Lori Walsh: The Small Business Association began processing the second round of payroll protection program applications this week. The program is in high demand as thousands of small business owners simultaneously vie for available funding and the systems drains under the weight of the need. Meanwhile, more than 63,700 people nationwide have died from COVID-19, that includes 21 people in South Dakota. Today, we're joined by US Senator John Thune. He's with us to talk about ongoing federal efforts to help stabilize the economy alongside efforts to stop the rising death toll. Senator Thune, thanks for being here.
John Thune: Thanks, Lori. Nice to be with you.
Lori Walsh: I want to start with just the numbers. It feels like it would be wrong to start anywhere else without talking about the numbers in South Dakota being 21 people now who have died. As we look at these big picture programs and we look at the economy and we look at what back to normal might look like, those are individual lives. That has to weigh heavily on you as it does on me right now when you just look at the numbers continue to go up.
John Thune: Yeah, it does. There's no question about it. That's the first job is to protect life. Obviously many of the steps that are being taken to deal with the health emergency are designed to prevent the spread and keeps your people from getting the virus and therefore hopefully from being hospitalized and ultimately dying from it. It's very sobering. When you put it in that perspective, it's a grim reality, but it's why it's so important that we continue to apply these practices and these guidelines that are designed to keep people safe.
Lori Walsh: We've had doctors on this program say we're doing a better job at the length of time that people are in the hospital. We're doing a better job of understanding how that supportive care works or doing a better job of figuring out what kind of social distancing is effective, but there's still no treatment for this. There's still no vaccine. There's still no cure, and it's still an incredibly contagious virus. I do want to talk... Go ahead.
John Thune: No, I was just going to say you're absolutely right. Until we have some of those therapies and until we have a vaccine, we're going to have to continue to just be circumspect and very careful and apply a lot of these physical distancing type and physical separation type strategies to keep people safe.
Lori Walsh: When you look across the country and you take calls during town halls or as people contact your office, are you noticing a restlessness for people who want things to be in "normal" and how do you respond to people from a leadership perspective to say now is not the time to take your eye off the ball?
John Thune: I think one thing you have to do, Lori, is you have to figure out how to get people to sort of recalibrate their expectations. Because I think people have this expectation that all we do is flip a switch coming out of this and everything goes back to normal, and that's not the way it's going to happen. I mean, this is going to be a slow climb out. There will be benchmarks along the way, I think, that will make people more comfortable and give people more confidence to get back out there, but it's going to be a gradual thing. The availability of more testing would be one issue. A curve that's not only flattened, but hopefully starting to bend downwards would be one of those benchmarks that you could look at. Hopefully the arrival of an antiviral therapeutic.
This one that Gilead came up with supposedly reduces recovery time by about 31%. There are some others out there that we think are going to be more effective, so at least people have the confidence that if they get it, they're not going to die from it. Ultimately, as you said, a vaccine, but that's quite a ways off yet. In the meantime, we have to figure out how to get people sort of back out there, but in a way that doesn't create even more problems by allowing this thing to catch fire again. Everybody's talking about a second wave in the fall, but I think we have to get to where we have an acceptable level of risk and how that's defined is probably going to be slightly different for each individual person.
If you're a young person, that's probably very different than somebody that's over 65 or has a preexisting health condition, but I think we have to be smart about this. Political leaders have to be smart, the health community experts have to be smart in terms of how they advise people, but it's not going to be something where we flip a switch and overnight everything's back to normal. It's going to take a while.
Lori Walsh: It was always about protecting those vulnerable people. In some ways, it seems like that's being forgotten a little bit that that was... When we first started this, that was top of mind.
John Thune: Yeah, and it needs to be. Like I said, the first priority in all of this is to protect lives. There are people who are obviously more susceptible based on their age and underlying health conditions to this virus in the first place. As Dr. Fauci has said, this is a pathogen that wants to infect 40% of the American people. I mean, it is very viral once it gets out there. I think the key is to create the safeguards, put the guardrails around the way people interact with each other so that it limits its spread. But we have to be particularly careful with those more vulnerable populations because as we've discovered, and you pointed out I think in your lead in, that you have more information, more experience on hospitalizations, what works, what doesn't work.
As more data comes in, we have more real life experience, we're operating less on assumptions and more on real world experience. Any time you can bring real world experience to bear, I think it really informs and makes your decision making a lot better. Now the more data that we have, the more information we have, the more experience we have, the better we will become at figuring out what works and what doesn't work and how to sort of slowly get things opened up again, but in a way that protects the health and safety of people.
Lori Walsh: Let's talk about some of those efforts and this week was round two of payroll protection program. More money flowing into that program and more people trying to access it, which means more challenges with just the vast quantity of people who are applying. What can you tell us about that second wave of funding and how that is going?
John Thune: Well, it's up and running again. I'll tell you, that was long overdue news for a lot of small businesses, very welcome, I think. As we pointed out in the past, there were some hiccups in getting applications submitted into the SBA, what they call the E-Tran system, which is the portal that they use for originating processing these loans, but I think the SBA leaders are addressing that. The important thing here is the program's finally functional again. As of Wednesday, approximately 90 billion of the PPP loans were approved for another almost million small businesses through that additional $310 billion that we had added to the original amount. When this started, it was a $350 billion program. That got burned through real fast.
The additional allocation is 310 billion. Of that already, 90 billion has been used up. That's a lot of loans going out there. As I've mentioned before, South Dakotans have taken full advantage of it. In the first iteration of this, the first 350 billion, south Dakota got I think had about $1.4 billion in loans and there were over 11,000 businesses that took advantage of it, which put us overall at about fifth in the nation in terms of proportionally at least the number of businesses that were able get access to it. It's been successful, and it's one of those things I think we just have to continue to pay attention to because it is providing bridge financing.
It's cashflow, it's liquidity for these businesses to keep people employed for the next eight weeks at which time we hope that we'll be in a better position and they'll be able to... Again, things will start transitioning and they can get to where they're actually operating and functioning again. But as of right now, it's been a very successful program. It's been heavily subscribed and a lot of dollars have been put out there on the street that are hopefully making a difference.
Lori Walsh: Help me understand the definition of success because if we've spent nearly $70 billion to keep people employed, but we have 30 million people filing for unemployment, those numbers in South Dakota went up again this week with people filing for unemployment, now put those two numbers together for me and talk to me about measuring the success of that.
John Thune: Well, I think that those two concepts are designed to compliment each other. We knew that there are some businesses probably that are maybe not going to make it or are laying off people and those people who are being laid off or furloughed are those that are eligible for unemployment insurance. That program was made a very big robust program so that people who for no fault of their own ended up having to go onto the unemployment insurance program have a very good benefit. It's, again, a four month long program. But the idea behind PPP was to minimize that number. Yes, the numbers are big of people who are going under the unemployment lines. I talk to people who are being furloughed and laid off and that's the option that's available to them.
But our hope is, at least through PPP, that that number is a lot smaller than it otherwise would be. I think that's how you have to measure that in relative terms. In South Dakota, like I said, prior to this most recent infusion of new dollars, we had over 11,000 businesses in South Dakota who had used the PPP program. Hopefully that means that a lot of those employees and workers continue to be employed, continue to get healthcare benefits, retirement benefits, all the things that PPP was designed to cover. Those who aren't making it end up having to apply for unemployment. There are some weird interactions in folks who... For whatever reasons, I've talked to people like, for example, stylists.
They weren't forced to shut down. Because they weren't forced to shut down, they don't qualify for unemployment insurance. If they're shut down involuntarily, then they're eligible for unemployment insurance and yet they're also having a hard time getting PPP funding. Many of them are self-employed. There are lots of those types of people who sort of fall through the cracks in trying to anticipate those problems and try and fix them and help as many people as possible is the way these programs are designed to work. Unemployment insurance should compliment PPP, but clearly there are going be increases in people who are applying for unemployment insurance.
Lori Walsh: If we hadn't had some of the hiccups that we had early on with small business owners being able to get those loans, if we hadn't had some of those larger businesses taking up some of that funding, some of whom have given that funding back, for example, would we have had fewer people on unemployment if that had been a smoother rollout? What I'm wondering specifically is if some of these people got laid off because there was a several week delay in sort of getting that payroll support that business leaders needed.
John Thune: Yeah, I think that's probably partly true. I don't think there's any question that when there are delays in the program and there are businesses that have applied or trying to get approved and the program shuts down or people are using the program that shouldn't be using it. I mean, when the Los Angeles Laker basketball team decides to use the PPP program, that's probably something that's abusing a government program. That clearly is not something that a franchise that's worth $4.4 billion needs to do. The Treasury Secretary, Steve Mnuchin, has said that they are going to be auditing these programs and making sure that there are...
Some of these people who are applying, there are some major media organizations I've seen that are very successful that have applied for it. There are lots of entities out there that for whom this probably was not designed and who have the capacity and the liquidity and the cashflow not to need it. The design of the program was such that it was trying to cover as many businesses as possible, as much payroll as possible, and as many employees as possible. I do think it's unfortunate that we lapsed for almost two weeks waiting for the Democrats and Republicans to be able to agree because I think that probably cost some people that otherwise might've gotten loans and might've stayed employed and they ended up having to apply for unemployment insurance.
It didn't need to take as long as it did and that's unfortunate,.but hopefully now that it's up and operating again, we'll get more people applying.
Lori Walsh: You mentioned people like hairstylists or other people in business who haven't had the customer base and have had to lay people off or shut down if they couldn't get a PPP loan, but they couldn't qualify for unemployment insurance because they were technically open. Now we're looking here in South Dakota, I'm sure you know about Governor Kristy Noem's Back to Normal plan. Business owners, restaurant owners, lots of people are scrambling to try to figure out what does this look like in the days ahead because there was never a mandate, I should say, to shut things down. Now, there's this guidance to get people back to work and get things open, but we still haven't even reached our peak in South Dakota.
Talk a little bit to South Dakotans about how to navigate that because the funding for the PPP if you get it is eight weeks and that's not that long. I mean, that's not permanent. Plus, your customer base is going to drop significantly and you have to maybe invest in some alterations in the way you do business or you have to at least reduce the number of people in your facility. There's a lot going on for business leaders and employees to really sort through right now.
John Thune: Yeah. Those are really hard decisions. I guess the idea was to try and make that easier and hopefully get the worst of this behind us so that when they do start to open up again, albeit in a probably more limited fashion, that at least they can get through it. But my guess is there's going to be a lot of innovation, a lot of creativity and business models in how businesses operate and creating... Particularly restaurants, right now many of them are carry out, but if they do open up again, there's going to have to be some physical spacing that allows for social distancing and things like that. I think it's going to require a lot of innovation and creativity as things start to open up again.
But again, I think that what hopefully coming out of this, a lot of these businesses is they... A good example of this would be a tourism business in Western South Dakota. The one thing that the treasury did just this last week and many of us were pressing on them to get them to do this was they're very seasonal. When they got a PPP loan, for example, they get it now, they don't have that many employees, but a month from now they'll be fully employed. When they apply for a loan and they take, this is what our payroll cost is today, well, it doesn't even come close to covering.
What the treasury did is they allowed flexibility for a seasonal business, like those in the Black Hills, to be able to list on their payroll the amount that they would have when they're fully operating and functioning like, for example, in the middle of July as opposed to the middle of April. They're trying to think to be flexible to allow these businesses that are going to get hard hit. We know coming out of this even some flexibility to try and get a little bit of relief on liquidity and cashflow health, et cetera. I think the idea is to try and maintain as much flexibility as possible.
But from a business standpoint in a state like South Dakota, which never really shut down in the first place, what does it look like and what does it mean to open up again I think is a question that's probably going to get answered on almost a case by case basis depending on where you are in the state, what the experience is, what the metrics are. Hopefully, if you can, you've got a flattened curve or a downward trajectory on your curve and you can slowly open things up again, but do it in a way that continues to observe the guidelines that have I think done a very good job of keeping this from spreading as much as it could have here in South Dakota. It's a tough call.
Lori, I think a lot of these businesses are just faced with really, really hard decisions. We want to keep them in business. We want to keep the workers employed, and like you said, not have them going into the unemployment lines, but at the same time realizing that the business may not look today or eight weeks from now like it did eight weeks prior.
Lori Walsh: I've worked plenty of retail. I've worked in a few restaurants. I'm a very bad waitress, by the way. I've also worked in tourism in a museum. Gosh, how do you social distance in a kitchen? I mean, I see how you could do it in your dining room with your customers, but those kitchens are tight in a retail setting for the employees who are doing everything from stocking shelves to standing behind the cash register. Certainly in the visitor industry, when those visitors come, I mean, it's shoulder to shoulder. It's going to be very, very hard. Talk a little bit, if you would, Senator Thune, about the 4th of July and this conversation about fireworks at Mount Rushmore.
Just what are some of the responsible ways to have that conversation moving forward because there's a lot of anxiety about that in this state right now.
John Thune: There is no question about it. Like you, I've worked in a lot of tourism business. We grew up in it. I grew up in Murdo. Two of my brothers worked at filling stations. My other brother worked at the Pioneer Auto Museum, which is our big attraction, and then my sister waited tables and I cooked. You're right. I mean, in the kitchen, it's pretty hard to create the kind of physical distance. You're standing close by to your fellow cooks and dishwashers and everybody else. That creates challenges in creating some physical separation. Obviously sanitizing everything and we become much more aware and conscious, I think, of how important it is to disinfect everything on a regular basis.
I think there'll be good guides and recommendations for how businesses like that could look and operate, but it's certainly going to be challenging, especially in the travel industry. But with respect to Mount Rushmore on the 4th, I mean, it seems to me at least that if that moves forward, and it sounds like it will, that depending on what happens over the course of the next several weeks, there'll have to be some decisions made about, again, spacing. I've been in that amphitheater. It's a wonderful place to observe the 4th of July. Back when they used to have fireworks out there, it was a pretty extraordinary experience to be there and to see the fireworks in front of their faces.
But my guess is if confidence is back and people are traveling and there's a lot of pinup demand for people to go places, at least we got some space out there. Normally in the middle of the tourism season it gets very crowded, but I just think they'll have to be very careful and circumspect and cautious about a number of people allowed in, spacing, all those sorts of things, realizing that there's no perfect way to do it. But I think people themselves are much more aware, much more conscious of that. They're going to be taking precautions on their own, keeping themselves probably to their own families.
I think the park is going to have to look long and hard at how they create the sort of physical separation to be able to pull this off. It's hard to feature a scenario where we're completely back to normal by the 4th of July and you could conduct that in a way that you would have 10 years ago. It's unlikely that that happens. I think there's going to have to be guidance given for an event like that by the CDC and hopefully that the state can partner with and make sure that if it comes off, it comes off in a safe way.
Lori Walsh: Senator John Thune, thank you so much for your time. We look forward to talking to you again in the future.
John Thune: Always good being with you. Thanks, Lori.