Editorial: Chicago Tribune – Restaurants need help from their customers, not Uncle Sam | Opinion


The following editorial was written by the editorial board of the Chicago Tribune:

After appropriating trillions of dollars in COVID-19 relief, Congress is set to pass another multi-billion dollar aid package, this one for restaurants and other small businesses that have suffered for the pandemic.

While we sympathize with all economic operators who have struggled to cope with COVID-19, another relief act for restaurants, bars and similar public places is too much. The days of new federal cash spending are over, and Congress (which has approved competing versions of the aid package in the House and Senate) must end this stacking.

To begin with, the huge sums handed out reignited inflation, creating a serious and surprisingly persistent threat to economic recovery. Taming the upward spiral in prices requires aggressive intervention by the Federal Reserve to raise interest rates and sell its bond holdings, with all the risks inherent in a recession. Disbursing further federal aid would only undermine this effort and make inflation harder to combat.

Additionally, states and cities awash in federal money are free to approve more targeted aid, as Illinois recently did at the behest of the powerful local restaurant lobby. The Treasury Department is expected to distribute tens of billions in fiscal stimulus funds that have been approved but not yet allocated, and states that receive the money will have years to spend it. Many other billions from other programs also need to be distributed.

The Restaurant Revitalization Fund, part of the U.S. bailout, has managed to pump money into a popular constituency, but not as Congress intended. Although businesses owned by women, veterans, minorities and low-income people were supposed to get priority, it was mostly a chaotic melee. Additionally, the amounts distributed were primarily determined by how much a company’s year-over-year revenue declined, which, contrary to the measure’s pro-worker intent, favored the restaurants that remained closed the longest. long time. No wonder a slew of lawsuits have been filed.

Supporters say it’s fair to add more money for restaurants that missed out on the first giveaway.

What about being fair to the taxpayers who are forced to foot the bill for the myriad flaws of this relief effort, and others?

The Paycheck Protection Program, for example, has also diverted aid on an even larger scale. Millions of restaurants and other businesses have taken advantage of this program, collecting loans that would supposedly be canceled if they used the money to retain workers. In a short time, Congress weakened the requirements, so even companies that downsized will never pay back a dime.

Since the program was open to virtually all small and medium-sized businesses, all kinds of businesses raised funds, including those that didn’t need it at all. Loose controls allowed scammers to get away with billions. A study from the University of Texas at Austin found that up to 15%, a surprisingly high percentage, had been looted. As Justice Department Inspector General Michael Horowitz recently told NBC, “What didn’t happen were even minimal checks to make sure the money was getting to the right people. at the right time”.

These aid programs have been a boon to some and a disappointment to those who didn’t understand how the system worked or who applied after others beat them to it. Proponents of a new restaurant spending bill say that in theory some of it could be paid for with money recovered from suing fraudsters. This old political promise to pay for new spending by cracking down on the proverbial fraud, waste and abuse rarely comes true. We are not convinced that a second relief effort in restaurants would be better managed than the first.

Another consideration is that some restaurants, bars and similar venues have made a rapid comeback and their biggest problem is not so much a lack of customers as a lack of staff willing to work. Especially in places that had less closure requirements, it’s more or less business as usual. In Chicago, where pandemic warranties were onerous, many restaurants are still suffering. Inflation is making the recovery even more difficult, raising the cost of food and labor to such an extent that menu prices cannot keep up.

If it were possible to effectively target government assistance only to businesses that need a little short-term help to get back on their feet, we would be less adamant. But the restaurant business is notoriously risky. Even under favorable circumstances, some make a ton of money, while many fail. Trying to pick winners and losers inside the Beltway doesn’t work, as the Feds have already demonstrated.

In Chicago, some of the hardest-hit sites are in places such as the Loop, where working from home has reduced the usual clientele. This tough business challenge will not be solved with a one-time extra dose of free government money. Businesses will have to figure out how to adapt.

The right thing to do is turn off the federal tap and support restaurants the best way you can, if you can afford it: Be a loyal customer and tip generously.

©2022 Chicago Tribune. Go to chicagotribune.com. Distributed by Tribune Content Agency, LLC.

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