Business Owner, Oakland discussed on 1A

KQED Radio
| KQED Radio


With us good morning thank you very much yeah so a little background on me I'm actually a small business owner in Oakland so I have been going through every single every other small business owners going through right now I want to talk about the paycheck protection program in particular because I know you know we will fight through that and because it's handled through banks sort of the execution of that is spotty but Hey so I know how the discussion earlier was we have all these programs are designed to help all the different sectors of business but the implementation of them and you know it seems a kind of a falling apart so you know what kind of advice would you have for small business owners that are trying to navigate you know these systems that are breaking down or all kind of looking at a ticking clock big question about implementation here Laura Tyson we go do you have some wisdom to shed for a Chrysler question to Sean would be have you managed to do it so you went to the bank the this is administered through the banks you have to usually have a landing or arrangement with the bank to begin with some kind of relationship I do know some people who've gone and they've gotten it really fast what's what's your what do you think of the implementation barriers for you sorry with this company yeah I'm I'm here okay so you know for us for a small company were or are about we're a little less than five employees and I you yeah we did apply for a bank that we have our lending arrangement with and you know what it looks like is happening at the same thing that any other bank would decide right so it's easier for a bank to make five ten million dollar loan then five thousand islands got it or not yeah you know where the bottom of the list you're at the bottom of the list yeah okay yeah I'm not I hi I recognize the implementation issues what I what I have said is even in my remarks is I just think people have to it the facility exists it's not it is the execution capabilities were not there when the facility was set up I think that it it will it will work it will work with a lag I don't think that that handles you know issues of of of your firm over the time period where there is a lag and you don't have the long is not addressed here so I think it's a well designed program but I think we were not at all set up for execution and by the way because there was a discussion of the German approach because I bite I think the the the combination of unemployment insurance and the small business lending facility which is supposed to be the case if you use that that loan you get it turns into a grant if you're using it to maintain your employees and pay your rent and maintain your operations that's it in a sentence our version if you will of course I've got a little bit so all I would do is say that the banks are struggling to get together in a way to execute more efficiently and effectively and I wish you luck in getting through finally I think you will love to use on thank you for calling us this morning I want to go back if I may do you Peter because I want to talk more with you about what other countries are doing I'm looking at an email here from a listener named Lori who writes rather than giving out cash individuals and businesses as we're doing I thought Norway's approach the corona was better they funded businesses to keep their employees paid while sheltering at home keeping both the businesses and employees solvent so they can come back sooner yeah I mean that that the other approach and I don't know which is necessarily better if you think about it the two balls are to make sure that people can put bread on the table and to keep companies from dissolving and you say you're looking to do that in the most cost effective way to keep both of those goals it I can I understand the argument in favor of keeping people on the payroll but if there's no work for them to do there's not a lot of difference between that and having them they'll sit at home sheltering in place while the company it goes into the induced coma so it's it's going to have one a six one half dozen the other wouldn't say either approach is clearly superior the other thing about the U. U. S. approach so the unemployment insurance one of those I don't remember which of the speakers mentioned this but people sometimes choose they're going to choose the unemployment insurance route because the the way we structure that program the actual pay you will get during this period of time which is adding to the normal unemployment benefits is six hundred dollars additional weekly actually for first for workers who kind of go in and out of jobs who are in the the kind of the it's often times called precarious employment relationships are not long term employees they're going in and out maybe they're working for multiple employers disk unemployment insurance option is gonna work better than trying to maintain all of those are very small businesses by and in the Norway approach I think because I think that workers themselves may say I don't want to do this and the employers may say yeah that's better for you right now go on to you I and you can come back so we don't have to rebuild this notion of breaking we don't we don't have great companies and so we but sometimes what can happen is that there is a flexible in and out of the work force and you're not going to break the company because you're not breaking their talent chain so I I think I would agree the jury's out of the U. S. approach versus say the Norway approach to Norway approach in some ways it's simpler but the U. but the US approach is very consistent with the kinds of institutions we already have in place unemployment insurance and small business loans so we're using that to work we're giving an extra bonus let me give to another caller here let me bring Catherine from Berkeley annex Catherine join us here on the air all right yeah my name's Katherine I'm in Berkeley and I'm also a small business owner like the previous caller but what I've noticed is we've done everything we've applied for PPP at all and we've we've even apply for a forbearance our mortgage we later my number off my husband still on the payroll but what one huge bill and what no one seems to be bringing up is is health insurance we have a company plan and we can't really afford it I always hear about are people losing their health insurance but nothing about any of the health insurance companies already taken their their cut out of our you know April payment the R. eight premium but it's a huge deal and I just don't understand how it is that we can't get a forbearance on our health insurance especially since we're not going to the doctor yeah Catherine I appreciate the question an effective looking at email her from listening to Serra this is I think we should just stop everything no bankruptcies no mortgages no rent no anything just pause everything no one knows anyone anything the government pays for necessities well healthcare is indeed Laura Tyson a subsidy so what about what would happen to bring up her well I did mention that one of the structural weaknesses of the U. S. economy going into this and underscored here and we shouldn't accept this way is that too much of our health insurance system is linked to employment that test should not have been the case we but I believe the state of California so so one of the things that's happened here is that the states have re opened some states not all have re opened their health insurance network so that you people who can apply for health insurance they don't have on on the exchanges so that's one thing you have health insurance the other thing of course is at it may be the case that a number of people who need to health insurance don't have it right now go into fall into Medicaid so there's a major Medicaid expansion going on which which it should I don't see I don't see a way out in the current situation right now for employers who signed up for health insurance to pay health insurance premiums right now that's not part of the any of the packages I've seen hello I appreciate the problem but the the payroll costs so I guess what I would say is in the Texan program the loans that exist to small businesses to maintain your employees I would assume that part of the cost of maintaining your employees is the health insurance premiums you're paying so I would assume that that would be in a sense something that the mall that the small business loans would want to cover just like they want to cover rent I mean so it essentially they're saying for those the card you need to spend to keep going let's say that the small business loans are meant to do that for two months now one of the problems here is it's only two months off the exit strategy is slower than that this is going to be a problem but for two months what these laws are meant to do is help small business covers the cost the cost of maintaining their payrolls and that would include health insurance costs let me Jerry Nichols or go back to you on this and I think what we're talking about really revenue here as usual and I wonder if you could say something to address the effect of all this on state and local governments because there's been a really sharp contraction a dramatic contraction in income and taxable sales and and obviously more demands on healthcare which is across the board sure it affects and the state government in in two ways one here is that consumers are saving more of what they're spending money on here is our groceries and in pharmaceuticals which are not that the sales tax revenue is definitely going down and the state is heavily dependent on high income earners in high income earners have much more volatile income streams to drop dramatically you know during recessions during economic contractions and and so the state is about to experience a you know a fairly sharp production in its revenue stream the sort of good news to the extent that there is some in this is that this is something that California's been talking about for a long time and so we do have a rainy day fund what led axes multiple funds and it adds up to around twenty billion dollars and there are ways to achieve some savings they gets one cut back twenty five billion dollars and some additional borrowing plus the transfers from the federal government still they're going to be cutbacks at the state level at the at the local level a sales tax revenue is dropping so that's going to hurt local governments but one of the unintended consequences of prop thirteen is it is still the case that the vast majority of properties in the state of California are assessed the value that's less than the market value and sell property taxes are unlikely to go down and that's what happened actually did in the in the last recession so state and local governments are going to be heard in the going to be cutting back California is it a little better shape than probably most other states because we've had that dramatic experience of the last two possessions in the middle been doing some planning but but it's certainly not good news for either state or local governments in this regard Nicholas Berg once again is director and senior economist with UCLA Anderson forecast and because economics editor for Bloomberg businessweek quick question from Ronald for you Peter he wants to know what all the new money being printed in the form of the stimulus package lead to massive inflation nobody's talking about this question all I love that question I would say no the quick answer is no let me explain why if if the money's not actually being printed when the fed buys assets it what it does is it creates reserves so it used to own a treasury bond you sell your treasury bond and now instead you have a checking account at the fed it's not new money it's just changing the composition of your balance sheet and the fed's balance sheet trading assets around now money is created when banks make loans and people take.

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