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The U.S. faces a wave of small-business failures this fall if the federal government does not provide a new round of financial assistance — a prospect that economists warn would prolong the recession, slow the recovery and perhaps enduringly reshape the American business landscape, the New York Times reported. As the pandemic drags on, it is threatening even well-established businesses that were financially healthy before the crisis. If they shut down or are severely weakened, it could accelerate corporate consolidation and the dominance of the biggest companies. Tens of thousands of restaurants, bars, retailers and other small businesses have already closed. But many more have survived, buoyed in part by billions of dollars in government assistance to both businesses and their customers. The Paycheck Protection Program provided hundreds of billions in loans and grants to help businesses retain employees and meet other obligations. Billions more went to the unemployed, in a $600 weekly supplement to state jobless benefits, and to many households, through a $1,200 tax rebate — money available to spend at local stores and restaurants. Now that aid is largely gone, even as the economic recovery that took hold in the spring is losing momentum. The fall will bring new challenges: Colder weather will curtail outdoor dining and other weather-dependent adaptations that helped businesses hang on in much of the country, and epidemiologists warn that the winter could bring a surge in coronavirus cases.

A federal small-business pandemic emergency loan program that has been criticized for delays and fraud has focused attention on the role of a small consulting firm that earned nearly $800 million in fees and subcontracted the work to a unit of the nation’s largest mortgage lender, the Wall Street Journal reported. Federal government contracting records show the Small Business Administration has awarded at least $770 million to RER Solutions Inc. of Herndon, Va., to process loans and grants for small businesses affected by the coronavirus pandemic under the SBA’s Economic Injury Disaster Loan program, or EIDL. That is a steep increase from a $10 million contract the company initially signed with the SBA in 2018. The bulk of that loan-processing work was then subcontracted to Rocket Loans, a unit of lending giant Rocket Cos., which also owns Quicken Loans, according to both Rocket and federal officials, though its name doesn’t appear in any of the publicly available documents on the federal contracts awarding the work to RER. Under the EIDL program, more than 3.6 million loans worth $188 billion have been issued to date since the pandemic, in addition to $20 billion in grants to 5.8 million companies, according to the SBA. The SBA is the administrator of the program, which is separate from the SBA’s $670 billion Paycheck Protection Program, where banks and other financial services companies act as intermediaries in assessing applicants and processing loans. Groups representing small businesses say the EIDL loan program has been plagued by delays. Karen Kerrigan, who heads Small Business & Entrepreneurship Council, an advocacy group, told House lawmakers in June the execution of EIDL went badly, leaving hundreds of thousands of small-business owners ”demoralized, confused and angered.” She says the program has improved since. The EIDL program also came under criticism from the SBA’s inspector general, which in a July report cited “pervasive fraudulent activity,” pointing to more than 5,000 instances of suspected fraud from banks where EIDL funds were deposited in customer accounts. The IG estimated that about $250 million in loans and grants have gone to businesses that could be ineligible.

A telephone call on coronavirus economic relief between U.S. House Speaker Nancy Pelosi and an adviser to President Donald Trump ended yesterday with no breakthrough, and Pelosi said that talks would not resume until the Trump administration agreed to $2.2 trillion in aid, Reuters reported. Pelosi and White House Chief of Staff Mark Meadows spoke by phone for about 25 minutes, the first chance in weeks to resume stalled COVID-19 aid negotiations. But the two sides soon appeared to be as far apart as ever. Meadows and Pelosi are two of the four negotiators who were involved in talks on legislation to help Americans and businesses suffering from a coronavirus pandemic that has now killed nearly 180,000 people. The others are Treasury Secretary Steven Mnuchin and Senate Democratic leader Chuck Schumer. The talks broke down on Aug. 7, with the sides far apart on major issues including the size of unemployment benefits for tens of millions of people made jobless by the pandemic, aid for state and local governments and funding for schools and food support programs. The Democratic-controlled House of Representatives in May passed a $3.4 trillion coronavirus relief bill, but Pelosi offered to reduce that sum by $1 trillion. The White House, which had proposed $1 trillion in aid, rejected the offer. Democrats have since demanded that the White House agree to “meet in the middle.”

A debate between the White House and the Treasury Department over President Trump’s payroll tax suspension has delayed crucial information about how the executive order will be carried out, leaving businesses across the country uncertain about how to proceed, the New York Times reported. The delay in releasing guidelines about the tax suspension comes amid broad business backlash to the idea, which was announced by Trump this month after talks with Congress over another economic relief bill stalled. The executive order aims to stimulate the economy by allowing companies to stop withholding payroll taxes until the end of the year, putting more money in workers’ pockets. But companies and trade groups have called the suspension an unnecessary complication since employees will be on the hook to pay the deferred taxes back when the tax holiday ends. Many companies are expected to opt out of participating to avoid sticking their employees with a giant tax bill next year. The White House, which is eager to push through a tax cut before the November election, wants the Treasury guidance to ensure that companies, not workers, are held liable for paying the employee portion of the tax when the tax holiday ends. It is unclear why the Treasury Department has not been willing to issue such guidance, but businesses, which have been fielding questions from their employees about when the tax cuts will begin, would prefer that Congress legislate any changes to tax policy. It is also not clear that the White House would have the legal authority to shift the tax burden in such a manner.

Cutting taxes during periods of high unemployment will produce fewer jobs than during more robust economic times, according to a new working paper from the nonpartisan Congressional Budget Office (CBO), The Hill reported. "I find that effects on hours worked, employment, and the unemployment rate become smaller in times of higher unemployment," the paper's author, U. Devrim Demirel, wrote. The reason, Demirel suggested, is that employers are less concerned about the costs of hiring at times of high unemployment, where labor is already relatively cheaper. In negotiations over COVID-19 emergency relief, Republicans have pushed to provide tax breaks for struggling businesses. The paper did not weigh in on whether such tools would help keep businesses afloat, but its findings suggest that it wouldn't be the best route to add jobs to the economy.

White House Chief of Staff Mark Meadows said yesterday that he is not optimistic about reaching a new coronavirus relief deal before the end of September, predicting House Speaker Nancy Pelosi will use the government funding cliff at the end of next month as leverage to strike a deal on pandemic aid, Politico reported. Meadows said his staff had reached out to Pelosi's office on Tuesday but added that he does not anticipate a response. The White House chief of staff said that lawmakers from both parties have privately expressed to him a desire to make progress on coronavirus relief. The hold up, Meadows said he suspects, is that Pelosi is holding back her party's rank and file in order to secure more Democratic priorities in any legislation. "It's really been Speaker Pelosi really driving this train as a conductor more so than really anybody," Meadows said. "And I think privately she says she wants a deal and publicly she says she wants a deal, but when it comes to dealing with Republicans and the administration, we haven't seen a lot of action." Pelosi spokesman Drew Hammill told Politico that a member of Meadows' staff texted the speaker's staff to confirm they had the correct number for the chief of staff, but did not mention resuming talks. Meadows also said he would call Pelosi during an interview on ABC News on Sunday, but Hammill said he never did.

A watchdog panel of government inspectors general is asking the Small Business Administration to provide the names of borrowers who received Paycheck Protection Program loans of $25,000 and up, citing a 2006 law that requires their disclosure, the Wall Street Journal reported. The request is being made by the Pandemic Response Accountability Committee, a panel of inspectors general from across the government that is responsible for ensuring relief funds appropriated under the $2 trillion Cares Act and other pandemic relief measures are being spent appropriately. The 2006 Federal Funding Accountability and Transparency Act says that loans, grants, contracts and other forms of federal financial assistance totaling $25,000 or more must be disclosed on a publicly searchable website, USASpending.gov. The disclosures must include the name of the entity receiving the award, the amount of the award and other relevant details. “Once the PRAC learned in late July that PPP information was not included in the USASpending data, we formally requested full and ongoing access to this data from the SBA Administrator,“ said Robert Westbrooks, the committee’s executive director. "The PRAC requires complete PPP information to meet its reporting responsibilities under the Cares Act and to ensure transparency of coronavirus emergency spending.” The SBA contends that disclosing the names of loan recipients could violate their privacy because PPP loans are scaled to the size of a business’s payroll. “SBA is acting, consistent with legal requirements, to protect this sensitive information for small businesses,” the agency said. But advocates for disclosure say that it is important to gauge the program’s effectiveness. Publicly traded companies, big law firms, government contractors with steady incomes, companies accused of fraud, private-equity firms, hedge funds and luxury real-estate developers all participated in the program aimed at struggling small businesses. The scrutiny has led some companies to give back the money.

One of the most successful elements of the government’s response to the coronavirus recession — protecting people on the margins from falling into poverty — is faltering as the safety net shrinks and federal benefits expire, the Washington Post reported. Major recessions are especially fraught for low-income earners, whose finances can veer from tenuous to dire with one missed paycheck. But as the economy cratered this spring, economists and poverty experts were mildly surprised to discover that the torrent of government support that followed — particularly the $600 a week in expanded unemployment benefits and one-time $1,200 stimulus checks — likely lowered the overall poverty rate. In fact, 17 million people would have dropped below the poverty line without the $500 billion in direct intervention for American families, said Zach Parolin, a researcher at Columbia University. Now, data show, those gains are eroding as federal inaction deprives Americans on the financial margins of additional support. If the unemployment rate stays around 10 percent and no new stimulus is delivered, “we can expect poverty rates to rise and climb higher than those observed in the Great Recession,” Parolin said. The poverty threshold for a family of four is $26,200, according to the U.S. Department of Health and Human Services. Data collected by the Census Bureau capture the financial pain. For the week that ended July 21, the most recent numbers available, roughly 29 million U.S. adults — about 12.1 percent — said their household sometimes or often didn’t have enough to eat the preceding seven days, according to the Center on Budget and Policy Priorities. Nearly 15 million renters said they were behind on rent during the same period.