Thankfully it didn’t take Congress and the U.S. Treasury Department too long to reach the conclusion that the lifelines in the CARES Act would prove inadequate. (The $2.3 trillion CARES Act was enacted Friday, March 27, just under two weeks ago.)

The Treasury Department is requesting an additional $250 billion for loans to small businesses that will be forgiven if they maintain payrolls. The $349 billion earmarked to date for the Small Business Administration’s new Paycheck Protection Program (PPP) already looks at risk of falling shy of loan demand. The high application volume for this lifeline is encouraging, but the program has struggled out of the gate with its web system crashing, application form and documentation issues, and a first-come, first-serve queue that is surely disadvantaging many struggling businesses.

To that last point, Congressional Democrats are seeking a provision in the supplemental funding package to ensure that at least half of the additional PPP loan funds are administered through community-based financial institutions serving women, minority, and veteran-owned businesses, as opposed to being channeled via commercial banks.

Congressional Democrats also want to tie a larger, broader package of economic aid to the Treasury’s requested funding for small business loans, specifically an additional $100 billion for hospitals and health centers, an additional $150 billion in grants to state and local governments, and a 15% increase in Supplemental Nutrition Assistance Program (SNAP) benefits. This proposal would double the amount of emergency funding for hospitals and fiscal relief for state and local governments, relative to similar funds already appropriated by the CARES Act. We’re already seeing a concerning number of news reports about states starting to cut their budgets, threatening cuts to Medicaid and hospital budgets in the midst of a pandemic (crazy!) in addition to more layoffs.

Senate Majority Leader Mitch McConnell (R-KY) wants to move a bill with only the small business loan funding, but has no leverage to force Democrats’ hand here.

The $1-for-$1 opening gambit of tying $250 billion in grants to the requested $250 billion in loan funding is an unforced error—aim for the scale and nature of the crisis at hand, not “even” headline numbers. I would much rather see Congress increase federal matching rates for state Medicaid programs—which are faster to implement, more directly aimed at preventing Medicaid cuts, and more easily conditioned on economic conditions, say remaining in effect until unemployment falls back to 4%—and only direct grants to municipal and tribal governments. I also worry that further, necessary expansions of emergency unemployment benefits will not be enacted without similar bipartisan legislative vehicles (a repeated tragedy of the Great Recession). And it seems crazy not to use such a legislative vehicle to prevent the dangerous, anti-democratic travesty we saw in Wisconsin’s primary from being repeated elsewhere.

All that said, expanding food assistance and providing an additional $250 billion for hospitals, states, and local governments would be a timely step in the right direction. Recommended reading:

• WaPo (4/8/20): Pelosi and Schumer seek huge spending increases for hospitals, local aid, and food stamps as coronavirus talks intensify by Erica Werner