Restaurants need help from customers, not government

After appropriating trillions of dollars in COVID-19 relief, Congress is angling to pass yet another multibillion-dollar aid package, this one directed at restaurants and other small businesses that suffered during the pandemic.

While we sympathize with all business operators who struggled to cope with COVID-19, another relief act for restaurants, bars and similar public venues is too much. The time for new federal cash outlays is over, and Congress (which has approved competing versions of the aid package in the House and Senate) needs to put a stop to this piling on.

For starters, the vast amounts doled out have kick-started inflation, creating a severe and strikingly persistent threat to the economic recovery. Taming the upward spiral of prices is requiring aggressive intervention from the Federal Reserve to raise interest rates and sell its bond holdings, with all the inherent risks of recession. Shelling out new federal aid would only undermine that effort and make inflation harder to address.

Further, states and cities awash in federal money are free to approve more targeted aid. The Treasury Department is expected to distribute tens of billions in Fiscal Recovery Funds that were approved but haven’t yet been allotted, and the states receiving the money will have years to spend it. Many more billions from other programs also remain to be distributed. Enough, already.

The Restaurant Revitalization Fund, part of the American Rescue Plan, succeeded in pumping money into a popular constituency but not the way Congress intended. Though businesses owned by women, veterans, minorities and those with lower incomes were supposed to get priority, mostly it was a chaotic free-for-all. Also, the amounts handed out were determined mainly by how much a company’s revenue had gone down year-over-year, which, contrary to the pro-worker intent of the measure, favored restaurants that stayed shuttered for the longest time. No wonder a slew of lawsuits have been filed.

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

What about being fair to taxpayers who are stuck footing the bill for the myriad flaws in this relief effort, and others?

The Paycheck Protection Program, for instance, also misdirected aid on an even bigger scale. Millions of restaurants and other businesses took advantage of that program, collecting loans that supposedly would be forgiven if they used the money to retain workers. In short order, Congress weakened the requirements, so even companies that slashed their workforces will never pay back a penny.

Because the program was open to practically any small or mid-sized business, all sorts of companies collected funds, including those that didn’t remotely need it.

We have no confidence a second restaurant-relief effort would be managed any better 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 who want to work.

If it were possible to effectively target government aid only to those businesses that need a little short-term help to get back on their feet, we’d be less adamant. But the restaurant business is notoriously risky.

The right thing to do is to turn off the federal spigot and go about supporting restaurants in the best way possible, if you can afford it: Be a loyal customer and leave a generous tip.