THE FOOD FIGHT ISN'T OVER YET: Independent restaurant owners and chefs whose businesses were already hard hit by the coronavirus crisis are praising the Senate's move to pass the largest economic relief package in U.S. history.
- “We called for Congress to act and they did,” said the leadership team of the Independent Restaurant Coalition, a group formed last week to advocate for government assistance to save local restaurants.
- “The Senate passed a bill tonight that gives a lifeline to local restaurants. Make no mistake, this isn't a bailout. We want to get back to work and we need to support our workers, suppliers, and communities throughout this crisis. Accomplishing this goal is critical, and swift action by the House of Representatives is required.”
- Boldfaced names in cooking: The IRC's leadership team includes Bravo’s Top Chef head judge Tom Colicchio, Travel Channel’s Bizarre Foods host Andrew Zimmern, Food Network star and restaurateur Marcus Samuelsson, celebrated Los Angeles-based chef and restaurateur Nancy Silverton, and Sam Kass, a food entrepreneur and former White House chef under former president Barack Obama.
The $2.2 trillion federal stimulus package contains favorable terms for the hospitality industry as tens and thousands of independent restaurants around the country closed to stop the spread of covid-19. More than 9 million Americans are reportedly now at risk of unemployment as a result of the industry coming to a standstill as countless servers, chefs, dishwashers, suppliers, and vendors have lost their jobs as a result of the industry coming to a standstill.
- The bill's enhanced unemployment insurance, direct cash assistance for individuals, and the $350 billion small business lending program with expanded loan forgiveness would provide some relief.
But the pressure campaign isn't over yet: Some of the biggest names in celebrity chefdom say this phase of federal relief in the pipeline is just one step toward survival. An influential faction is already calling for Washington policymakers to give federal subsidies to insurance companies to pay out “business interruption coverage” to impacted restaurants.
- Chefs Wolfgang Puck and Thomas Keller took to President Trump's favorite TV channel earlier in the week to argue the case: “We are trying to feed our employees … but [the crisis has] affected millions and millions of people,” Puck said on Fox News with Tucker Carlson. “And insurance companies are wrongfully denying business interruption coverage for all of our business.”
- The issue: Restaurateurs say they pay into their insurance policies to cover all sorts of unexpected disruptions to their business. But the fine print of some policies includes a “virus exemption,” which would not cover losses or forced closures as a result of a pandemic, restaurateurs say. As a result, insurers are apparently denying those who have submitted claims in the wake of restaurant slowdowns and forced suspensions.
- “We need help and we need help immediately. And the way to do that is through the federal government — modifying the insurance interruption language in our policies,” Keller said, “and allowing the federal government to subsidize the insurance companies so that they can then deliver to us the cash that we need to survive.”
- "We’ve been paying into the system for a long time," Portland, Ore. chef and restaurant owner Naomi Pomeroy told Power Up. "I've never made any claims and feel like we deserve to have assistance here during this time, and think it's crap they tried to write in virus exclusions...We do a lot to stimulate the whole economy and create so many satisfying jobs."
Even restaurants that are staying open in some capacity say the takeout business model isn't enough: “In the past week, one of us was forced to lay off 800 workers. Another had to let 1,500 people go. A third laid off 2,000 people, including corporate office staff. Some of us are still offering takeout and delivery — and selling gift cards and swag online — but that’s barely enough to keep anyone employed, given the costs of rent and insurance for sit-down restaurants. Our economic model requires people in seats,” a handful of prominent restaurateurs wrote a New York Times op-ed.
The loss in business is just staggering:
The insurance related litigation has already started: “A prominent seafood restaurant in New Orleans’ French Quarter, Oceana Grill, has asked a state court to confirm that its policy with Lloyd’s of London would cover lost revenue due to civil-authority actions with coronavirus restrictions,” the Wall Street Journal's Leslie Scism reports.
- John Houghtaling II, Oceana’s lawyer, told Scism that “the legal action was filed at this early stage of the New Orleans civil authority orders — announced March 13 to March 15 — because ‘insurers are placing doubt on whether coverage applies to the shutdowns because they are denying that the virus impacts property.’”
Another possible front for Washington: Butler University’s Zachary Finn, a professor of risk management at the Lacy School of Business, is arguing for lawmakers to amend the Terrorism Risk Insurance Act — a program created after 9/11 attacks to insure losses as a result of terrorism — with language to address a pandemic.
- “This shouldn't be done on a state-by-state basis or in the courts because then you'll destabilize the industry and insurance companies will go bankrupt,” Finn told Power Up.
Long-lasting damage?: Chefs and restaurateurs worry that even once restaurants reopen, lower demand for eating out and slowed traffic will ultimately cause some to collapse.
- “I think most restaurants won’t fold due to a lack of relief from these efforts; rather, it will happen slowly as we reopen when there’s inherently less demand but the same fixed costs,” Momofuku chief executive Marguerite Zabar Mariscal told Power Up.
- “Unless landlords are willing and able to issue rent reductions through 2021/2022 as the engine revs up, restaurants will close. The difference of 10 to 20 percent in traffic is the difference of survival in cities like New York.”
- “When we reopen, we won't be at full capacity,” chef Colicchio told us. “So after this stimulus … we'll need additional no interest loans and support to not just have capital to open the restaurant but to create a runway to sustain ourselves over a period of time until the business comes back.”
- “Once we get through this, we have the potential to change the way we do business in this country — from the way workers are valued to the way business is conducted,” Colicchio added. “The virus in a way has laid bare the stark reality of how and where our country has gone astray. Hopefully we get through this and pull together and start making decisions that make sure that everyone could realize the American Dream.”
On The Hill
WHAT’S IN THE $2.2 TRILLION BILL: The Senate unanimously passed the largest rescue package in history “aimed at limiting the financial trauma that the coronavirus pandemic is inflicting,” our colleagues Erica Werner, Mike DeBonis and Paul Kane report.
It's not over yet: The House still needs to approve the bill, which is set to vote on Friday. President Trump has declared that he will sign it into law immediately.
- The House is currently out of session and members have expressed concern about returning: “House Speaker Nancy Pelosi (D-Calif.) had initially favored passing the bill by ‘unanimous consent,’ which would require agreement from all members of the chamber," our colleagues write. "But one prominent liberal — Rep. Alexandria Ocasio-Cortez (D-N.Y.) — had already suggested she could oppose it.”
- That means there will be a voice vote now on Friday at 9 a.m.: This will allow any members present to publicly debate the bill, our colleagues note, “before passing the legislation without a roll-call vote that would require a quorum to be present. At the same time, lawmakers who are quarantined, live in places with lockdown orders or simply don’t want to travel would not have to do so."
Is the bill enough?: “The good news is the majority of the money is going to laid-off workers, small business owners, hospitals and state and local governments. The bad news is it won’t be enough to stop a recession,” our colleague Heather Long reports.
- A recession could be the least of our worries: “And it’s an open question whether the nation can avoid an economic depression, the likes of which haven’t been seen since the 1930s,” our colleague writes.
The highlights of the 883-page bill, per our colleague Jeff Stein:
$1,200 checks for millions of Americans - a total cost of $290 billion: “The legislation would give taxpayers $1,200 per adult and $500 per child. The benefit would be smaller for individual taxpayers earning over $75,000 annually (or $150,000 for a couple filing jointly) and disappear altogether for individuals earning over $90,000,” our colleague writes.
- Not sure what that means for you?: We'll do the math for you — just check out our calculator.
- When to expect the money: “Treasury Secretary Steven Mnuchin has set a goal of getting the first payments out the door the week of April 6. Many experts say this is an ambitious timetable, and it may get pushed back to later in April,” our colleagues Ashlyn Still, Heather Long and Kevin Uhrmacher report.
Aid to large businesses with more oversight ($504 billion): “One of the more controversial provisions in the package is a provision for hundreds of billions of dollars in loans for large businesses getting hit hard by the outbreak. Critics have called that provision a bailout for corporate America,” our colleague writes. Because much of this is loans, the total cost may end up being far less.
- The oversight: There are “restrictions on salary increases for executives of firms receiving bailout money, as of firms receiving bailout money, as well as a prohibition on issuing stock buybacks that primarily benefit company shareholders. Those provisions last only a limited time,” our colleague writes. There will also be a congressional oversight panel and a new inspector general to probe decisions made by the Treasury Department that will allocate part of the pool.
- No money for the Trump organization: There's “a prohibition on funding benefiting the president, vice president, Cabinet members or congressional lawmakers. The prohibition also applies to these federal officials’ relatives,” our colleague writes.
Increase in unemployment insurance ($260 billion): “The federal government would provide an additional $600 on top of existing unemployment benefits, which are currently an average of $300, for four months,” our colleague writes.
- More people can also qualify for unemployment insurance: “The proposal extends unemployment benefits to people who may not have been fired but are unable to work as a result of coronavirus — because they are sick, quarantined or need to take care of a child forced to stay home from school.”
Emergency aid for small businesses ($377 billion): “The bill also aims to help small companies weather the economic storm. It does so through generous zero-interest loans for firms with fewer than 500 employees — loans that could be forgiven if the firms follow certain conditions, such as not firing their workers,” our colleague writes. Some of these loans may also be paid back.
Hospitals, expanded health care spending ($180 billion): “The centerpiece of that section of the bill, a key ask of Senate Democrats, is a $100 billion fund for hospitals and providers hit hardest by the outbreak. That money can be used for protective gear for health-care workers, testing supplies and emergency operation centers, among other necessities,” our colleague writes.
Emergency aid for state and local governments ($175 billion): “States are expected to be hammered by the economic crunch, both with rising costs as people seek additional public assistance and lower tax revenue because of falling business activity,” our colleague writes. “Each state will receive a minimum of $1.5 billion.”
- The District wasn't treated like a state: The legislation treats D.C. as a U.S. territory, even though the nation's capital has more cases than most states, our colleague Jenna Portnoy reports. Before the final text was released, this was expected to cost D.C. an estimated $750 million.
Help to run elections during the pandemic ($400 million): The money is “far less than Democrats said would be necessary to prepare for November’s elections,” our colleagues Amy Gardner and Mike DeBonis report.
- Democrats also lost out on the mandates they wanted: “Those include requiring [states] to make mail-in voting available to everyone and, if an election is held during a national emergency, sending a mail-in ballot to every registered voter,” our colleagues write.
Support for transportation networks that are struggling as passengers stay home ($114 billion): “The funding, designed in many cases to get to recipients within days of [Trump] signing the bill, would support airlines, airports, transit agencies and Amtrak,” our colleague Ian Duncan reports.
On K Street
LET'S ALL GO TO THE LOBBY: The (not so) secret of Washington is that must-pass legislation provides ample opportunities for K Street to stuff in related, or in some cases unrelated, provisions on behalf of well-connected industries. The largest stimulus bill in history was not exception. But spotting these provisions takes reading the really fine print, as the New York Times Eric Lipton and Kenneth P. Vogel report.
- Two items provide an opening for the Trump Organization: Both parts of the bill benefit the larger hotel and restaurant industries, but the Trump Organization did not respond to the Times on whether it intended to take of advantage of the opportunities. One provision allows hotel and restaurant chains to be considered small businesses if they apply as individual locations and that particular location has 500 employees or less, per the Times. The other changes the tax code to allow immediate write-offs for renovations instead of taking the deduction over 37 years.
Beleaguered Boeing also appears to be getting some help: The Chicago-based aerospace giant's name is nowhere in the bill, but “a $17 billion federal loan program for businesses deemed ‘critical to maintaining national security' was largely crafted for its benefit,” our colleagues Aaron Gregg, Jeff Stein and Josh Dawsey report.
Outside the Beltway
THE DEADLIEST DAY: “For the first time since the outbreak reached the United States, state health departments around the country reported more than 200 coronavirus-related deaths in a single day on Wednesday,” our colleagues report.
- A majority of those deaths come from New York where the situation continues to deteriorate: “A refrigerated truck has been stationed outside to hold the bodies of the dead. Over the past 24 hours, New York City’s public hospital system said in a statement, 13 people at Elmhurst had died,” the Times's Michael Rothfeld, Somini Sengupta, Joseph Goldstein and Brian M. Rosenthal report.
- “It’s apocalyptic,” Ashley Bray, 27, a general medicine resident at the hospital, told the Times.
THE LATEST IN THE DMV: “The tally of novel coronavirus cases in the Washington region climbed past 1,000 as Maryland, Virginia and the District reported their largest single-day increases,” our colleagues Antonio Olivo, Ovetta Wiggins, Gregory S. Schneider and Darran Simon report.
The increase in cases means that expanded testing has begun to take root: But the fruit of social distancing will take longer to see.
- Key quote: “None of us can say in four weeks everything is going to be great and it’s going to be safe for all kids to go back to school,” Maryland Gov. Larry Hogan (R) said after the school closure was extended. “It would be wonderful if we get to the point where we bend the curve, and we can, but obviously we’re not going to send kids back if we’re still climbing and people are getting infected.”
About that emergency message you received: The District wanted everyone to be reminded that all nonessential businesses are now closed and residents are being urged to stay inside. But Mayor Muriel E. Bowser (D) is not issuing a stay-at-home directive.
- In other words: You can still go to the store and exercise. If you try to play basketball or soccer with a group, you might to asked to disperse.
So, what’s still open?: Our colleague Jenna Portnoy has your essential guide to what the District, Maryland and Virginia consider essential and what’s closed throughout the region.
PELOSI TURNS 80: "They were considered troublemakers in their time, so maybe there is a future for all of us,” the House speaker said with a laugh. “But I can just tell you, a troublemaker with a gavel — that’s the real difference.” That's just a small taste of our colleague Karen Tumulty's incredible essay that recounts the life of the most powerful woman in American history.