Coronavirus Live Updates: A Loans Program to Save Jobs Runs Dry; 22 Million Americans Have Filed for Unemployment

The $349 billion lending program for small businesses has run out of funds.

A federal loan program intended to help small businesses keep workers on their payrolls has proved woefully insufficient, with a staggering 22 million Americans filing for unemployment in the last four weeks, and officials said Thursday that it had run out of money.

The program, called the Paycheck Protection Program, was i limbo as the Small Business Administration said it had run out of money, leaving millions of businesses unable to apply for the loans, while Congress struggles to reach a deal to replenish the funds.

Congress initially allocated $349 billion for the program, which was intended to provide loans to businesses with 500 or fewer employees. The money has gone quickly, with more than 1.4 million loans already approved as of Wednesday evening.

Treasury Secretary Steven Mnuchin and Jovita Carranza, the administrator of the Small Business Administration, warned on Wednesday night that “by law, the SBA will not be able to issue new loan approvals once the programs experience a lapse in appropriations.”

The loans have been sought after as small businesses struggle with virus-induced quarantines and closures, which have quickly depleted cash flows as businesses remain closed and customers stay home.

The program underwrites bank loans for small businesses that will never need to be repaid if owners use most of the money to keep paying employees for two and a half months. Economists and business lobbyists warned when the bill was being debated that the money was nowhere close to the $1 trillion or more that companies would need.

Mr. Mnuchin is expected to resume negotiations with lawmakers about adding another $250 billion to the fund on Thursday, while Treasury staff were expected to meet with aides to Speaker Nancy Pelosi of California and Senator Chuck Schumer of New York, the minority leader.

While both parties agree on the need to replenish the program, talks have broken down over whether to simply fill the pot up, as Republicans and the White House want, or make significant changes to how money is allocated to businesses, as Democrats have called for.

Democrats have insisted on attaching new restrictions to ensure the money flows to minority-owned businesses and other companies that are traditionally disadvantaged in the lending market. They also want to add more money for hospitals, food-stamp recipients and state and local governments whose tax receipts have plunged.

The Senate is expected to convene in a procedural session on Thursday, but it is unclear whether Senate Republicans will attempt to pass the funding. Such a maneuver would require unanimous agreement from all 100 senators.

And, just as the money ran out, the Federal Reserve’s backstop for the program came on line. The facility — which takes the loans banks make to small businesses as collateral — became fully operational as of Thursday. Banks that make loans are now able to essentially get financing from the Fed to extend that credit, by using the loans they are making as collateral.

The promise that the program was coming has likely encouraged lending by assuring banks that they would not have to keep the loans on their balance sheets.

Meanwhile, some banks are keeping their customers’ stimulus checks if their accounts are overdrawn. The phenomenon is swiftly becoming a political issue, with the Treasury secretary fielding calls from senators urging him to ensure that relief money isn’t garnished. Banks are legally allowed to withhold funds that go into accounts that have negative balances, and there is no specific provision in the relief package that prevents banks from taking customers’ stimulus money to cover debts.

President Trump convened bipartisan calls with members of the House and Senate on Thursday, soliciting feedback from key congressional officials in both parties as he prepared to roll out new guidelines aimed at reopening swaths of the country.

The White House hastily assembled the groups on Wednesday to be a part of Mr. Trump’s “Opening Our Country Council,” catching many of the two dozen or so chosen lawmakers off guard.

Democrats and Republicans who dialed in said the exchanges, even between Mr. Trump and Democrats, were cordial and it was clear that the president wanted to signal to lawmakers that he was listening to their input. Vice President Mike Pence and Steven Mnuchin, the Treasury secretary, also joined the calls.

According to two lawmakers on the House call, Mr. Trump said it would be up to individual states to lead the way on reopening the economy as they became ready, but that he would issue federal guidelines. Multiple House members suggested that states should follow a shared checklist, but cautioned that it should leave room to account for specific needs of each state.

Later, on a separate call, senators in both parties pushed Mr. Trump to ramp up testing capabilities, arguing that widespread, easy access to diagnostics were a prerequisite for reopening, according to one official familiar with that call.

Representative Kevin McCarthy of California, the top House Republican, told reporters afterward that the discussion he listened in on had been largely unscripted and “very productive.” He said that Democrats from hard-hit areas like New Jersey and New York thanked the president for sending resources to their states.

“They were giving input, ways to open the government back up,” Mr. McCarthy said.

Workers have “nowhere to hide” as unemployment permeates the economy.

More than 5.2 million workers were added to the tally of the unemployed on Thursday, another staggering increase that is sure to add fuel to the debate over how long to impose stay-at-home orders and restrictions on business activity.

In the last four weeks, the number of unemployment claims has reached 22 million — roughly the net number of jobs created in a nine-and-a-half-year stretch that began after the last recession and ended with the pandemic’s arrival. The latest figure from the Labor Department, reflecting last week’s initial unemployment claims, underscores how the downdraft has spread to every corner of the economy: hotels and restaurants, mass retailers, manufacturers and white-collar strongholds like law firms.

“There’s nowhere to hide,” said Diane Swonk, chief economist at Grant Thornton in Chicago. “This is the deepest, fastest, most broad-based recession we’ve ever seen.”

Some of the new jobless claims represent freshly laid-off workers; others are from people who had been trying for a week or more to file.

The mounting unemployment numbers seem certain to add to pressure to lift some restrictions on business activity. President Trump has said some measures should be relaxed soon because of the impact on workers. “There has to be a balance,” he said at a press briefing Wednesday evening. “We have to get back to work.”

Many governors and health experts are more cautious. If business conditions return to normal too quickly, they fear, a second wave of infections could spread.

“For all practical purposes, the U.S. economy is closed, so why would you expect layoffs to stop?” said Torsten Slok, chief economist at Deutsche Bank Securities. “The longer the wait to reopen, the more painful it will be in terms of layoffs. Getting a date for reopening and getting more certainty about reopening is critical.”

Mr. Slok expects the unemployment rate to hit 17 percent this month, up from 4.4 percent in March and higher than any mark since the Great Depression.

The coming wave of hardship is likely to widen racial disparities, with poverty projected to rise twice as much among blacks as among whites. Poverty is also likely to rise disproportionately among children, a special concern because brain science shows that early deprivation can leave lifelong scars.

If quarterly unemployment hits 30 percent — as the president of one Federal Reserve Bank predicts — 15.4 percent of Americans will fall into poverty for the year, the Columbia researchers found, even in the unlikely event the economy instantly recovers. That level of poverty would exceed the peak of the Great Recession and add nearly 10 million people to the ranks of the poor.

There are significant caveats. Most important, the model does not yet include the potentially large anti-poverty effect of the Cares Act, the emergency legislation last month that provides about $560 billion in direct relief to individuals and even greater sums to sustain businesses and jobs. However imprecise, the model suggests a coming poverty epoch, rather than an episode.

Fed up with the broad restrictions on American life, and in some cases encouraged by anti-government activists on the right, thousands of protesters have taken to the streets across the country to urge governors to reopen businesses and relax strict rules on daily life that health officials have said are necessary to save lives.

In Michigan, thousands of demonstrators in cars jammed the streets around the State Capitol in Lansing, saying the restrictions to prevent spread of the coronavirus were drowning small businesses. In Frankfort, Ky., dozens of people shouted through a Capitol building window, nearly drowning out Gov. Andy Beshear as he held a news conference. And in Raleigh, N.C., at least one woman was arrested during a protest that drew more than 100 people in opposition to a stay-at-home rule, The News & Observer reported.

More protests against stay-at-home orders have been planned in other states, including Texas, Oregon, and California, as the economic and health effects of the coronavirus mount in the United States.

Some organizers and demonstrators had affiliations with the Tea Party and displayed the “Don’t Tread on Me” logo that was an unofficial slogan for the movement. Others waved flags and banners in support of President Trump, who has pushed to reopen the economy.

But the size of the protests in places like Michigan suggested that anger over the no-end-in-sight nature of the lockdowns is not limited to the far right, and that the public’s patience has a limit. As anxiety, uncertainty and joblessness grow, the next few weeks will pose a test for governors and local leaders who are likely to face increased pressure to loosen some of the restrictions.

In Michigan alone, more than 1 million people — roughly a quarter of the state’s work force — have filed for unemployment benefits.

Greg McNeilly, a Republican consultant in the state who has criticized the governor’s response as too blunt and sweeping, said that while the protests this week included fringe elements of the right, politicians would be mistaken if they dismissed them outright.

“At the heart of this is legitimate concern that, look, we can’t beat this virus without a vaccine or herd immunity,” he said. “And right now it feels like our policymakers, state and federal, are choosing fear instead of saying ‘how can we live safely with this?’”

The research into the affects of asthma at this early stage is minimal and not always consistent. A recent commentary published in Lancet by a group of European researchers called it “striking” that asthma appeared to be underrepresented as a secondary health problem associated with Covid-19, and anecdotal evidence supports that observation.

“We’re not seeing a lot of patients with asthma,” said Dr. Bushra Mina, a pulmonary and critical care physician at Lenox Hill Hospital in New York City, which has treated more than 800 Covid cases. The more common risk factors, he added, are “morbid obesity, diabetes and chronic heart disease.”

New York’s sweeping shutdown will last until at least May 15, Gov. Andrew M. Cuomo said Thursday as he urged people to prepare for a “new normal” as the state sputters into a reopening over the coming months.

“This is going to be a moment of transformation for society, and we paid a very high price for it,” Mr. Cuomo said. “But how do we learn the lessons so that this new normal is a better New York?”

Mr. Cuomo’s guidance, including that businesses begin considering how to “reimagine” workplaces by weighing more regular use of telecommuting and sustained social distancing, came as he announced that his state’s official death toll had risen by 606 to 12,192. The increase in fatalities was the lowest for the state in 10 days. (The tally does not include the more than 3,700 people in New York City who have died during the outbreak without being tested and are now presumed to have died of the virus.)

Although Mr. Cuomo and other public officials have been encouraged by some statistics suggesting that New York’s efforts to stop the spread of the virus were working, Mr. Cuomo cautioned that reopening too hastily would cause the infection rate to swell.

“The rate of infection is everything,” said Mr. Cuomo, who is coordinating with other governors in the Northeast to map out a strategy for restarting the bulk of the economy.

Mr. Cuomo signaled that “more-essential” businesses with a low infection risk would be prioritized for reopening, though he did not articulate a specific timeline. “Less-essential” industries with a high infection risk, one of Mr. Cuomo’s presentation slides said, would be the “last priority — dependent on infection decline and precautions put in place.”

The economic consequences of the pandemic had come into clearer view earlier Thursday, when Mayor Bill de Blasio said that New York City would need at least $2 billion in “very tough budget cuts” in its next fiscal year.

Mr. de Blasio’s proposal forecasts an extraordinary drop in the city government’s tax revenue: some $7.4 billion over the current fiscal year and the next.

More immediately, the state’s latest high-profile tactic to quell the virus — a requirement for people to wear facial coverings in public when they cannot maintain six feet of social distancing — will take effect at 8 p.m. on Friday.

On Jan. 22, two days after Chinese officials first acknowledged the serious threat posed by the new virus ravaging the city of Wuhan, the chief of the World Health Organization held the first of what would be months of almost daily news briefings, sounding the alarm, telling the world to take the outbreak seriously.

But with its officials divided, the W.H.O., still seeing no evidence of sustained spread of the virus outside of China, declined the next day to declare a global public health emergency. A week later, the organization reversed course and made the declaration.

Those early days of the epidemic illustrated the strengths and weaknesses of the W.H.O., an arm of the United Nations that is now under fire by Mr. Trump, who on Tuesday ordered a cutoff of American funding to the organization.

With limited, constantly shifting information to go on, the W.H.O. showed an early, consistent determination to treat the new contagion like the threat it would become, and to persuade others to do the same. At the same time, the organization repeatedly praised China, acting and speaking with a political caution born of being an arm of the United Nations, with few resources of its own, unable to do its work without international cooperation.

Mr. Trump, deflecting criticism that his own handling of the crisis left the United States unprepared, accused the W.H.O. of mismanaging it, called the organization “very China-centric” and said it had “pushed China’s misinformation.”

But a close look at the record shows that the W.H.O. acted with greater foresight and speed than many national governments, and more than it had shown in previous epidemics. And while it made mistakes, there is little evidence that the W.H.O. is responsible for the disasters that have unfolded in Europe and then the United States.

Massachusetts is the first state to invest in an ambitious contact-tracing program, budgeting $44 million to hire 1,000 people to track down people who have been exposed, as soon as possible, and warning them.

Contact tracing has long been a critical tool in combating infectious disease, including fights against illnesses such as AIDS and SARS. It has helped Asian countries like Singapore and South Korea contain the spread of the new virus, but their systems rely heavily on digital surveillance, using patients’ digital footprints to automatically alert their contacts, an intrusion that many Americans would not accept.

Massachusetts is opting for an old-school, labor-intensive method: people. Lots of them.

Dr. Paul Farmer, a physician-anthropologist and founding partner of the nonprofit Partners in Health, which is helping the state train workers, said there was no substitute for the bond of trust formed by a human contact tracer.

It is not known whether any of those cases are linked to returning Liberty students, but the university community is exposed as well. Liberty said on Wednesday night that two employees had tested positive for the virus, two more had results pending, and seven were quarantined at home.

Amid those struggles, a Liberty student on Monday filed a class-action lawsuit, saying that Liberty and Mr. Falwell had “placed students at severe physical risk and refused to refund thousands of dollars in fees owed to them for the Spring 2020 semester,” according to a statement from the law firm filing the suit.

The furor in Lynchburg centers on Mr. Falwell’s decision to open the campus to all students and staff at a time when most American universities were closing for fear of spreading the disease. For weeks before that decision, Mr. Falwell had derided other universities’ responses as overreactions driven by a desire to harm Mr. Trump.

We answer your housing questions on breaking leases, paying rent and more.

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Reporting was contributed by Donald G. McNeil Jr., Alan Blinder, Eileen Sullivan, Jonah Engel Bromwich, Alan Rappeport, Nelson D. Schwartz, Richard Pérez-Peña, Ellen Barry, Marc Santora, Jim Tankersley, Emily Cochrane, Emily Flitter, Matt Stevens, Karen Barrow, Nicholas Bogel-Burroughs, Nicholas Fandos, Jeremy Peters, Roni Caryn Rabin, Caitlin Dickerson, David Gelles, Abby Goodnough, Neil Irwin, Danielle Ivory, Miriam Jordan, Sheila Kaplan, Annie Karni, Kate Kelly, Zolan Kanno-Youngs, Adeel Hassan, Mike Baker, Manny Fernandez, Simon Romero, Emily Flitter, Katie Thomas, Elizabeth Williamson and Jason DeParle.

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