municipal Liquidity Facility; and the

    PPP Liquidity Facility

    To date, Treasury has committed $195 billion of CARES Act funding 
to these facilities, and Secretary Mnuchin has stated Treasury's intent 
to the commit the remaining $259 billion.
    Without these facilities and the provision of credit through the 
Federal Reserve's ``lender of last resort'' function, many otherwise 
healthy businesses would face the prospect of permanent closure, 
critical components of our financial markets would be severely 
impaired, and the shock caused by the pandemic would turn into a 
prolonged and severe economic downturn.
Robust Oversight of Lending Programs Is Critical
    The Chamber strongly supports efforts by Congress, the 
Congressional Oversight Commission, and eventually the Special 
Inspector General for Pandemic Recovery to provide oversight for the 
CARES Act lending programs. Oversight of these programs is central to 
the confidence of taxpayers that the funding authorized under the CARES 
Act is being deployed responsibly and in a manner that will support 
economic recovery. Accordingly, identifying fraudulent actors and 
holding them accountable should be the top priority of oversight 
efforts.
    We also believe that oversight is important to ensure that funds 
are being appropriated in a manner that is consistent with 
Congressional intent, and that borrowers are following the appropriate 
terms and conditions for eligibility. Such oversight assists 
businesses' understanding of the expectations that policymakers have 
set for participation.
    The Chamber has consistently supported oversight mechanisms in 
times of crisis when taxpayer dollars are used as a lifeline for the 
economy. For example, in 2009 the Chamber support the Troubled Asset 
Relief Program (TARP) Accountability Act which provided a mechanism for 
Government and the public to easily track and monitor disbursement of 
TARP funds in the wake of the 2008 financial crisis. \5\ As we stated 
then, ``This level of transparency will help avoid the misuse of funds 
and develop a level of confidence that is integral to the success of 
TARP.''
---------------------------------------------------------------------------
     \5\ See testimony of U.S. Chamber to House Financial Services 
Committee, September 17th, 2009, http://archives-
financialservices.house.gov/media/file/hearings/111/quaadman--
testimony.pdf.
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    At the same time, using this crisis and exploiting the CARES Act 
facilities to pursue unrelated policy goals--or to shame certain 
companies or industries for availing themselves of programs they are 
legally eligible for--should not be confused with ``oversight.'' 
Businesses in every sector and of every size are being harmed by the 
pandemic, and many will ultimately choose to apply for and receive 
credit under a program. Our economy will never fully recover if lending 
programs become politicized and used as a mechanism to direct policy 
outcomes that are uncorrelated to putting Americans back to work and 
getting the economy growing again.
    As we noted in a recent letter to the Treasury and Federal Reserve, 
the Chamber also remains concerned over certain corporate governance 
restrictions for 13(3) facilities that were included as part of the 
CARES Act, including a prohibition for certain borrowers from paying 
dividends or engaging in share repurchases. \6\ Such restrictions are 
based upon the reasonable argument that businesses and shareholders 
should not be rewarded with taxpayer support for reckless or 
irresponsible behavior.
---------------------------------------------------------------------------
     \6\ http://www.centerforcapitalmarkets.com/wp-content/uploads/
2020/04/4.16.20--CCMC--MainStreetLoanFacilities--Fed--Treasury.pdf?#
---------------------------------------------------------------------------
    However, the current crisis is inherently unique in that businesses 
seeking financing find themselves in such a position through no fault 
of their own, and in most cases have been mandated by a Government body 
to limit or cease operations. Moreover, retirees and other retail 
investors that rely on the returns generated by dividends and share 
repurchases would be harmed by a broad prohibition against such 
distributions. The Chamber continues to urge the Treasury Department or 
Federal Reserve to use extreme prudence if they decide to implement 
these restrictions authorized under the CARES Act.
Section 13(3) Lending Facilities
    While the lending facilities established by the Treasury Department 
and Federal Reserve are incredibly expansive, we recognize that given 
the severity of the economic situation they may ultimately not entirely 
fulfill the credit needs of our diverse economy. We urge both the 
Treasury Department and Federal Reserve to be flexible in adapting to 
economic conditions as they evolve. The Chamber and its members have 
taken strong interest in the recently established credit facilities. 
Our views regarding a number of them are described in greater detail 
below.
Main Street Lending Program
    The Main Street Lending Program was announced by the Federal 
Reserve in early April and is expected to be operational in the coming 
days. The MSLP will provide up to $600 billion of credit through the 
Main Street New Loan Facility, Main Street
    Priority Loan Facility, and the Main Street Expanded Loan Facility. 
The MSLP will be especially important for middle market businesses that 
are ineligible for the PPP but are struggling to finance their 
operations and payroll.
    The Chamber was pleased with several changes made to the 
eligibility requirements of the program by the Federal Reserve in mid-
April. These changes included modifying employment and revenue 
thresholds to include more businesses, decreasing the permitted minimum 
loan size by half, allowing for the use of adjusted EBITDA to determine 
leverage, including borrowers with nonterm loans, and substituting the 
Secured Overnight Financing Rate (SOFR) with the still widely used 
London Inter-bank Offered Rate (LIBOR) to price loans.
    While these changes should make the program more attractive, as 
noted above we believe that restrictions on capital distributions could 
ultimately be harmful to both businesses and their shareholders. We 
also believe eligibility requirements under the MSLP should be modified 
to include nonbank lenders, in particular by expanding the definition 
of an ``eligible loan'' to include those made by nonbank lenders.
    Additionally, while the banking system stands ready to assist and 
serve as conduits for main street businesses to access the MSLP, we 
continue to hear concerns that some of the other terms of the facility 
are unduly restrictive for some borrowers. For example, extending loan 
maturities up to 6 years would provide greater flexibility for 
borrowers, and we believe that the Federal Reserve should reexamine the 
``penalty rate'' provided for under the program which currently may 
prove to be a disincentive for many borrowers.
    Congress, the Treasury Department, and the Federal Reserve should 
be cognizant about the possibility of ``donut holes'' being created 
that leave out important sectors of the economy. The MSLP was intended 
to complement the PPP by providing credit to medium and larger 
businesses that are not eligible for SBA lending. Yet, it appears key 
eligibility restrictions for the MSLP were copied from PPP requirements 
that were drawn from the SBA's 7(a) program. The latest FAQ's for the 
MSLP (May 27, 2020) cite ineligible businesses as those that include 
those ``listed in 13 CFR 120.110(b)-(j), (m)-(s), as modified and 
clarified by STA regulations for purposes of the PPP . . . ,'' but do 
note ``The Federal Reserve may further modify the application of these 
restrictions.''. This would, for example, exclude passive businesses 
owned by developers and landlords that are critical for providing 
locations for main street businesses to operate.
    The Chamber will continue working with the Treasury Department and 
Federal Reserve to ensure that the terms of the MSLP and other relief 
programs do not create any harmful gaps that penalize critical 
industries.
Term Asset-Backed Securities Loan Facility
    The Federal Reserve announced the establishment of the Term Asset-
Backed Loan Facility (TALF) on March 23, 2020, wherein it noted it 
would lend up to $100 billion on a nonrecourse basis--an amount equal 
to the market value of the asset-backed securities (ABS) less a 
haircut--to holders of certain AAA-rated ABS backed by newly and 
recently originated consumer and small business loans. This 
announcement noted that eligible securities will include those backed 
by student loans, auto loans, credit card loans, loans guaranteed by 
the SBA, and other certain asset classes--all of which support critical 
aspects of our economy. Spreads for eligible asset classes tightened 
almost immediately suggesting the market is responding positively to 
the program even before it extends credit. TALF's first subscription 
date for loans backed by eligible ABS will be June 17, 2020, and the 
first loan closing date will be June 25, 2020.
    The commercial real estate industry has faced a number of 
unexpected yet severe headwinds in recent months as a result of 
business disruptions due to COVID-19. In general, tenants that were 
otherwise creditworthy before the crisis have been unable to pay rent 
due to disruptions in their business including Government orders to 
limit their operations. Many tenants of commercial properties have 
found they are ineligible for programs intended to support main street, 
or are restricted in how funds are used, causing them to miss rent 
payments or request forbearance. This has imposed stress on creditors 
that support this market that could be mitigated by TALF.
    The Federal Reserve's May 12th term sheet, while positive, appears 
to fall short of ameliorating some major liquidity issues. Importantly, 
the May 12th term sheet indicates that TALF-eligible collateral 
includes the AAA-rated tranches of both outstanding commercial 
mortgage-backed securities (CMBS). There is evidence to suggest that 
the announcement to add AAA legacy CMBS to the program has already 
improved liquidity in the sector. The Chamber supports this expansion 
of TALF, which we believe would help alleviate the extreme funding 
pressures in the commercial real estate market during this period of 
uncertainty. However, it is our understanding from tenants and 
creditors that this support for CMBS is inadequate.
    We believe the Federal Reserve should expand TALF. First, it should 
be noted that TALF only includes legacy CMBS, it does not include new 
securitizations. The liquidity for legacy CMBS is vital but does not 
adequately address the new issues facing the commercial real-estate 
market. There would be great benefit to the commercial real-estate 
market, including for tenants, if TALF were expanded to new 
securitizations. Additionally, the Chamber has noted that legacy Single 
Asset Single borrower and conduit legacy securities should be included 
in TALF.
    Finally, TALF should address financing challenges for private 
residential mortgage backed securities (RMBS). This asset class was 
arguably excluded from TALF 1.0 (i.e., the original iteration of the 
program created in 2008) due to uncertainty of credit risk in the 
market at this time. However, while TALF 1.0 is a helpful model, it 
does not fully account for the unique nature of this economic crisis or 
changes in market structure. At the request of Congress, underwriting 
has been substantially strengthened by lenders for residential 
mortgages that provides more transparency for credit risk. And, unlike 
Government guaranteed mortgages, private mortgage are not supported by 
any emergency lending programs.
Municipal Liquidity Facility
    State and local government budgets have come under enormous 
pressure in the wake of the pandemic, as business activity and tax 
revenues have dried up. Businesses of all sizes depend on the critical 
services provided by State and local governments--maintaining roads, 
public safety, health care, etc.--to operate their businesses. The 
continuity of these critical services is especially important during 
this time of uncertainty.
    The Chamber accordingly has supported the establishment of the 
Municipal Liquidity Facility (MLF), which will provide a $500 billion 
backstop for the short-term funding needs of States and cities across 
the country. The Chamber was pleased by changes made by the Federal 
Reserve to the original terms of the MLF that would expand eligibility 
to more counties and cities as opposed to just the largest ones, but 
there are outstanding questions about the effectiveness of its 
structure in terms of eligibility and the cost of funds.
    The primary question the Federal Reserve, and this Committee, 
should remain focused on is eligibility to access the MLF and the 
effectiveness of indirect access for noneligible issuers. The original 
term sheet (April 9) permitted access for U.S. States, counties with a 
population of at least two million residents, and U.S. cities with a 
population of at least one million residents--one estimate determined 
only 24 local governments (in addition to the States) nationwide would 
qualify for direct access. The Chamber was pleased the updated term 
sheet (May 11) expands eligibility for direct access to a total of 86 
local governments, but important parts of the country and economy 
remain overlooked. \7\ We are sympathetic to the Federal Reserve's 
apparent desire to limit the number of potential counterparties due to 
operational constraints and understand their approach to permit 
eligible issuers to provide indirect financing to local governments, 
but it is an imperfect solution.
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     \7\ https://www.newyorkfed.org/medialibrary/media/markets/
municipal-liquidity-facility-eligible-issuers
---------------------------------------------------------------------------
    However, we do not have confidence that eligible issuers will be an 
effective mechanism for local governments to indirectly access the MLF. 
Most States and large cities--the eligible issuers--are facing their 
own fiscal challenges that will not likely be completely ameliorated by 
the MLF; therefore, it is highly unlikely they would share access to 
funds with other issuers. History has shown that States actually tend 
to push costs down to local governments when encountering fiscal 
challenges. It is unclear if States have the operational capacity to 
provide indirect access to the MLF, and some may not currently have the 
legal authority. Finally, it is unclear if eligible issuers would have 
to assume credit risk.
    The Chamber has recommended to the Fed to provide an exclusive 
allocation of funds to be made available to noneligible issuers (e.g., 
10 percent MLF borrowing by States reserved for cities and counties). 
Another approach may be an incentive structure that allows a State to 
increase its total borrowing authority if it provides financing to 
noneligible issuers. Finally, it is unclear if eligible issuers would 
have to assume credit risk. There will be little incentive to overcome 
these operational considerations if the MLF maintains a punitive 
funding rate.
    The Chamber appreciates the Federal Reserve's role as a ``lender of 
last resort,'' but encourages ongoing review of the funding rates in 
the MLF. Overly punitive penalty rates (i.e., in excess of market 
rates) will discourage take up in the program. The MLF should be 
cognizant of crowding out private capital, but should not lose sight of 
the dire fiscal situations of State and local governments that were 
otherwise responsible borrowers with reliable access to financing, 
before encountering revenue shortfalls due reasons such as delaying 
income tax filing or decreased sales tax receipts from depressed 
economic activity. MLF pricing remains too high except for the issuers 
with the lowest credit ratings. The penalty for AAA/AA/A rated debt is 
above the current abnormal spreads. The Federal Reserve should lower 
the funding rate, like it has with other 13(3) programs such as the 
Commercial Paper Funding Facility (CPFF), if take-up is lower than 
expected. A more logical target for pricing would be to set a penalty 
rate to prevailing spreads from January/February 2020 (before the 
market uncertainty from COVID-19).
    Expanding the term of the loan to 3 years in the most recent term 
sheet is an improvement but may not be long enough. Clearly, the term 
of the loan should reflect the expected cashflow of the borrower. It is 
widely believed that it could take 3 to 4 years for the economy to 
recover, and for corresponding revenue levels to return, thus a term 
length closer to 5 years may be more appropriate.
    Finally, it is important to remember that the Federal Reserve 
maintains authority to purchase and sell municipal securities in the 
open market. The Federal Reserve has established similar programs that 
cover every major asset class except for municipal securities and 
Congress recognized these liquidity issues in the CARES Act. At that 
time, there were unexplainable price dislocations that signaled issues 
with the functioning of the market. These issues have abated, but the 
market stability may be caused, at least partly, in the Federal 
Reserve's authority to intervene.
Primary Market Corporate Credit Facility and Secondary Market Corporate 
        Credit Facility
    The Federal Reserve established two facilities to support credit to 
large employers--the Primary Market Corporate Credit Facility (PMCCF) 
for new bond and loan issuance and the Secondary Market Corporate 
Credit Facility (SMCCF) to provide liquidity for outstanding corporate 
bonds and corporate bond portfolio Exchange Traded Funds (ETFs). The 
Chamber supports both the PMCCF and SMCCF as sources of liquidity to 
companies navigating business challenges as a result of the pandemic.
    Based on the term sheets that were issued for the PMCCF and SMCCF 
on April 9, 2020, the Chamber asked the Federal Reserve to address a 
series of comments and questions regarding the initial terms and 
conditions surrounding eligible issuers, pricing and limits per issuer, 
and the documentation, disclosures, and operational mechanics required 
to access the PMCCF and SMCCF. We commend the Federal Reserve for 
beginning the process of bringing greater clarity to the terms through 
FAQs released on May 4, 2020, and May 26, 2020, and we expect further 
clarification as the Federal Reserve works to make both facilities 
fully operational. While the Federal Reserve has already begun 
purchasing ETFs through the SMCCF, we are still awaiting the PMCCF to 
become operational and the SMCCF to begin purchasing eligible corporate 
bonds.
    Among the issues the Federal Reserve has not yet addressed is 
whether it would consider amending the ratings eligibility to include 
additional issuers. Many companies that are important to the economy do 
not qualify based on the current minimum rating requirement thresholds 
of BBB-/Baa3 as of March 22, 2020, or BB-/Ba3 at time of purchase if 
the issuer has been subsequently downgraded.
    Since our original comments to Federal Reserve, it has also been 
brought to our attention a deep concern that the facilities will lose 
their effectiveness through its reliance on ratings from only the three 
major nationally recognized statistical rating organizations (NRSROs): 
Fitch Ratings, Inc., Moody's Investors Service, Inc., and S&P Global 
Ratings. Given that the PMCCF and SMCCF may be a critical source of 
support to larger enterprises that are ineligible for other programs, 
we encourage the Federal Reserve to consider including all SEC-
registered NRSROs, not just those rated by major rating agencies.
    In its updated FAQs posted May 26, 2020, the Federal Reserve 
subsequently decided to allow ratings from DBRS, Inc., Kroll Bond 
Rating Agency, Inc., and A.M. Best Rating Services, Inc. provided that 
the issuer seeking support from the PMCCF and SMCCF also has a rating 
from one of the three major NRSROs. While this is a move in the right 
direction, such policy will continue to exclude those issuers who 
require liquidity in these challenging times who do not also have 
qualifying rating from the major three major NRSROs. Moreover, the 
Federal Reserve has not provided an explanation of why three of the 
nine NRSROs have been excluded as acceptable ratings.
Paycheck Protection Program Liquidity Facility
    The effectiveness of the Small Business Administration's Paycheck 
Protection Program (PPP) is a top priority of the Chamber. The PPP is a 
lifeline for countless small businesses, and it is therefore 
appropriate the Federal Reserve would offer liquidity to financial 
institutions issuing these loans. The Paycheck Protection Program 
Liquidity Facility (PPPLF) will free up room on the balance sheet so 
financial institutions can do even more support businesses and the 
economic recovery.
    It is worth noting that uptake of the PPPLF has been relatively 
limited. Over 4 million PPP loans and over $500 billion in total 
credit, have been approved. However, according to data available from 
the Federal Reserve earlier this month, total advances outstanding 
under the PPPLF are approximately $29 billion. \8\ While additional 
updates are forthcoming, further changes regarding the terms of the 
PPPLF may be necessary to ensure the facility achieves its intended 
effect.
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     \8\ https://www.federalreserve.gov/publications/files/mlf-msnlf-
mself-and-ppplf-5-15-20.pdf#page=3
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Conclusion
    The lending programs under Title IV of the CARES Act are critical 
towards helping our economy recover from the sudden shock caused by the 
coronavirus pandemic. We believe that with some of the changes outlined 
above and with appropriate oversight from Congress and other bodies, 
these programs will reach their full potential, allow businesses to 
weather this storm, and help workers keep their jobs. Thank you again 
for the opportunity to testify--I would be happy to answer any 
questions you have.
                                 ______
                                 
                    STATEMENT OF DOUGLAS HOLTZ-EAKIN
                    President, American Action Forum
                              June 2, 2020
    Chairman Crapo, Ranking Member Brown, and Members of the Committee, 
thank you for the privilege of appearing today to share my views on the 
implementation of Title IV of the Coronavirus Aid, Relief, and Economic 
Security (CARES) Act. I wish to make three main points:

    A generous interpretation of publicly available data 
        indicates that Treasury and the Federal Reserve have disbursed 
        less than 1 percent of the $500 billion in emergency relief 
        made available by Title IV of the CARES Act in the 2 months 
        since passage of the Act.

    Treasury has provided no loans or loan guarantees under the 
        powers granted it by Title IV to the intended recipients: 
        airlines and businesses critical to national security. Although 
        Title IV funding in theory backs five Federal Reserve emergency 
        lending facilities, to date only one facility is operational 
        that has purchased at maximum $1.8 billion in securities from 
        capital markets.

    This slow pace stands in sharp contrast to lending made 
        possible by other sections of the CARES Act and the other 
        emergency lending facilities at the Federal Reserve. I can only 
        speculate as to why, but it also suggests that there is 
        considerable untapped economic support remaining from the CARES 
        Act.

    Let me discuss these in turn.
    Title IV of the Coronavirus Aid, Relief, and Economic Security 
(CARES) Act, signed into law on March 27, 2020, provides for $500 
billion in financial assistance to eligible businesses, States, 
municipalities, and tribes as emergency relief for losses related to 
the ongoing coronavirus pandemic. \1\
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     \1\ https://www.banking.senate.gov/newsroom/press/cares-act-title-
iv-summary
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    The Title subdivides this $500 billion into three categories:

    $29 billion in loans or loan guarantees to passenger and 
        cargo air carriers, and associated industries, of which $0 
        appears to have been spent;

    $17 billion in loans or loan guarantees for businesses 
        critical to maintaining national security, of which $0 appears 
        to have been spent; and

    $454 billion (including any amounts unused from the above) 
        for loans, loan guarantees, and other investments in support of 
        Fed emergency lending facilities, of which $195 billion can be 
        considered ``committed'' to backing these facilities, but only 
        $1.8 billion appears to have been spent.

    The first two categories empower Treasury directly to make loans or 
loan guarantees to eligible parties in accordance with additional terms 
and conditions set out by the CARES Act, including restrictions on 
share buybacks and executive compensation. \2\ The third category 
provides a potential source of funding for the Federal Reserve's 
emergency lending facilities, with similar conditions applied.
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     \2\ https://www.americanactionforum.org/insight/financial-
services-provisions-in-the-coronavirus-aid-relief-andeconomic-security-
cares-act-final-version/
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    A combined $1.8 billion of the $500 billion authorized by Congress 
in Title IV of the CARES Act has been spent as of the date of this 
testimony, 2 months after the CARES Act passed into law. This stands in 
comparison to the $513 billion in loan assistance \3\ to small 
businesses administered by the Small Business Administration (SBA) in 
the form of Paycheck Protection Program (PPP) loans, as provided for by 
Title I of the CARES Act.
---------------------------------------------------------------------------
     \3\ https://www.americanactionforum.org/research/tracker-paycheck-
protection-program-loans/
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    The remainder of this testimony will consider each category of 
Title IV relief in turn, followed by a comparative consideration of 
other Fed emergency lending and liquidity programs and the PPP for an 
overview of emergency relief as a result of the CARES Act as a whole 
and other efforts. In considering the implementation of Title IV, this 
testimony will cite at multiple points the findings of the first report 
\4\ (the first Oversight Commission Report) of the Congressional 
Oversight Commission established by the CARES Act, published May 18, 
2020.
---------------------------------------------------------------------------
     \4\ https://www.toomey.senate.gov/files/documents/
COC%201st%20Report_05.18.2020.pdf
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Relief for Passenger and Cargo Air Carriers
    The situation facing the airline industry today is unprecedented. 
The downturn in demand for commercial air transportation has been swift 
and dramatic. The International Air Transport Association predicts an 
almost 20 percent loss in worldwide passenger revenues, an astounding 
decline that would amount to more than $110 billion.
    Internationally and domestically, airlines have already cut routes, 
reduced jobs, and even shut down operations.
    But things are tough everywhere. Hotels and restaurants are empty, 
Broadway has been shuttered, and the entire private sector is faced 
with a sharp liquidity crisis. In contrast to those industries, 
however, airlines are a key part of the supply chain. Even passenger 
flights are not just for passengers--they are the backbone of the cargo 
industry. Roughly a quarter of all cargo is transported on those same 
passenger flights that are rapidly being grounded. The health of the 
transportation sector--airlines in particular--is inextricably linked 
to the health of our Nation's economy as a whole.
    A disruption of airline service would ripple through the supply 
chain, creating further economic harm beyond the recent drop in demand. 
Businesses--and vital businesses in particular--still need to receive 
goods that they can then sell to the public. Airlines help ensure they 
receive those goods.
    To be sure, intervening in a market economy is fraught. But this is 
no ``bailout'' of bad behavior. The airlines were in good financial 
shape: They had been raising compensation for employees and investing 
in their business models. This isn't bailing out bad behavior--and the 
moral hazard that engenders. It is throwing a lifeline of bridge 
finance to get past the pandemic and back to business, while continuing 
to support the broader economy.
    Although Treasury has not released a detailed breakdown of funds 
disbursed directly to eligible airlines, the first Oversight Commission 
Report found that Treasury had not disbursed any of the $29 billion in 
funds available under this part of Title IV. As of the date of this 
testimony, there are no public data to suggest that this has changed. 
Airlines had a deadline of April 17 to apply for loans. The first 
Oversight Commission Report notes that Treasury did receive and is 
evaluating applications; it is frustrating that in the 6 weeks since no 
emergency loans or loan guarantees have been granted.
Relief for Businesses Critical to National Security
    In addition to emergency relief directly for passenger and cargo 
airlines, all drafts of the CARES Act \5\ included a carve-out specific 
to businesses critical to national security. Despite the fact that this 
clause was not a late addition to the CARES Act, the Act did not define 
this crucial term. It would be nearly 2 weeks before Treasury provided 
a definition setting out the intended beneficiaries of this relief in a 
set of questions and answers released on April 10. \6\ Treasury 
required that applicants for this relief operate top secret military 
facilities or have the highest-rated priority contracts with the 
Department of Defense. This guidance has not been updated since.
---------------------------------------------------------------------------
     \5\ https://www.americanactionforum.org/insight/financial-
services-provisions-in-the-coronavirus-aid-relief-andeconomic-security-
cares-act-final-version/
     \6\ https://home.treasury.gov/system/files/136/CARES-Airline-Loan-
Support-Q-and-A-national-security.pdf
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    Further, it was not until April 27, a month after the enactment of 
the CARES Act, that Treasury opened the online application system for 
businesses critical to national security to apply for relief under this 
section of CARES, and eligible businesses were only provided with 5 
days during which to apply. Despite this, April 30 remarks by 
Undersecretary of Defense Ellen Lord indicate that 20 companies had 
applied to Treasury for relief as a business critical to national 
security. \7\
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     \7\ https://www.defense.gov/Newsroom/Transcripts/Transcript/
Article/2172171/undersecretary-of-defense-asellen-lord-holds-a-press-
briefing-on-covid-19-resp/
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    As with airline relief, the first Oversight Commission Report found 
that Treasury had not disbursed any of the $17 billion in funds 
available under this part of Title IV. As of the date of this 
testimony, there are no public data to suggest that this has changed; 
as above, it does not seem likely that this position would have changed 
given that the window for application closed on May 1. Why has Treasury 
not granted relief as a result of any of these applications given that 
Treasury has at this point had a month to evaluate any applications?
Support for the Federal Reserve's Emergency Lending Facilities
    Since the onset of the coronavirus pandemic, the Federal Reserve 
has moved more decisively and more quickly in a matter of weeks than in 
the previous century of its operation. \8\ In addition to cutting its 
key interest rate to zero percent and embarking upon a considerable 
round of quantitative easing, the Federal Reserve has introduced or 
reintroduced nine emergency lending facilities--some de novo and some 
created by the Federal Reserve in the 2007-2008 financial crisis under 
the emergency 13(3) powers created by the 1913 Federal Reserve Act. \9\ 
Of these nine facilities, five have or will benefit from equity 
investments by Treasury using the $454 billion appropriated by the 
CARES Act. The status of these facilities is provided below.
---------------------------------------------------------------------------
     \8\ https://www.americanactionforum.org/insight/timeline-the-
federal-reserve-responds-to-the-threat-of-coronavirus/
     \9\ https://www.federalreserve.gov/aboutthefed/fract.htm
    
    
    A total of $195 billion as authorized by Title IV of the CARES Act 
has been committed by Treasury and the Federal Reserve to support five 
emergency lending programs. Before even considering the success of 
these five programs, however, it is immediately obvious that the 
residual $259 billion ($305 billion if the available funds to airlines 
and businesses critical to national security are also considered) 
remains unallocated. Two months after the passage of the CARES Act over 
half of the funds appropriated by Congress are not even committed, or 
available, to a Fed emergency program, even theoretically; this is 
funding that could support trillions of dollars of liquidity.
    Of the five emergency programs nominally backed by CARES funding, 
only one program is operational as of the date of this testimony, the 
Secondary Market Corporate Credit Facility (SMCCF), which alongside the 
Primary Market Corporate Credit Facility (PMCCF) is designed to support 
the credit markets by providing liquidity for outstanding corporate 
bonds. The SCMMF in particular will only purchase exchange-traded funds 
(ETFs) with an investment-grade rating prior to the pandemic whose 
rating has since fallen to ``junk'' (at least BB-/Ba3). The number of 
firms to whom this applies is extremely small, with one analysis 
suggesting that only $50 billion in eligible high-yield bonds are 
available for purchase. \10\
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     \10\ https://www.advisorperspectives.com/commentaries/2020/05/26/
the-feds-corporate-bond-buying-programsfaqs?topic=covid-19-coronavirus-
coverage
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    The most recent Fed report to Congress on the status of the SMCCF 
was made before the SMCCF was functioning and as a result has no 
transaction data to report. \11\ Although the first Oversight 
Commission Report notes that ``on May 12 the [special purchase vehicle] 
began to make purchases of ETFs,'' as of the date of this testimony the 
Federal Reserve has not made available to the public data specific to 
the volume of purchases by the SMCCF. In its weekly statistical release 
(H.4.1, Factors Affecting Reserve Balances), however, the Federal 
Reserve reported as of May 21, 2020, a $1.8 billion balance held by the 
Corporate Credit Facility special purchase vehicle through which the 
SMCCF and the PMCCF operate and will operate. \12\ This $1.8 billion, 
it can be reasonably assumed, represents the balance sheet of the 
special purchase vehicle and therefore it can be deduced that the SMCCF 
has about $1.8 billion in ETFs, with funding presumably backed by 
Treasury.
---------------------------------------------------------------------------
     \11\ https://www.federalreserve.gov/monetarypolicy/files/pmccf-
smccf-talf-4-28-20.pdf#page=3
     \12\ https://www.federalreserve.gov/releases/h41/current/
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    Until the next report specific to the SMCCF is released by the 
Federal Reserve, the max that the $454 billion appropriated by Title IV 
appears to have disbursed appears to be $1.8 billion. Under the three 
sections in total of Title IV that appropriate $500 billion in 
emergency relief, at a generous interpretation, $1.8 billion, or less 
than 1 percent, appears to have been disbursed.
    Going forward, this position will of course change. The proposed 
Main Street Lending Program will facilitate bank lending as much as 
$600 billion to businesses with under 15,000 employees or with 2019 
annual revenues of up to $5 billion. Likewise, the Municipal Liquidity 
Facility will support as much as $500 billion in lending to State and 
local governments. Both programs, due to be operational very shortly, 
will in addition to the other Fed programs support trillions of dollars 
of liquidity. Both programs, however, designed to be key elements of 
the Federal Reserve's emergency lending, will have at best only begun 
to operate 2 months after the enactment of the CARES Act.
Non-Title IV Lending and Relief
    The focus of this hearing is Title IV of the CARES Act. It is 
interesting to note, however, the sharp difference between execution 
under Title IV and the Paycheck Protection Program (PPP) as 
administered by the Small Business Administration with the assistance 
of Treasury. The SBA has supported over $500 billion in lending to 
small businesses impacted by the pandemic. The PPP has proven so 
enormously popular and necessary as to require available funding to be 
increased after the CARES Act was signed into law. The program has 
justifiably come under some criticism, and in particular many questions 
remain outstanding as to the format and nature of loan forgiveness. 
Despite these flaws I have stated that the PPP is the best part of the 
CARES Act. \13\ The SBA has facilitated the largest single support for 
the economy for the month of April. That such enormous sums were 
distributed to businesses in need at all, let alone so quickly, remains 
extraordinary. This is not even the only relevant section of the CARES 
Act. Other sections provide the same industry-specific assistance 
specifically to the airline sector as seen in Title IV; the most recent 
figures show that Treasury has disbursed at least $12.4 billion \14\ to 
93 air carriers via the Payroll Support Program set up elsewhere in 
CARES.
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     \13\ https://www.americanactionforum.org/daily-dish/in-defense-of-
the-ppp/
     \14\ https://home.treasury.gov/news/press-releases/treasury-
implementing-cares-act-programs-for-aviation-and-national-security-
industries
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    Similarly, the Federal Reserve has acted with outstanding haste to 
attempt to balance negative forces in the economy. In addition to 
lowering the Fed Funds rate to zero percent and its quantitative easing 
efforts, the Federal Reserve acted with great speed to loosen capital 
restrictions on banks, making more capital available to businesses and 
individuals in need. \15\ All of the Federal Reserve's emergency 
lending facilities that are not backed in some way by Title IV are 
operational, and as of April 24 the Federal Reserve had provided $85 
billion in funding to the market. \16\
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     \15\ https://www.americanactionforum.org/insight/timeline-the-
federal-reserve-responds-to-the-threat-ofcoronavirus/
     \16\ https://www.federalreserve.gov/publications/reports-to-
congress-in-response-to-covid-19.htm
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Conclusions
    It is clear that Treasury and the Federal Reserve are capable of 
decisive action both in the provision of direct loan support and by 
injecting capital into distressed markets. This makes the slow pace of 
execution under Title IV so striking.
    The most charitable conclusion is that the Treasury and Federal 
Reserve are moving slowly to implement powers newly available to both. 
Broadly speaking, the Federal Reserve emergency lending facilities that 
are currently operational either are or have much in common with the 
emergency lending facilities employed during the previous financial 
crisis. The Federal Reserve has moved much more slowly on new 
facilities, most particularly the Main Street Lending Program, that 
represent such a significant departure from the ordinary business of 
the Federal Reserve.
    It must be assumed that Treasury and the Federal Reserve have 
determined that the safest course for Title IV is to neither move fast 
nor break anything in such substantially new territory. At any rate, 
that such a significant portion of the CARES Act remains unused seems 
to suggest that the CARES Act can provide considerable additional 
support to the economy and that this unused authority should enter into 
the calculus governing any new pandemic-related legislation.
    Thank you, and I look forward to your questions.
                                 ______
                                 
                      STATEMENT OF HEIDI SHIERHOLZ
   Senior Economist and Director of Policy, Economic Policy Institute
                              June 2, 2020
    Chairman Crapo, Ranking Member Brown, and Members of the Committee, 
thank you for the opportunity to testify today. My name is Heidi 
Shierholz and I am a senior economist and the director of policy at the 
Economic Policy Institute (EPI) in Washington, D.C. EPI is a nonprofit, 
nonpartisan think tank created in 1986 to include the needs of low- and 
middle-wage workers in economic policy discussions. EPI conducts 
research and analysis on the economic status of working America, 
proposes public policies that protect and improve the economic 
conditions of low- and middle-wage workers, and assesses policies with 
respect to how well they further those goals. Prior to joining EPI in 
2017, I was the Chief Economist at the U.S. Department of Labor.
    Title IV of the CARES Act provides $500 billion in emergency relief 
in order to support liquidity for eligible businesses, States, and 
municipalities affected by COVID-19. This assistance has been referred 
to as ``bailouts.''
    While numerous concerns have been raised about the lending programs 
in Title IV, the biggest problem with them has arguably not received 
enough attention: Title IV primarily takes the form of loans, not 
grants. In an economy where nonessential activity has been largely shut 
down for an extended period--by a widespread, justifiable fear of 
contracting a potentially lethal virus and by official lockdown 
measures--it is not illiquidity that is often the primary problem. Many 
businesses, States, and municipalities are seeing their revenues drop 
to such an extent that the real threat they face is not illiquidity, it 
is bankruptcy. Further, households are facing huge challenges just 
meeting basic needs in the wake of the shutdown, and having a large 
tranche of aid that does nothing to directly alleviate their 
suffering--or to keep them from needing to slash their spending, making 
the recession worse and the recovery weaker--is a huge missed 
opportunity.
    Relatedly, the $454 billion in this Title that is designated for 
supporting facilities established by the Federal Reserve to provide 
liquidity is money that is solely for insuring the Federal Reserve 
against losses in the event borrowers default on their loans. This is 
not solving any meaningful economic problem. It is likely that in the 
end, this money won't even be ``spent.'' It is more likely that the Fed 
will see gains, not losses, on these loans. This was the conclusion of 
the Congressional Budget Office in determining that there was no 
deficit impact from the $454 billion appropriation. \1\ However, the 
implication of no losses on this lending is also that the lending will 
provide very limited concrete economic stimulus, and instead will 
simply act as insurance policy to backstop the normal functioning of 
credit markets through the pandemic. While this provides some benefit, 
it means that this $454 billion is not actually going toward boosting 
incomes and stimulating the economy during this recession. Most 
destructively, the high ``cost'' associated with this Title could well 
have convinced policymakers and the public that substantial aid is 
being provided and, as a result, reduced their sense of urgency in 
providing more direct aid.
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     \1\ https://www.cbo.gov/system/files/2020-04/hr748.pdf
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    Any displacement of direct aid caused by the allocation of the $454 
billion in this Title would have horrifying consequences for working 
families. Further, it signifies the continuation of a very damaging 
theme in policymaking over the past decade or more: Congress 
outsourcing responsibility for fighting recessions to the Federal 
Reserve. The tools the Federal Reserve has for fighting recessions have 
become extremely weak--not just because what is primarily needed now 
are grants, not loans, but also because the Federal Reserve's main 
tool, lowering interest rates, doesn't go very far when interest rates 
are already near zero. The need for major fiscal policy in fighting 
this recession could not be more urgent. But if policymakers and the 
public are convinced that the Federal Reserve can handle the emergency 
response and, as a result, a further, massive fiscal response is not 
forthcoming, we are virtually guaranteed to face an extended 
depression.
    One example of Federal Reserve assistance that is well-intentioned 
and could potentially support benefits for the broad public but is 
fundamentally less effective than its fiscal counterpart is the 
Municipal Liquidity Facility (MLF) established by the Federal Reserve 
under Title IV to help State and local governments better manage cash 
flow pressures. State and local governments are currently forecast to 
be facing revenue shortfalls as large as $1 trillion in coming years. 
\2\ These shortfalls demand fiscal aid to State and local governments, 
and the MLF cannot be viewed as any kind of substitute for grant aid to 
States and localities. The aid State and local governments need is not 
loans, but direct fiscal grants that will allow them to close their 
massive budget shortfalls--shortfalls that will otherwise force them to 
lay people off and enact deep budget cuts, given their balanced-budget 
requirements. It would be deeply misguided to argue that the existence 
of this lending facility means that States don't need direct aid 
because they can now borrow from the Federal Reserve--as has 
unfortunately been done by Administration officials. \3\
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     \2\ Josh Bivens, ``A Prolonged Depression Is Guaranteed Without 
Significant Federal Aid to State and Local Governments'', Working 
Economics Blog (Economic Policy Institute), May 19, 2020.
     \3\ C-SPAN, ``Secretary Mnuchin Remarks to Reporters'', published 
on April 20, 2020.
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    With that said, credit from the Municipal Lending Facility could be 
of use to States and localities in buying time to manage the fiscal 
impacts of the pandemic. However, the current restrictive MLF rules 
will limit its use even for this purpose. The 3-year term of MLF loans 
is much too short. It is extremely likely that States will still be 
facing fiscal gaps in 3 years, making them reluctant to use credit that 
is due at that time. Despite the fact that State and local governments 
are far more likely to repay loans than private businesses, the 3-year 
MLF loan term is shorter than the 4 year loan term granted to highly 
leveraged companies using the Main Street Lending Facilities, or the 5 
year loan granted to airlines. Another barrier is the fact that MLF 
loans can only be taken out through the end of 2020. Because of the 
level of State budget shortfalls, various State legal restrictions and 
the mechanics of State budget cycles, many States will still need to 
use the facility during 2021. Finally, MLF credit is expensive. It is 
comparable in expense to what is being offered to private businesses 
through the Main Street Lending Facility, despite the fact that 
municipal credits are far safer than private credits and municipal 
credit finances key public services. Without changes in these rules, 
such as those proposed in the HEROES Act, the MLF will be even more 
severely limited in what usefulness it can provide to States and 
municipalities navigating the coronavirus crisis.
    The public benefits of the private sector facilities in Title IV 
are also significantly limited by the notable lack of requirements or 
conditions that would link loans to the creation of social benefit, the 
maintenance of employment, or response to the Coronavirus pandemic. For 
example, the corporate credit facilities have apparently no 
requirements for borrowers to maintain employment or payroll or limit 
executive compensation. This means that companies could sell bonds to 
the Federal Reserve and use the proceeds for share buybacks or other 
increases in executive compensation while laying off their lower-paid 
workers. Conditions on the Main Street Lending Facilities are also 
deeply inadequate--for example, companies do not even need to attest 
that they will make an effort to keep workers, there is simply a 
toothless statement that companies ``should'' make ``commercially 
reasonable'' efforts to maintain employment. \4\ Further, since there 
are no limits on the types of entities that could use these facilities, 
it is likely that highly aggressive and sophisticated entities such as 
large private equity firms will seek out opportunities to channel 
funding to reward capital owners instead of supporting workers and the 
response to the pandemic. Such uses of the facilities could effectively 
loot money from taxpayers. For example, a private equity fund could 
have a portfolio company borrow money from the Federal Reserve, 
transfer that money up to the private equity parent in the form of 
monitoring fees or other payments rather than using it to support 
employment, and then the private equity fund would not be responsible 
for repaying funds to taxpayers if the portfolio company went bankrupt. 
Given the lack of requirements or conditions that would link loans to 
the maintenance of employment, disclosure and transparency are 
profoundly important. Making transaction-level information on the 
identity of borrowers and the details of specific loans public is a 
crucial way to help ensure that borrowers use the funds to genuinely 
support the economy rather than simply seek profits for capital owners. 
Public transparency will help limit the extent to which companies can 
misuse funds. The Federal Reserve has announced that it will publish 
the names and details of participants in its facilities set up in the 
CARES Act. This effort should be monitored to ensure that the 
disclosures include detailed transaction-level information such as the 
identity of borrowers (including beneficial owners of legal entities), 
the terms of the loans, copies of the underlying deal documents, and 
the intended use of the proceeds.
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     \4\ Specifically, ``an Eligible Borrower should undertake good-
faith efforts to maintain payroll and retain employees, in light of its 
capacities, the economic environment, its available resources, and the 
business need for labor.'' See p. 27 of https://www.bostonfed.org/mslp-
faqs.
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    The CARES Act also imposed some basic oversight of these programs, 
but given that President Trump immediately began undermining these 
provisions, \5\ Congress should pass stronger oversight provisions.
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     \5\ The White House, ``Statement by the President'', March 27, 
2020.
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    The major exception in Title IV to the key concern that the Title 
primarily takes the form of loans, not grants--and also to the concern 
that the Title places virtually no conditions on the use of the funds--
is with the aid directed toward industries related to passenger air 
travel and cargo air carriers (this is referred to as the ``airline 
bailout''). This aid was largely comprised of direct grants, and it 
included prohibitions on layoffs, involuntary furloughs, stock 
buybacks, and limits on executive compensation. The conditions could 
have been even stronger--for example, many airlines are attempting to 
skirt the conditions by reducing hours and therefore pay--but the 
conditions have undoubtedly saved many jobs. Unfortunately, the airline 
bailout was a limited exception to the general approach employed in 
Title IV of unrestricted loans.
    It is also important to note that the outsourcing of rescue policy 
to the Federal Reserve has tended to channel Government assistance 
toward the wealthiest in our society. The monetary policy tools used by 
the Federal Reserve work indirectly through support for capital 
markets, not directly through fiscal assistance to those who need it 
the most. We have seen this pattern during the response to the COVID-19 
crisis, where Title IV of the CARES Act provided enormous support to 
investors and capital owners. Given that the richest 10 percent of 
households control 84 percent of the total value of stocks, \6\ the 
most direct effect of this support primarily benefited the wealthy. 
Policymakers must keep this fact at the forefront of their minds in the 
current negotiations on additional fiscal relief. The Federal 
Government must step up to minimize the suffering of low- and middle-
income households as a result of the pandemic, as it has stepped up to 
minimize the negative effect of the coronavirus recession on the 
wealthy.
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     \6\ Edward N. Wolff, ``Household Wealth Trends in the United 
States, 1962 to 2016: Has Middle Class Wealth Recovered?'' National 
Bureau of Economic Research Working Paper no. 24085, November 2017.
---------------------------------------------------------------------------
    Further, if Congress doesn't step in with substantial additional 
fiscal relief, the country will almost surely face an extended 
depression. The official unemployment rate was 14.7 percent in mid-
April, up from 3.5 percent in February. And even though that is the 
highest unemployment rate since the Great Depression, it is not 
actually reflecting all coronavirus-related job losses. In fact, as of 
mid-April, only about half of people who were out of work as a result 
of the virus were showing up as unemployed. About a quarter were being 
misclassified--they had been furloughed and should be counted as 
unemployed and on temporary layoff, but were instead being counted as 
``employed but not at work.'' Another quarter were being counted as 
having dropped out of the labor force altogether, rather than 
unemployed. This is because jobless people who have not been furloughed 
are only counted as unemployed if they are actively seeking work, which 
is currently impossible for many. If all workers who are out of work as 
a result of the virus had shown up as unemployed, the unemployment rate 
would have been 23.5 percent in mid-April instead of 14.7 percent. And 
since mid-April, another nearly 18 million workers have applied for 
unemployment benefits. Typical forecasts predict that the official 
unemployment rate will be around 25 percent in June, that it will still 
be in double digits at the end of 2020, and that it will be around 8 
percent at the end of 2021. As a reminder, the highest the unemployment 
rate ever got in the early 1990s downturn or the early 2000s downturn 
was 7.8 percent.
    Job loss is occurring across virtually the entire economy, but it 
is hitting low-wage sectors particularly hard (think restaurants, bars, 
hotels, personal services, and brick and mortar retail). Because of 
disparate access to education, occupational segregation, 
discrimination, and other labor market disparities, black and Latinx 
workers and women of all races are more concentrated in these jobs. As 
a result, they are facing greater job loss. Further, many people who 
have managed to hang on to their jobs have seen their hours cut (think 
of restaurant workers whose place of work is now only doing takeout). 
The number of people who want full-time hours but are working part-time 
because their employer didn't have enough work for them has more than 
tripled since the coronavirus crisis began.
    The one bright spot in the available jobs numbers is the fact that 
as of mid-April, about three-quarters of the officially unemployed--and 
about two-thirds of all workers who are out of work as a result of the 
virus--report that they expect to be called back to the jobs they had 
before the coronavirus shock.
    Whether they will actually be called back or whether those 
furloughs will turn into layoffs is the fork in the road we are 
standing in as a Nation right now.
    If effective public health measures are enacted--widespread 
testing, contact tracing, self-isolation of those who have been 
exposed, and mask-wearing--nonessential sectors of the economy that 
have been shut down will be able to successfully reopen in phases, 
making it possible for the country to start climbing out of this 
recession. Simply lifting the lockdowns without these public health 
measures will not lead to a successful reopening because most people 
will remain afraid of contracting a potentially lethal virus and will 
understandably be unwilling to fully reengage in the economic activity 
that is a prerequisite for recovery.
    But that alone will not be enough. If the Federal Government does 
not provide sufficient direct aid, then as the economy begins to 
reopen, confidence and demand will be not be high enough for businesses 
to actually need to call furloughed workers back, and those furloughs 
will turn into permanent layoffs.
    The most important provision to help generate a rapid recovery is 
substantial aid to State and local governments. As mentioned above, 
State and local governments are currently forecast to be facing revenue 
shortfalls as large as $1 trillion in coming years. \7\ Further, due to 
balanced budget requirements, these Governments are tightly constrained 
from taking on large amounts of debt to maintain spending in the face 
of this downward shock to their revenues. The result is intense 
pressure for large cutbacks in public spending by State and local 
governments in coming years. Such cutbacks would be devastating to the 
cause of restarting the economy, even if the virus has completely 
abated. We know how devastating these cutbacks would be because we have 
lived through the mistake of allowing them to drag on growth in the 
recent past. The lack of sufficient aid to State and local governments 
in the aftermath of the Great Recession led to State and local spending 
austerity that delayed the recovery from the Great Recession by over 4 
years. \8\ As of mid-April, State and local governments had already 
lost more jobs than they did during the entire Great Recession. In this 
crisis, if Federal aid is passed that is sufficient to close the 
enormous revenue shortfalls the economic crisis will cause for State 
and local governments, it will save 5-6 million net jobs in the public 
and private sector by the end of 2021. Without this aid, those jobs 
will be lost.
---------------------------------------------------------------------------
     \7\ Josh Bivens, ``A Prolonged Depression Is Guaranteed Without 
Significant Federal Aid to State and Local Governments'', Working 
Economics Blog (Economic Policy Institute), May 19, 2020.
     \8\ Id.
---------------------------------------------------------------------------
    It is also crucial to extend the expansions of unemployment 
insurance that were part of the CARES Act well past their current 
expiration dates. The modifications the CARES Act made to the Nation's 
unemployment insurance (UI) system are a crucial lifeline for tens of 
millions of American workers. Aside from temporarily expanding the 
eligibility criteria for who qualifies for unemployment benefits 
through the end of the year and providing an additional 13 weeks of 
State UI benefits, the CARES Act also provided an extra $600 per week 
in UI payments through the end of July.
    This $600 top-up has been fiercely criticized by some since the Act 
passed, but the criticism is either ill-informed or in bad faith. The 
extra $600 has been by far the most effective part our economic policy 
response to the coronavirus shock. It is perhaps worth noting that my 
preference would have been for a 100 percent replacement rate up to a 
quite generous maximum benefit, instead of a flat-rate increase. But 
decades of disinvestment in the administrative capacity of State UI 
offices left them incapable of flexibly calculating each new 
applicant's benefit amount with a 100 percent replacement rate. (Case 
in point: most offices are still using the 1970s-era programming 
language COBOL to run their computers \9\). State offices are capable 
of administering a flat-rate increase, however. So, policymakers in 
Congress appropriately chose the second-best solution of picking a 
flat-rate increase in benefits that would leave the average worker (and 
most workers overall) with 100 percent of their precrisis earnings.
---------------------------------------------------------------------------
     \9\ Alicia Lee, ``Wanted Urgently: People Who Know a Half Century-
Old Computer Language So States Can Process Unemployment Claims'', CNN, 
April 8, 2020.
---------------------------------------------------------------------------
    But the necessity of the one-size-fits-all approach means that 
workers who earned less than the average worker before the crisis will 
receive benefits that are somewhat higher than 100 percent of their 
previous wage. Many conservatives claim this is somehow an economic 
disaster, but in fact, for the purpose of generating a rapid 
macroeconomic recovery from this shock, the more money getting into the 
pockets of low- and middle-wage workers, the better. \10\ These workers 
are likely to be in households that will have little choice but to 
quickly spend any unemployment benefits on necessities, boosting the 
economic recovery. Dropping the additional top-up would mean unemployed 
workers would have to survive on a maximum of half of their prior 
earnings--and many on much less than half, given the extremely low caps 
on regular State UI benefits. Without the top-up, unemployed workers 
and their families would have to severely cut back on their spending, 
hampering the recovery.
---------------------------------------------------------------------------
     \10\ Josh Bivens, ``What Should We Know About the Next 
Recession?'', Economic Policy Institute, April 2019.
---------------------------------------------------------------------------
    The primary complaint against the extra $600 is that it will impede 
the otherwise efficient functioning of low-wage labor markets. But of 
course, the labor market is not ``efficient,'' instead it has been 
rigged against low- and moderate-wage workers for decades, and 
precrisis earnings for these workers were far too low, on both moral 
and efficiency grounds. \11\ Further, the official unemployment rate 
will likely be well over 20 percent at the end of July--and the 
unemployment rate that takes into account everyone who is out of work 
as a result of the virus will be even higher. Even without the 
epidemic, it would be terrible policy on humanitarian and economic 
grounds to use cutbacks to UI benefits that make them too stingy to 
live on as a cudgel to demand people attempt to find a job quickly when 
the labor market is that weak.
---------------------------------------------------------------------------
     \11\ Josh Bivens and Heidi Shierholz, ``What Labor Market Changes 
Have Generated Inequality and Wage Suppression?'', Economic Policy 
Institute, December, 2018.
---------------------------------------------------------------------------
    Some have pointed to stories of low-wage businesses trying to 
reopen reporting they can't find workers because potential employees 
can make more on unemployment benefits and not expose themselves to 
health risks on the job. Policymakers could easily solve this potential 
``incentives'' problem by allowing laid-off workers keep their extra 
$600 weekly payment (or at least some increment of it) even after they 
find a new job, strengthening health and safety standards so workers 
know their workplaces are required to be as safe as possible, and 
offering premium pay to frontline workers who face risk on the job.
    It is also important that none of these provisions (for example, 
emergency unemployment compensation provisions and aid to State and 
local governments) are allowed to expire at arbitrary end dates, and 
instead that automatic triggers for their expiration are enacted. There 
is an enormous amount of uncertainty around how the economic impact of 
the coronavirus will unfold. Assigning arbitrary end dates to 
provisions to sustain the economy makes little sense when the process 
could be handled automatically, by having provisions phase out as the 
unemployment rate or the employment-to-population ratio decline. Using 
automatic stabilizers would not be any more expensive than the 
cumulative cost of multiple extensions of the programs in the bill--but 
it would prevent destructive lapses in critical programs while Congress 
negotiates extensions, and it would alleviate corrosive uncertainty by 
giving businesses, States, and households crucial confidence around 
budgeting and planning.
    If the Federal Government provides sufficient aid during this 
crisis so that people's incomes don't drop dramatically (even if they 
have been unable to work), so that businesses stay afloat (even if they 
have been totally or significantly shuttered), and so that State and 
local governments whose tax revenues are plummeting are not forced to 
make drastic cuts that will hamstring the economy, then today's 
furloughed workers could get back to their prior jobs and the recovery 
could be rapid because confidence and demand would be relatively high. 
But if the Federal Government doesn't act, then those furloughs will 
turn into permanent layoffs and the country will face an extended 
period of high unemployment that will do sweeping and unrelenting 
damage to the economy and the people and businesses in it. Federal 
lawmakers get to choose which path we take.
        RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN
                      FROM THOMAS QUAADMAN

Q.1. Last year, many CEOs of the companies you represent 
pledged that they would start to consider that their companies 
exist not only to serve shareholders, but also their customers, 
suppliers, and workers. Right now, some of the CEOs who 
endorsed this statement have furloughed workers during the 
pandemic, but continued to issue dividends to their 
shareholders. Will the U.S. Chamber take the position that 
companies should halt all dividends and capital distributions 
until they increase pay for their employees? Yes or no?

A.1. As stated in my written testimony for the hearing, the 
economic crisis caused by the pandemic is not the fault of 
businesses that have been ordered to shut down or severely 
limit their operations. The primary, and appropriate, 
consideration of Congress when it passed the CARES Act was 
speed--getting money into the economy quickly so that millions 
of businesses don't collapse, and employees are left without a 
paycheck. The CARES Act is not perfect, but by and large it 
served its core purpose. The Chamber has urged the Treasury 
Department and Federal Reserve to be extremely cautious when 
applying the corporate governance and shareholder distribution 
prohibitions included in the CARES Act. Using this crisis as a 
reason to shoehorn certain policy objectives will only make it 
less likely that struggling businesses access many of these 
programs.
    Further, the argument in favor of a blanket restriction on 
dividends ignores those who depend on dividends for income, 
including retail investors and beneficiaries of retirement 
plans. Taking into account the needs of other constituencies 
does not mean that businesses should harm their own 
shareholders at every opportunity. This economic downturn is 
unprecedented in its swiftness and severity--Congress and 
regulators should not make it worse.

Q.2. Will the U.S. Chamber take the position that all of its 
member companies must publicly disclose whether they have 
received loans through any Federal Reserve lending facility or 
other funding from the CARES Act and the amount of such 
funding? Yes or no?

A.2. As stated in my written testimony, robust oversight of the 
CARES Act programs is critical to instilling public confidence 
in relief efforts, and to identifying and holding accountable 
those who fraudulently attempt to access the facilities. But 
``shaming'' a business teetering on the brink because that 
businesses happens to operate in a particular industry is not 
an appropriate role for policymakers and will only 
disincentivize companies from accessing relief facilities. We 
have no objection to public disclosure of borrowers from CARES 
Act facilities so that the public is informed. The Chamber has 
consistently supported oversight mechanisms in times of crisis 
when taxpayer dollars are used as a lifeline for the economy. 
For example, in 2009 the Chamber support the Troubled Asset 
Relief Program (TARP) Accountability Act which provided a 
mechanism for Government and the public to easily track and 
monitor disbursement of TARP funds in the wake of the 2008 
financial crisis. As we stated then, ``This level of 
transparency will help avoid the misuse of funds and develop a 
level of confidence that is integral to the success of TARP.'' 
We believe the same should apply to oversight of the CARES Act.

Q.3. During the hearing, I asked you about companies spending 
millions of dollars on ad campaigns to thank essential workers 
and assure them that ``We are all in this together.'' Saying 
``thank you'' is not enough. Most of these workers earn 
relatively low wages, and many companies who provided small 
temporary wage increases are now pulling them back. If we are 
really all in this together, will the U.S. Chamber take the 
position that its member companies must permanently and 
substantially increase the pay of all workers? If not, why not?

A.3. The most important thing for American workers over the 
last few months has been to preserve their paychecks, and we 
believe that the CARES Act facilities--particularly the 
Paycheck Protection Program--have done an effective job at 
that. While the Chamber is more than willing to engage in 
discussions with lawmakers regarding a national minimum wage, 
we strongly oppose efforts to tie such a discussion to 
businesses (many of which are struggling to survive) that 
availed themselves of programs passed almost unanimously by 
Congress. Moreover, as the Chamber pointed out in a letter last 
year to the House, the Congressional Budget Office has 
estimated that an increase to $15/hour would result in as many 
as 3.7 million workers losing their jobs. An increase to $10, 
on the other hand, would raise the wages for approximately 3.5 
million workers with minimal job losses. We are happy to 
continue working with policymakers to ensure that American 
workers receive fair wages and to avert any national mandate 
that would cost millions of jobs.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
           SENATOR CORTEZ MASTO FROM THOMAS QUAADMAN

Q.1. Should we have used the Defense Production Act to rebuild 
our strategic national stockpile of medical supplies?

A.1. The Chamber believes the Defense Production Act (DPA) 
offers tools that can be useful to address specific industrial 
bottlenecks and other problems such as price gouging that can 
arise during a pandemic, including this one. The Chamber has 
supported the targeted use of the DPA, but also recognizes it 
is not a complete panacea. For example, the DPA is not a 
substitute for a close public-private partnership focused on 
dramatically boosting production of medical goods and ensuring 
their swift and efficient delivery to where they are most 
needed.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR JONES
                      FROM THOMAS QUAADMAN

Q.1. The Paycheck Security Program would cover the wages and 
benefits of furloughed or laid off employees of affected 
businesses and nonprofits that have experienced a drop in 
revenues of at least 20 percent. Grants will cover salaries and 
wages up to $90,000 for each furloughed or laid off employee, 
plus benefits, as well as up to an additional 20 percent of 
revenues to cover fixed operating costs such as rent, 
utilities, insurance policies, and maintenance.
    Companies receiving these grants must commit to a number of 
restrictions including maintaining pay and benefits of rank-
and-file workers and offering to bring back workers laid off 
since February 1st the opportunity to go back to participate in 
the program at prior level of compensation. Additionally, the 
bill would decrease the burdens on financial institutions that 
are overwhelmed by SBA loan programs.
    Can you share your thoughts on the Paycheck Security Act? 
Do you believe this will provide business owners who missed out 
on the Paycheck Protection Program (PPP) security?

A.1. The Chamber appreciates all the various proposals to 
provide additional assistance to small businesses whose revenue 
has been constrained by stay-at-home orders, and social 
distancing requirements. Recently the Chamber communicated its 
recommendations for a Phase IV bill to the Congress, below is 
what the Chamber recommended to help support small and midsize 
employers. We would be happy to discuss with you how the 
Paycheck Security Program might achieve these goals.
    Excerpts from July 16, 2020, letter to the President and 
Members of Congress available at: https://www.uschamber.com/
letters-congress/us-chamber-letter-the-phase-4-coronavirus-
relief-legislation

        Employers across the country continue to struggle with 
        the economic fallout caused by the coronavirus. The 
        impact, however, is not the same across industries. As 
        of June, some sectors of the economy have essentially 
        restored all the jobs lost since February. Other 
        sectors--particularly those most impacted by closures 
        and social distancing requirements where remote work is 
        not possible--have faced catastrophic revenue and job 
        loss. As part of the CARES Act, Congress appropriately 
        provided broad-based support for employers through the 
        Paycheck Protection Program (PPP), the Economic Injury 
        Disaster Loan (EIDL) program, the Main Street Lending 
        Facilities, the Employee Retention Tax Credit, and 
        other tax provisions.

        At this time, it is appropriate for Congress to take a 
        more targeted approach: closing the gaps that existed 
        in the CARES Act programs and providing additional 
        relief for those businesses that cannot return to more 
        normal operations as a result of the social distancing 
        requirements necessary to prevent the spread of COVID-
        19.

        Specifically, the Chamber urges Congress to consider 
        the following proposals:

        Closing the CARES Act Gaps:

    While the PPP was intended to assist all small 
        business employers, including nonprofits, nonprofits 
        who are not organized as 501(c)(3) organizations have 
        been excluded from the program.

    Congress should extend the deadline for applying 
        for PPP funds through the end of the year and make all 
        nonprofit employers eligible to apply for a loan.

    Congress should also make the PPP loan forgiveness 
        process easier for the smallest small businesses by 
        automatically forgiving loans under $150,000 or 
        $250,000.

    The CARES Act prohibited an employer from receiving 
        both a PPP loan and an employee retention tax credit. 
        While no employer should be able to receive a PPP loan 
        and a tax credit for the same expense, allowing PPP 
        borrowers to access employee retention tax credits 
        after exhausting their PPP loans will help small 
        businesses who continue to face constrained revenue.

    In too many cases, small businesses in low-income 
        and rural areas, as well as those without traditional 
        banking relationships--including minority-owned 
        businesses had difficulty accessing the PPP. The 
        bipartisan Recharge and Empower Local Innovation and 
        Entrepreneurs Fund (RELIEF) for Main Street Act would 
        provide $50 billion to seed and scale locally relief 
        programs for small employers. The Chamber urges 
        Congress to pass this initiative.

    Replenish the SBA's Economic Injury Disaster Loan 
        (EIDL) program and require SBA to remove the $150,000 
        loan cap for the program that is authorized to provide 
        loans up to $2 million.

        Providing Additional Relief for Employers:

    Congress can build on the aid provided in the CARES 
        Act to help employers address urgent liquidity needs, 
        including by allowing the monetization of additional 
        tax attributes like general business credits. This 
        would provide businesses timely access to tax benefits 
        existing on their books. In addition, Congress should 
        provide tax relief for losses due to the Coronavirus 
        pandemic; and modify international tax provisions to 
        maximize the benefits of CARES Act tax relief.

    The CARES Act created an Employee Retention Tax 
        Credit (ERTC) that provided an effective $5,000 
        refundable tax credit to employers negatively impacted 
        by the economic fallout from the pandemic. Congress 
        should increase the size of the credit, make the credit 
        more flexible by allowing small and midsize employers 
        to claim the credit irrespective of whether the 
        employee is ``providing services,'' and expanding the 
        universe of eligible employers by reducing the 
        reduction in gross receipts required to access the 
        credit. Congress can simultaneously make the expanded 
        credit more targeted by reducing the benefit for 
        employers who are experiencing less of a revenue loss.

    While the CARES Act mostly focused on aiding small 
        businesses with their payroll costs, for many, their 
        fixed expenses, like rent, are a significant burden. At 
        the same time, revenue is constrained as a result of 
        social distancing requirements. Congress should 
        consider a modest addition to the ERTC for ERTC 
        eligible employers to cover a limited amount of fixed 
        costs.

    As part of the CARES Act, numerous tax provisions 
        were enacted on a temporary basis to help businesses 
        address liquidity issues. Given the expected time 
        required to return to the prepandemic economy, a 
        further extension of these tax provisions is warranted.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
         SENATOR CORTEZ MASTO FROM DOUGLAS HOLTZ-EAKIN

Q.1. Why is it important that Congress provide funds for local 
governments hard hit by health and economic crises?

A.1. Local governments have been deeply affected on both sides 
of their budgets. Due to the demands of meeting the public 
health mission, local expenditures for first responders, 
frontline health personnel and health care costs, in general, 
spending has risen. These expenditures are in the national 
interest and it is appropriate that the Federal taxpayer carry 
this burden (at least in part). At the same time, revenues have 
fallen sharply as the economy has contracted. The major issue 
facing Congress is whether to provide compensatory funds 
directly through the appropriations process or to have 
localities rely on the Municipal Liquidity Facility.

Q.2. How can the Federal Reserve provide loans and buy 
municipal bonds from communities with smaller populations?

A.2. The Federal Reserve possesses wide latitude in the 
creation and disposition of emergency lending programs under 
its Section 13(3) powers. The Fed could either create a new 
facility under this authority providing loan support 
specifically targeting these smaller populations, or amend the 
Municipal Liquidity Facility to permit access to the program to 
these communities, an action it has already performed twice.

Q.3. How can the Fed make a determination of credit quality 
from local governments that may not have rated bonds?

A.3. I do not believe that it can. Further, I do not believe 
that it should, nor does it in fact at this point need to. The 
Municipal Liquidity Facility is not currently designed to be 
accessible to States and municipalities without an investment 
grade rating (although allowance is made for entities who had, 
but have lost this status since the onset of the pandemic). 
Local governments that are not investment grade, or are 
unrated, are not covered by the Fed's emergency lending 
programs.

Q.4. Nevada currently has the highest unemployment rate in the 
Nation--30 percent. What long term impacts do you see on Nevada 
and other States that rely on tourism and may have a higher 
sustained unemployment rate?

A.4. The outlook depends almost entirely on the pace of 
development of therapeutics and vaccines, and thus the capacity 
to restore the confidence of the public in using the 
hospitality and leisure sector services. Barring restored 
confidence, it seems unlikely that this sector will be restored 
to its former scale and Nevadans will be forced to diversify 
their economy to employ residents or suffer an out-migration of 
their population.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR JONES
                    FROM DOUGLAS HOLTZ-EAKIN

Q.1. The Paycheck Security Program would cover the wages and 
benefits of furloughed or laid off employees of affected 
businesses and nonprofits that have experienced a drop in 
revenues of at least 20 percent. Grants will cover salaries and 
wages up to $90,000 for each furloughed or laid off employee, 
plus benefits, as well as up to an additional 20 percent of 
revenues to cover fixed operating costs such as rent, 
utilities, insurance policies, and maintenance.
    Companies receiving these grants must commit to a number of 
restrictions including maintaining pay and benefits of rank-
and-file workers and offering to bring back workers laid off 
since February 1st the opportunity to go back to participate in 
the program at prior level of compensation. Additionally, the 
bill would decrease the burdens on financial institutions that 
are overwhelmed by SBA loan programs.
    Can you share your thoughts on the Paycheck Security Act? 
Do you believe this will provide business owners who missed out 
on the Paycheck Protection Program (PPP) security?

A.1. I have seen no evidence that financial institutions are 
overwhelmed by PPP applications. Nor do I see the need to 
create an additional program with the desired aim of providing 
relief in a very similar if not identical manner to the PPP to 
the same population of businesses. The PPP is not perfect, and 
there is room for Congress to improve the program (most 
particularly in clarifying the rules relating to forgiveness). 
But I do not see the value in duplicating the efforts of the 
PPP, doubly so when the PPP program still has at least 20 
percent of funding available.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SINEMA
                    FROM DOUGLAS HOLTZ-EAKIN

Q.1. What is the fastest and most efficient mechanism to 
provide financial assistance to small and medium-size 
businesses? And what is the fastest and most efficient way to 
provide relief to families?''

A.1. In a very practical sense, mass disbursement of financial 
assistance to small and medium-sized businesses has already 
been achieved. The Paycheck Protection Program (PPP) has been 
the single most effective aspect of the CARES legislative 
package, and as noted in my testimony singlehandedly was the 
largest support for the economy for the month of April. Getting 
over $500 billion to businesses in need in a matter of weeks is 
an enormous credit to Congress, Treasury, the Small Business 
Administration (SBA) and our Nation's banking system. Of 
course, the program is not without flaw, but by any objective 
standard it has proven to be a lifeline to thousands of Main 
Street businesses; the program is an unqualified success if 
measured solely against the metrics of speed and efficiency.
    If by your question you envisaged a scenario where further 
billions in financial aid are to be disbursed, the most 
efficient mechanism appears to me to be to continue funding the 
PPP and make both required and beneficial programmatic changes, 
including, for example, potentially allowing a second loan to 
be taken out. Although the system is not perfect, it has 
demonstrably proved itself to be effective, and any potential 
future efforts should use not just the key learnings from this 
process but also take advantage of the infrastructure and 
network of lenders the SBA has so hastily acquired. Any other 
effort, even efforts more preferable in theory to myself or 
critics of the PPP, would be unlikely to be as fast or as 
efficient as the PPP at this point due to the unique experience 
the SBA has gained.
    Congress enacted three new laws in response to the COVID-19 
pandemic that provide myriad means of assistance for 
individuals and families. Some provisions provided for cash 
transfers, while others offer forbearance for missing payments 
or limit penalties for withdrawing money from existing 
accounts. The effect is to ensure that individuals have access 
to more cash, receive adequate nutrition, and that they can 
receive testing for COVID-19. AAF has catalogued those programs 
here. Tailoring assistance to specific needs--household 
liquidity, unemployment, and other challenges--provided more 
effective assistance than any single individual program.
    Going forward, as the public health and economic situations 
change, so too will the needs of individuals. Congress' ability 
to again respond quickly and specifically to those needs will 
be important. In preparation, Congress should start working to 
assess what those needs will be in the future, and how current 
needs might change. For example, as treatments and vaccines are 
developed, individuals will need to be able to access and 
afford them. Some businesses and perhaps even entire industries 
may never return, or at least not in any manner that closely 
approximates their existence before the pandemic; as such, many 
individuals will need to find different jobs requiring 
different skills and may need training to do so. Children may 
be required to continue learning from home next year; many will 
need additional resources to be successful and it may require 
taking action now in order to be prepared. To the extent that 
Congress can anticipate needs and get ahead of coming crises, 
the consequences will be much less severe.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN
                      FROM HEIDI SHIERHOLZ

Q.1. Even before this pandemic, many Americans were barely 
making ends meet. Corporations were not paying people a living 
wage, while their executive and shareholder compensation has 
continued to increase. How will this persistent wealth gap 
between corporate executives and workers, and black and white 
workers, affect our economy if we continue down this path?

A.1. The persistent gaps between corporate executives and their 
workers, and between black and white workers is not just a 
moral issue, it is bad for the economy as well. Growing 
evidence finds that for many, economic outcomes are tied to who 
their parents are and what neighborhood they live in, not how 
talented they are and how hard they work. High inequality means 
those at the top are able to hoard opportunity, obstructing the 
ability of many to contribute to the economy and society to 
their fullest potential, and this hurts productivity and 
growth. Growing evidence also finds that rising inequality 
bestows its beneficiaries with economic power and political 
influence that allows them to subvert the institutions that 
support a fair and well-functioning economy and manipulate 
economic growth in their favor, from minimizing the taxes they 
face to regulatory changes that protect their interests. This 
undermines a fair balance of power in the economy and, as a 
result, leads to inefficiencies that lower productivity and 
drag on growth and stability. Growing evidence also finds that 
rising economic inequality affects how much money in the 
economy is used for consuming versus saving. In particular, 
rising inequality has translated into consumption that is lower 
than it otherwise would have been, since gains in the last four 
decades have gone largely to those at the top of the income 
distribution, who are less likely to spend extra money. 
However, greater aggregate savings has not led to investment-
led growth either, because firms know there is an increasing 
share of consumers who don't have money to spend. This drags 
down and distorts growth.

Q.2. The number of unemployment claims in just the past two 
months has far exceeded the total jobless claims during the 
Great Recession. Could you discuss the severity of the 
unemployment, labor market, and economy today versus the Great 
Recession? How should these differences inform our policy 
responses to the economic crisis resulting from the coronavirus 
pandemic?

A.2. I am writing this response in September of 2020, six 
months into the COVID crisis in the U.S. labor market. Though 
the labor market has added a substantial number of jobs in each 
of the last 4 months (May-August), we lost so many jobs in 
March and April that we are still 11.5 million jobs below where 
we were in February. This is far more than the total jobs lost 
in the Great Recession, 8.7 million. Of profound concern now is 
that the pace of job growth is slowing. In August, we added 
fewer jobs than in July, and far fewer than in June. Slowing 
job growth when there is a jobs deficit of more than 11 million 
is a disaster for the working families of this country. It is 
imperative that Congress act in at an unprecedented scale to 
provide the fiscal aid that will create and save jobs, in 
particular, aid to State and Local governments, and extending 
the unemployment insurance provisions in the CARES Act.

Q.3. The Great Recession also lasted longer for black and brown 
workers than white workers. Could you please explain how the 
2007-2008 financial crisis and economic downturn had a 
disproportionate impact on black and brown households? How does 
the recovery from the Great Recession exacerbate the effects of 
the economic crisis related to the coronavirus pandemic for 
black and brown families?

A.3. It wasn't until 2019 that the median income of black 
households finally surpassed its pre-Great-Recession peak--12 
years after the start of that recession. Black households were 
the last racial group to meet this benchmark, and black wealth 
has yet to recover. This is due to a wide variety of factors 
rooted in systemic racism, from occupational segregation by 
race to discrimination in mortgage lending to other disparities 
in opportunity rooted in white supremacy. And now the recovery 
has been cut short, with black and brown workers experiencing 
much more job loss in the current recession than white workers, 
while having less wealth to fall back on. The current recession 
will exacerbate profound racial inequalities. Congress must 
act.

Q.4. We've seen how State and local governments, who keep our 
communities clean and safe and employ thousands of workers, are 
struggling financially under the weight of this pandemic, like 
in my home State of Ohio. Although the Federal Reserve is 
working on a facility to help lend money to some 
municipalities, this may not be enough. What are the economic 
consequences if we fail to provide more direct Federal aid to 
State and local governments?

A.4. Without additional Federal aid, State and local 
governments are currently forecast to be facing revenue 
shortfalls as large as $1 trillion in coming years. Further, 
due to balanced budget requirements, State and local 
governments are tightly constrained from taking on large 
amounts of debt to maintain spending in the face of this 
downward shock to their revenues. The result is intense 
pressure for large cutbacks in public spending by State and 
local governments in coming years. Such cutbacks would be 
devastating to the cause of restarting the economy, even if the 
virus has completely abated. We know how devastating these 
cutbacks would be because we have lived through the mistake of 
allowing them to drag on growth in the recent past. The lack of 
sufficient aid to State and local governments in the aftermath 
of the Great Recession led to State and local spending 
austerity that delayed the recovery from the Great Recession by 
over 4 years. As of mid-April, State and local governments had 
already lost more jobs than they did during the entire Great 
Recession. In this crisis, if Federal aid is passed that is 
sufficient to close the enormous revenue shortfalls the 
economic crisis will cause for State and local governments, it 
will save 5-6 million net jobs in the public and private 
sectors by the end of 2021. Without this aid, those jobs will 
be lost.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
           SENATOR CORTEZ MASTO FROM HEIDI SHIERHOLZ

Q.1. Federal Reserve's Interventions Impact on Workers--Do you 
think the Federal Reserve's interventions will reduce 
unemployment? If so, what should the Fed do to promote 
employment? How should they ensure their interventions protect 
jobs for workers?

A.1. Yes, the Fed's actions will reduce unemployment relative 
to a scenario where they did nothing. Mass bankruptcies are bad 
for the labor market, and the interest rate structure 
appropriate for February 2020, with 3.5 percent unemployment, 
was obviously not appropriate for March and April of 2020 when 
properly measured unemployment quintupled. The most valuable 
thing the Fed can do is what they've already done: reassure 
fiscal policymakers that policy interest rates will remain low 
so long as the economy remains weak. Fiscal policymakers need 
to recognize this signal and provide much greater aid to 
households and State and local governments.

Q.2. Should the Federal Reserve prioritize investments in 
businesses that support strong unions that provide living 
wages?

A.2. Unions are deeply important for our economy and the 
workers in it. Unions provide workers livable wages, strong 
benefits, and safe working conditions. And unions don't just 
help union workers--they help all of us. When union density is 
high, nonunion workers benefit, because unions effectively set 
broader standards--including higher wages that nonunion 
employers must meet in order to attract and retain the workers 
they need. The combination of the direct effect of unions on 
union members and this ``spillover'' effect to nonunion workers 
means unions are crucial in raising wages for working people 
and reducing income inequality. However, prioritizing 
investments in businesses that support unions is not the Fed's 
job. Congress and the President must pass laws that make it 
possible for all willing workers to form unions and bargain 
collectively. The Fed does not have the administrative 
capacity--particularly in the throes of a horrific economic 
crisis--to make these decisions.

Q.3. Do you think the Fed's interventions will result in more 
or less corporate consolidation? Should antitrust concerns be a 
focus of the Justice Department and Congress?

A.3. The effects of the Fed's post-COVID interventions could 
either increase or decrease consolidation. The potential for 
the Fed's interventions to increase consolidation has gotten 
substantial attention, but it's important to note that given 
that large firms are arguably much more able to raise funds in 
distressed financial markets than small firms, the Fed's 
actions could well be leveling the playing field. Antitrust 
should be a concern of both the Justice Department and 
Congress.

Q.4. Some criticize the Federal Reserve's actions to provide a 
backstop for businesses that now have junk bond status. They 
argue that such interventions protect wealthy investors. Do you 
think the dramatic interventions by the Federal Reserve will 
contribute to greater income and wealth inequality?

A.4. I believe the Fed's actions will unambiguously reduce 
income inequality, if modestly. Almost nothing in the past 5 
decades has been as destructive of equality in the U.S. economy 
as labor markets that remain weak for extended periods. The 
Fed's actions will modestly help the labor market recovery. The 
Fed's initial purchase of financial assets (Treasuries and 
corporate bonds, in particular) will boost their prices, which 
will increase reported wealth inequality (as these assets are 
concentrated--like all wealth--in portfolios of richer 
households). But if they unwind these purchases at any point in 
the future, this will reduce their prices and reduce 
inequality. Further, the largest effects of past Fed support of 
the financial system was on home prices. Given that home equity 
is the most democratically held form of wealth, this equalized 
wealth holdings between, for example, the median family and the 
top 1 percent.

Q.5. What public investments should policymakers consider to 
provide jobs to the 40 million Americans who have become 
unemployed and whose jobs may not return any time soon?

A.5. Policymakers should make major investments to address 
national priorities such as public health, the care economy, 
infrastructure, public education, and climate crisis 
mitigation.
    These investments would both meet national needs and create 
millions of good jobs.

Q.6. Do you think the employee retention provisions in the Main 
Street Lending Program are adequate?

A.6. No, the conditions on the Main Street Lending Facilities 
are deeply inadequate. For example, companies do not even need 
to attest that they will make an effort to keep workers; there 
is simply a toothless statement that companies ``should'' make 
``commercially reasonable'' efforts to maintain employment. 
Further, since there are no limits on the types of entities 
that could use these facilities, it is likely that highly 
aggressive and sophisticated entities such as large private 
equity firms will seek out opportunities to channel funding to 
reward capital owners instead of supporting workers and the 
response to the pandemic. Such uses of the facilities could 
effectively loot money from taxpayers. For example, a private 
equity fund could have a portfolio company borrow money from 
the Federal Reserve, transfer that money up to the private 
equity parent in the form of monitoring fees or other payments 
rather than using it to support employment, and then the 
private equity fund would not be responsible for repaying funds 
to taxpayers if the portfolio company went bankrupt.

Q.7. Do you think the Federal Reserve has structured its 
programs to support maximum employment?

A.7. Given inaction by the Congress and President, the Fed 
should make the Municipal Liquidity Facility (MLF) more 
attractive to State and local governments, reducing interest 
rates, extending terms, extending the borrowing period and 
opening it up to a wider range of Governments. In future 
recessions, the Fed could be given the necessary tools to more 
directly support maximum employment than these, but they do not 
currently have them.

Q.8. The CARES Act restricts Fed financing to ``businesses that 
are created or organized in the United States or under the laws 
of the United States and that have significant operations in 
and a majority of its employees based in the United States.''
    Are you concerned that companies that have undergone a tax 
inversion or a U.S. subsidiary of a foreign company will 
receive assistance? If so, how should the Federal Reserve 
structure the loan to preserve jobs while requiring the 
corporation repay the taxpayers who financed the loan?

A.8. Generally, I'm not concerned that too many businesses will 
receive help from the Fed--I think the much bigger problem is 
insufficient aid being given across-the-board to households, 
Governments and businesses in the recovery. Any firm operating 
in the U.S. that employs U.S. workers strikes me as a good 
target for aid at a time like this, even if they are foreign-
owned. If these firms have inverted purely for tax gains, the 
IRS should be the agency that assesses this and provides the 
appropriate remedies.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR JONES
                      FROM HEIDI SHIERHOLZ

Q.1. According to the Pew Research Center, 60 percent of 
Hispanic adults say that someone in their household has lost 
their job or experienced decreased pay due to the coronavirus 
outbreaks and about 44 percent of African Americans have 
reported the same.
    The Federal Reserve has regularly reported, in healthy 
economic times, that almost 40 percent of individuals do not 
have the funds to cover a $400 emergency. The Pew Research 
Center reports that 53 percent of white adults have rainy day 
funds compared to 29 percent of Hispanics, and 27 percent of 
African Americans.
    After the Great Recession, communities of color lost more 
than a $1 trillion of wealth. Will the coronavirus pandemic 
exacerbate the existing gap of wealth between African Americans 
and Hispanics with their white counterparts? What policy steps 
should Congress take to close the gap after the pandemic?

A.1. Yes, the coronavirus pandemic will exacerbate the existing 
wealth gap between black and Hispanic workers with their white 
peers, because evidence to date suggests that black and 
Hispanic workers face much more economic and health insecurity 
from COVID-19 than white workers. Black and Hispanic workers 
have experienced greater job losses during the pandemic, are 
less likely to have the ability to work from home, less likely 
to have paid sick days, and are more likely to be uninsured 
compared to their white peers. These disproportionate impacts 
of the coronavirus on black and Hispanic workers will only 
widen existing wealth gaps unless policymakers address long-
standing underlying racial disparities in economic and health 
outcomes.
    Steps policymakers should take to close the racial wealth 
gap after the pandemic include:

    Fiscal policy that prioritizes investments that 
        create jobs in high-unemployment and high-poverty 
        communities.

    Strengthen the rights of workers to organize, join 
        unions, and collectively bargain, as directed in the 
        PRO Act, passed by the House of Representatives in 
        February 2020.

    Strengthen enforcement of antidiscrimination laws 
        and policies through banning the use of forced 
        arbitration agreements as a condition of employment, 
        prohibiting employers from asking potential employees 
        about pay history, and requiring employers to provide 
        greater pay transparency.

    Update existing labor standards so that they 
        continue to provide a robust floor for job quality, 
        including increases to the minimum wage, as provided in 
        the Raise the Wage Act of 2019, preventing further 
        erosion of the Federal overtime salary threshold, and 
        elimination of exclusions to basic labor standards that 
        are historically rooted in racial exclusion and 
        discrimination.

Q.2. The Paycheck Security Program would cover the wages and 
benefits of furloughed or laid off employees of affected 
businesses and nonprofits that have experienced a drop in 
revenues of at least 20 percent. Grants will cover salaries and 
wages up to $90,000 for each furloughed or laid off employee, 
plus benefits, as well as up to an additional 20 percent of 
revenues to cover fixed operating costs such as rent, 
utilities, insurance policies, and maintenance.
    Companies receiving these grants must commit to a number of 
restrictions including maintaining pay and benefits of rank-
and-file workers and offering to bring back workers laid off 
since February 1st the opportunity to go back to participate in 
the program at prior level of compensation. Additionally, the 
bill would decrease the burdens on financial institutions that 
are overwhelmed by SBA loan programs.
    Can you share your thoughts on the Paycheck Security Act? 
Do you believe this will provide business owners who missed out 
on the Paycheck Protection Program (PPP) security?

A.2. The Paycheck Security Act would avert mass layoffs and 
prevent irreversible business losses, it would prevent millions 
from losing their health insurance, and it would provide 
resources for firms to rehire furloughed workers and restore 
their health care benefits. We entered the current crisis with 
a weak social insurance system and public safety net, and 
workers and their families are paying the price. Given this 
preexisting weakness, fast and transformative responses to this 
economic crisis are crucial, and the Paycheck Security Act is a 
bold solution to provide needed relief during the extended 
lockdown (or partial lockdown) period of the crisis, and to put 
us in much better position to mount a rapid recovery once the 
public health all-clear is sounded.
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