New round of aid for restaurants, others likely to be the last

'I'm pushing hard to include it in the omnibus,' Cardin says

Senate Small Business Chairman Benjamin L. Cardin, D-Md., right, shown with Rep. Anthony Brown, D-Md., has spent weeks negotiating on a final pandemic aid package for restaurants and other small businesses.  (Tom Williams/CQ Roll Call file photo)
Senate Small Business Chairman Benjamin L. Cardin, D-Md., right, shown with Rep. Anthony Brown, D-Md., has spent weeks negotiating on a final pandemic aid package for restaurants and other small businesses. (Tom Williams/CQ Roll Call file photo)
Posted February 11, 2022 at 6:30am

Senate Small Business Chair Benjamin L. Cardin is hoping to attach another, final round of COVID-19 aid for restaurants and other small businesses that rely on in-person customers to the delayed fiscal 2022 appropriations package lawmakers are aiming to pass by March 11.

“We’re not going to be asking to come back again for any additional funds,” the Maryland Democrat said. “This is it.”

Cardin has spent weeks negotiating a small-business aid package with Sen. Roger Wicker, R-Miss., and other senators from both parties. He said last week they had a tentative agreement that should be able to get 60 votes in the Senate once they have a legislative vehicle on which to move it.

With top appropriators announcing this week they have a framework agreement on fiscal 2022 spending they hope will soon produce a broader deal encompassing all 12 bills, Cardin may have found his vehicle.

“The next train looks like it's going to be the omnibus, so yes I'm pushing hard to include it in the omnibus," he said.

Cardin said he talked to Senate Majority Leader Charles E. Schumer about that Wednesday and that he’s also had conversations with appropriators and Wicker about using the upcoming omnibus as a vehicle.

Cardin and Wicker have been reluctant to share details about what they’ve negotiated, but the main objective of the package is to replenish the Restaurant Revitalization Fund that Congress enacted in a pandemic aid law last March. The grant program drew more than 278,000 applicants, but only about a third of the restaurants and bars that applied received some of the $28.6 billion that Congress appropriated.

“The details will come out in due course, but the purpose is that those that were in line, that qualified and would have gotten it but for either the fact that they were a little late getting in the line or the courts pushed them to the back of the line, they would get their funds,” Cardin said.

There will not be a new application process for restaurants and bars that did not apply for the last round, Cardin said. And while he wouldn’t divulge exactly how much will be spent this time, he said it won’t be more than $48 billion, the amount he and Wicker proposed in a bill they introduced in August to backfill the Restaurant Revitalization Fund.

Cardin plans to broaden the new package beyond restaurants but said funds “for similar type of businesses” would be much smaller than that program. He has declined to specify what other industries may get aid, but other lawmakers have sought funding for live entertainment venues, gyms, hotels, minor league baseball clubs and more.

Many of those businesses, like gyms and hotels, didn’t qualify for previous rounds of industry-specific aid to restaurants and theaters, so new funds and application processes would have to be created for them.

Cardin acknowledged the package won’t provide as much money as he and others wanted but that it’s what can get enough bipartisan support to clear the Senate.

And while he’s emphatic that “the funds that are appropriated are the final funds” for small businesses, he allowed some wiggle room for a scenario where Congress may need to craft a broader pandemic relief package in the event of another unpredictable COVID-19 variant.

The funding for the small-business package will come from a mix of unobligated funds from prior pandemic aid packages that will be repurposed and new appropriations, Cardin said.

“We don’t have enough unused money,” he said. “So we will repurpose whatever we can, but we’re going to need more resources.”

Tax credit revival

A separate effort to restore tax relief targeted to small businesses and nonprofits for the last three months of 2021 gained steam Thursday as a bipartisan group of senators introduced a bill that would bring back the aid. Cardin is among leaders of that push, and he said Thursday he's discussing tax relief for small businesses more broadly and ways to help address “workforce challenges.”

The bipartisan infrastructure law terminated the employee retention tax credit early, repealing it for the final quarter of last year to generate $8.2 billion in revenue. It was created and expanded as part of COVID-19 relief laws and set to run through 2021, offering up to $28,000 per employee to hard-hit businesses.

Senate Finance Committee members Maggie Hassan, D-N.H., and Tim Scott, R-S.C., introduced legislation Thursday that would restore access to the credit for the fourth quarter of 2021. Cardin is a co-sponsor, along with Shelley Moore Capito, R-W.Va., and infrastructure law negotiator Mark Warner, D-Va.

It matches a bill from a bipartisan group of House members. Republican support is critical to moving the provision through the evenly divided Senate, particularly with some in the GOP skeptical of fresh or revived relief when other aid remains available.

Dozens of small-business and nonprofit groups applauded the bill on Thursday. They’ve lobbied to get the relief back, saying the aid was cut off just as new coronavirus variants hit.

The employee retention credit “remains a lifeline for a vast number of small businesses,” National Automatic Merchandising Association CEO Carla Balakgie said in a statement. “For many, their future literally rides on this funding.”

Cardin said that restoring the credit for the end of 2021 will be a priority before extending it further, though he’s pointed to interest in that as well.

Cardin also opened the possibility of working on broader tax reforms for small businesses. He said he’s discussed the issue with Small Business Committee members and found interest on both sides of the aisle.

Cardin argues the 2017 GOP tax overhaul left small companies behind. That law cut the corporate tax rate from 35 percent to 21 percent, a lower headline rate than other business owners pay.

The law also added a 20 percent deduction for owners of pass-through businesses like partnerships and S corporations, whose owners are taxed at the individual level with a top rate of 37 percent. For those successful business owners that qualify under complex rules governing the 20 percent deduction, the top effective rate might go as low as 29.6 percent, but can often be much higher.

Some argue the true top corporate tax rate is closer to 40 percent once capital gains and dividend taxes are factored in. But not all corporations distribute earnings to shareholders, and many shareholders don't face U.S. tax to begin with.

“We are looking at how we can modify the tax code to provide equity to small-end businesses,” Cardin said.