Senate Blocks Restaurant Industry Push for New Covid Relief

  • Republicans balk at new round of grants over deficit spending
  • House had passed aid measure for restaurants, gyms, teams

Bloomberg Government subscribers get the stories like this first. Act now and gain unlimited access to everything you need to know. Learn more.

A bid by the restaurant industry to secure $40 billion in new Covid relief grants hit a wall in the Senate Thursday after Republicans blocked an attempt to begin debate on a bipartisan aid bill.   

The 52-43 vote — short of the 60 needed — likely spells the end of the quest to fund restaurants left out of last year’s rescue efforts unless the bill sponsors can find a way to fully pay for the spending. Republicans have increasingly grown wary of further deficit spending to address the pandemic and last month demanded that a $10 billion vaccine and treatment bill be fully paid for.

The bill, authored by Maryland Democratic Senator Ben Cardin and Mississippi Republican Roger Wicker, would provide $40 billion to replenish a depleted restaurant relief fund with the aim of reaching many of the 177,000 applicants that haven’t received assistance.  It would also send additional funds to gyms, minor league sports teams, live event companies and local buses and ferries. 

“Two years into this crisis, the idea that restaurant owners have all recovered could not be further from the truth,” Senate Majority Leader Chuck Schumer said on the Senate floor, stressing that restaurants are grappling with labor shortages and loans borrowed at the height of the pandemic. 

The National Restaurant Association has lobbied heavily for passage of a new relief bill.  The group said in April according to its own survey that half of restaurants denied aid do not expect to remain in business without some aid. 

Restaurants are facing mounting costs for key ingredients like cooking oil, along with price spikes for to-go packaging and paper goods like cups. While the industry had predicted some inflation relief by the spring of 2022, that hasn’t happened yet and fast-food giant McDonald’s recently raised its US outlook for commodity costs this year to as much as 14% from a previous estimate of just 8%.

Read more: Chicken Wings for $34: US Food Prices Are Set to Go Even Higher

To cope with soaring expenses, restaurants have already passed on some costs. Average menu prices in April were up 7.2% from a year earlier in the biggest 12-month gain since 1981, according to the National Restaurant Association. Diners have also seen shrinking portions.

Still, margins are being squeezed hard. And things could get even worse since many big restaurant chains and food retailers sign long-term contracts for supplies. As agreements inked six or 12 months ago come up for renewal, they’ll likely be set at the current higher costs. 

Only $5 billion of the Cardin-Wicker measure was paid for by using unspent prior pandemic relief, however, and that sparked GOP opposition. Republicans argued that the spending would worsen sky-high inflation. 

“I’m a no on it because I think it has to be fully paid for. I hope we come back with a bill that is,” Ohio Republican Rob Portman said. 

The House in April passed a similar restaurant relief bill on a 223-203 vote with just six Republicans in support. That measure, authored by Democrats Dean Phillips of Minnesota and Earl Blumenauer of Oregon would have directed $42 billion to the restaurant fund and an additional $13 billion for other small businesses.  While the authors estimate that the bill can be paid for by reclaiming fraudulent Paycheck Protection Program loans, the Congressional Budget Office has not backed up that estimate. 


Stay informed with more news like this – from the largest team of reporters on Capitol Hill – subscribe to Bloomberg Government today. Learn more.