February 25, 2021

Toomey, Hearing Witnesses Highlight Harmful Impacts of Democrats’ $1.9 Trillion Spending Bill

Washington, D.C. – In this morning’s U.S. Senate Banking Committee hearing, Ranking Member Pat Toomey (R-Pa.) discussed the impact of the COVID-19 pandemic and the $1.9 trillion Democrat spending bill with Dani Ritchie, owner of Studio Alchemy hair salon in Harmony, Pa., and Joel Griffith, a research fellow at The Heritage Foundation.

Ranking Member Toomey asked Ms. Ritchie about the harmful impacts on small businesses of a $15-an-hour minimum wage and extended lockdowns and restrictions:

“You have your own small business. What do you think would be more valuable to your employees: a $15 minimum wage or to be able to fully open and accommodate, safely, the customers that you can accommodate?

Ms. Ritchie responded to Ranking Member Toomey by saying:

“We definitely need to reopen. This isn’t doing anything good for the economy. As I said when I gave my testimony, the 50 percent capacity just doesn’t make sense, especially because in a hair salon, I have to be so incredibly sanitized and sterilized anyway, and the distance between our stations is much more than six feet. So I believe we can absolutely accommodate 100 percent capacity.”

During questioning of Mr. Griffith, Ranking Member Toomey asked whether additional small business programs are necessary to help small businesses weather the pandemic:

“You indicated in your testimony that all of this government funding, grants, and loans is having the effect of crowding out private capital and misallocating resources. Explain to us: what is the net effect of that? What’s the problem with the government being a substitute for the private allocation of capital?”

Mr. Griffith responded:

“When the government becomes a substitute for private allocation, it means that businesses that otherwise would’ve been able to obtain capital and produce things more efficiently, it means they won’t have access to that. Usually you have businesses bidding with each other by paying higher interest rates for limited amount of capital, and those businesses that can produce the most, they’re able to go ahead and obtain that loan or obtain that investment. In this instance, you end up having the government allocating capital to a business based on other factors beyond credit worthiness or beyond whether or not that company is likely to be able to produce, and they’re able to curry political favor, but that doesn’t result in net economic growth.”

You can read Ranking Member Toomey’s full opening statement at today’s hearing here, watch the video of his opening remarks here, and watch the video of his questions here.