This webinar will have a straightforward format after my introduction he will offer 10 minutes or so of remarks, then i will have questions for the senator and we will have a discussion about the economic challenges facing our nation and what congress should do to address them. We will take a couple of questions at the end. Thank you for joining us. If you have a question for senator rubio, submit it by email. Econtalk on aei twitter. Those are listed on the events web page. I am honored to be joined by senator rubio, thank you for being here. Senator marco rubio is the senator from florida, served in local state government, including as speaker of the Florida House before being elected to the senate in 2010 and reelected in 2016. He serves on the Senate Committee of appropriations, the Foreign Relations committee, the special committee on aging as acting chair of the select committee on intelligence, and most important to our discussion is chairman of the Senate Committee on Small Business and entrepreneurship. He was the driving force behind the creation of the Paycheck Protection Program, which might be the most important component march cares act passed in and referred to as the phase three economic recovery package. Again, senator rubio will have remarks, and we will do the discussion. Thank you, and im not sure i will need the full 10 minutes. Thanks for the invitation. The opportunity to do this. I think the events of the last 2. 5 months have in some ways, in many ways, revealed what is important and what matters. Things we have taken for granted for a very long time have suddenly become prominent and paramount. About theking today threats that exist to our food supply. Not because the food doesnt exist, but the ability to package it at a Meat Processing plant, the ability to get it to market, things we have not thought about. Forake those things granted, we think our food comes from grocery stores. It began way before that, the people who produced it. Then the issues of other things life. E for granted in our the needs for our country, even as powerful as ours, to be prepared on the first Case Scenario on issues of no consequence. All of this has come to ahead. I think it has been revealing. If you think about the responses and reactions we have gotten, not just as a time of great fear and uncertainty, but also a time of tremendous private sector response. Look at what the private sector has done, mobilizing supply lines away from one product and towards first it was ventilators and personal protective equipment as well. If you think about how our doctors, so many patients coming in, they have improved outcomes. Not just because of medical innovation, but they applied their expertise to do things, thetimes as simple as physician a patient lays, and a competition accommodation of different treatments and drug work. Main purposes and other ailments that taken together have served positively. The death toll, the people who have lost loved ones in this pandemic. It is also a testament to what an Important Role our Civics Community and private sector plays in our national strength. Forward,oject moving there are a couple of things about this pandemic that will serve as a hinge point industry that will in history that will change. Think one, i vulnerabilities in parts of our supply chain. Not just because of the Pandemic Impact on our country, but we will enter an era we will seek countries protect supply chains. As an example, eight or nine Major Economies in the world have designated medical equipment and pharmaceuticals as a national priority, and have on occasion placed restrictions on exports. Likewise, i think they are shocked. We were so dependent on foreign sources of production for things like masks and gowns to protect our personnel on the front lines, the medical front lines of this pandemic. There will be a natural sort of reaction to that. I am also very curious to see what happens in the european union. That would have an effect on our economy, as well. Depending how things turn out, you can for see the opportunity to become more nationalistic and less paneuropean moving forward. That will ultimately have an impact on our trade and commerce from a transatlantic point of view. Hassituation with china gotten more difficult, both in our politics and geopolitical and diplomatic realm. I have always said that the relationship between the u. S. And china will define the 21st century. Its a moment where i think a lot of things are changing, though we cant fully anticipate what they will result in. Im pretty comfortable in saying that the world and our country, economic and political realms, are going to be substantially altered after this pandemic passes. No matter how it turns out. The challenge for those of us in Public Policies to make sure that our response is appropriate. That we address the problems it revealed, and we confront any challenges it presents, but also that we dont overreact to it and in the process create damage to the country. It will be a unique time in Public Policy and one that i hope we get right for the sake of our children and the future of our country. I look forward to answering your questions about the particulars of what we have done and what might happen moving forward. But i close with this, there is a huge debate going on in this elsery, like everything that happens each day in our politics, it has almost become impossible to have a reasonable conversation about a topic. Almost everything turns into us versus them. Now it is down to wearing a mask or opening or not opening. These are all false choices in many ways. The answer is we cannot ask americans to continue to live under the restrictions they are facing right now. It would also be highly irresponsible to tell everybody to go back to the way things were in the early part of march because, given the fact that there is no cure for this disease, that would be a dangerous situation. So the truth of the matter is we are now entering an era where were going to have to learn to deal with this virus, try to diminish and mitigate the risk that it poses, especially to the most vulnerable, as much as possible. Even as we try to engage in some normalcy of putting kids back in school and americans back to work. Theres no roadmap for it, no ones ever done it before, no one can tell you they have a manual on how to do it in a country as large and diverse as this one, but it is one of those things were going to need to figure out and one of those things where i think federalism actually serves us quite well, because it allows those local communities the opportunity to not just influence decisions but to craft a way forward that makes sense for their state, for their county, for their city. In that sense, federalism really is a benefit to us in this response. These are just some thoughts in general that hopefully set the table about where my mind is on a lot of things. I look forward to answering your questions in more detail. Thank you, senator. That sets us up for discussion. I want to talk about some of the specific issues you raise with resiliency and our relationship with china. To those in a minute. Something you said really stood out to me, and i think it is a question on a lot of peoples minds and it would be interesting to hear what you are thinking about this as someone leading the response. You referred to this as an age of history. I know that is one view. Another view you hear from some members in our own party is that this is a terrible situation for sure, lots of suffering right now, both on the health front and economic front, but hopefully we will have a vaccine coming relatively soon. We will have some medicine coming relatively soon. We will have a strong recovery from this in the summer and in the fall. And we will look back on this in a Rearview Mirror a year from now as a difficult situation but something largely in the past, and we will continue on with where we were earlier this year. Why do you view this as an historical, watershed moment rather than a difficult situation but one that will not fundamentally change American Life . Senator rubio it will fundamentally have an impact on American Life and on the rest of the world. As a perfect example, there are developing countries in africa and the western hemisphere who, as they face a huge surge in infections, it will create huge problems. They could even threaten the stability of government. They could have a humanitarian catastrophe of epic proportions. That is first and foremost. There are issues going on in european politics. There are some countries in europe that will look to the eu in their time in need, and they will not be able to do enough. At a time of need, everyone forgot about the eu and started closing their borders. Other countries have been dramatically impacted and dont have the sort of Christian America has. In the asiapacific region, you see nations like australia become very forceful in confronting china, both at the World Health Organization and the larger context. That is a development we had not seen in the past. There are a lot of things going on around the world that will ultimately impact us. You look at pharmaceuticals in europe. Many of the countries also important to us in terms of what they produce. Aren fact those countries protected industries and begin to narrow down or clamp down on their ability to freely export, that will have an impact on the United States and the world. So we are interconnected economically and geopolitically with a host of other countries who will have a much more difficult time recovering from this crisis, even in our own backyard, the western hemisphere, the caribbean. All of these nations are not just heavily dependent on tourism, they are heavily dependent on american tourism. It cannot return in a better part of year. That could have an impact on the economy as well as the rise of transnational crime. No matter how well we whether it domestically, we will be deeply impacted nationally internationally. Even domestically. Are potential trends, in terms of the consolidation of some businesses , assuming many Small Businesses will struggle to get back online. You could see some industries further consolidate. I think for a lot of americans, whether you are 18 and graduating from high school, like my daughter, 21 and graduating from college, there is uncertainty about what the next two or three years look like for you. Especially if youre trying to enter a workforce that is retrenched. There is a lot to think about and i dont think anyone has a perfect prediction of how it will look. America is not going to fail, it will not fall apart, but it will be impacted and changed by the events of the last two months. That is very helpful. Let me ask you about current policy and then we can move on to future policy. I want to throw the floor open to you for a minute. No one in congress did more than you did to create the Paycheck Protection Program and get that into law. How do you think it has been going . Senator rubio i think it has been an enormous success. Especially when you judge it through the lens of it was put together in a handful of days in an emergency situation. It was an asset that never existed before. The administration had about six days to implement it. On april 3 of this year, april 3 or fourth, the first friday in april, it was the first time in america that any banker in america had ever taken a ppp application, the any borrower had filled it out. To this point, over 500 billion has been put in the hands of over 4 million Small Businesses in the country. When you judge it through the lens of that, you would say the program has been a success. It had glitches, of course. Any program of that magnitude does. But the issue was to give businesses enough time to meet payroll, whether 12 weeks or 16 weeks because they were hiring at a different pace. The goal of the program was pretty straightforward, and that was to protect paychecks. We wanted to provide Small Businesses who did not have the liquidity to do this to maintain as many people on payroll as possible in the midst of an economic shutdown. In many of their cases the doors were closed, in others they were only partially open. And the hope was to keep as many off the unemployment line as possible. By some estimates, 30 million to 40 million payrolls have been supported by this program. Obviously, the pandemic, the restrictions are different in different places. Some places are opening faster than others. Some industries were able to utilize these funds better than others. But ultimately, i take comfort in the fact that our Unemployment Rate right now would be significantly higher were it not for the ppp being in place. And on that, i would say its been very successful and by the far the most successful part of the cares act. I agree that it has been extremely successful. One of the challenges with ppp has not been with the actual legislation, how the program was structured in congress, but how treasury has implemented the program. There have been some questions as to whether or not regulations have worked against congressional intent, for example, the regulation that 75 of any amount of loan converted into a grant be spent on payroll. That is not in the statute. It is in the regulation. Another example, you have chaos around which businesses who took out loans would be audited and what criteria would be used for those afterthefact audits, things of that nature. When you think about how the program has been implemented, is there any role for congress in renewing the program or reupping funding, to try to put some measures in the next round of legislation to give official guidance to treasury related to the challenges we have seen . Senator rubio the 75 number is not in the statute, but clearly, the purpose of the program was for it to be utilized for payroll. Thats why there was loan forgiveness, as a further incentive to use the money to pay workers. So, whether it was 75 , 70 , 65 percent, some standard had to be set. We kind of left it open because we wanted there to be flexibility depending on market conditions. There are two issues. Some people say 75 is too high. The second is you had to spend it all within eight weeks. Some businesses said it will take us 12 weeks, 14 weeks. I think the second point has a consensus we want to add. If you want to know why it came to eight weeks, we were appropriating 350 billion dollars. We were told that was how much money we had for ppp. We estimated the private sector nongovernment payroll in america and divided it by the number, and it gave us about eight weeks of payroll. Thats where the number was set by and large. Obviously now, businesses are starting to reopen their doors, and if they had another four or five weeks, they could rehire everybody, but if they had to spend it all four weeks ago, they are going to have to return some of that money and have a loan on their hands. No one knew in late march if this was a 15 day problem, a 30 day problem. It was impossible to predict. On the actual percentage of payroll versus nonpayroll, we never said to anyone this was a payroll Protection Program designed to keep people on payroll. It was difficult to calculate how much money it would take to meet those other needs. They are harder to calculate on a business by business perspective. But that is the gist of it. Right now, there are about 100 billion in funds that have not been tapped into. And there are two reasons. Some companies have been beat up in the press for taking this money. And there is a level of uncertainty about what will be forgiven or even if you were eligible. I hope that recent decisions from treasury have cleared up some parts about who qualifies. The beating part, thats tougher. Companies have seen the tremendous punishment inflicted upon them in the Public Square if they take money from one of these programs. We have seen Large Companies take the money return the money and then lay off 10,000 people. I think ppp shaming has been a factor. Lets go with that. During the shutdown and the fog of war conditions that all of this was worked out in, it cant be overstated that we didnt know how long it was going to last, and the idea of kind of freezing the economy in place as it was on february 1, keeping workers attached to their employers, making sure they didnt push the Unemployment Rate up, with the hope they would have a job to snap back into when the economy reopened, all of that makes perfect sense and was the right approach from a policy perspective. We have now moved into a different phase. As of this morning, 49 states were attempting some stage of reopening. As they reopen, i think the policy needs for economic support are going to change. We may now be in a world where a restaurant or bookstore will have 60 or 80 of total revenue. They were having 20 . Thats a significant improvement. But they may not be able to operate with that loss. We are going to see reallocation of workers across industries. If you worked for a concert venue or a stadium, it doesnt make sense for you to continue working there if no one is going to call you back to work for the next six months. So the economy needs you to go get a job as a Delivery Driver or Something Like that. So the goal of keeping employers and employees attached is still an important goal, but not as important as it was when congress was putting in place the phase three cares act. How do you think about the next phase of Small Business and Midsize Business support . How do you deal with the problem senator rubio i think thats a good point. One of the things i have said is, one of the things we need to be cautious of and the next bill is not solving the problem immediately before us but trying to anticipate as best we can what the world and our country are going to look like by the time the law is being implemented, because this has developed and evolved so qu