The coronavirus is unprecedented, but the attempts to take advantage of the crisis to promote special interest, corporate welfare, and permanent changes to programs are unfortunately business as usual.

As Congress considers legislation that could spend as much as $2 trillion, everything should be targeted and temporary, and then everything that is spent should be transparent and accountable.

The effort to include permanent program changes and unrelated policies began with the first Democratic version of the first coronavirus bill in the House.  Fortunately, those provisions were stripped out of the bill before it went to the full House and Senate.

As the third version of the bill is moving quickly through the Senate, there is a long line of special interests trying to convince Senators their pet provisions should be included.  This unfortunate process in some cases pits industry versus industry and leaves taxpayers and consumers out of the picture.

One of the more egregious examples is the March 18, 2020 letter from the National Restaurant Association to President Trump that includes a proposal to extend the Durbin Amendment under Dodd-Frank from debit cards to credit cards.  While there is no doubt the restaurant industry is among the hardest-hit and should receive all the help that reasonably can be provided, including financial relief, loans, and tax measures as requested in the association’s letter, Congress should reject the requested expansion of interchange fees.

The Durbin amendment was a last-minute addition to Dodd-Frank set price controls on the amount that banks with more than $10 billion in assets can charge to merchants for processing payments with debit cards.  Sen. Durbin (D-Ill.) claimed this would help the “Main Street business” by reducing costs and savings would then be share with consumers through lower prices.  The Federal Reserve implemented the amendment in 2011, reducing fees from 51 cents to 24 cents, on average.  But an April 25, 2017 International Center for Law and Economics (ICLE) report found that while larger retailers saved $40 billion for their bottom line, small businesses and low-income households were hurt by the price controls. 

Following the reduction in interchange fees, banks increased other fees and reduced services, including higher overdraft and ATM fees, fewer accounts with free checking, and increased minimum balances.  These increased costs were not offset by lower retail prices.

There is other aspect to the effort to expand the Durbin amendment to credit cards that are related to the coronavirus.

According to Neilsen, in 2019 only 4 percent of grocery sales were online.  With everyone stuck at home, online grocery shopping increased dramatically, with Instacart up by 218 percent and Walmart up by 160 percent over the same date in 2019.  Seniors are also rapidly increasing their online shopping.  These new customers may find it convenient to stick with online shopping when stores reopen.  Since delivery is less profitable than traditional purchases, and grocers already have small margins, adding higher fees for credit cards could be the difference between being able to open or remain closed.

At least most grocery stores remain open.  Every other retailer is closed and is likely to remain so for weeks.  In 2019, “more than 9,300 stores closed their doors, a 59% jump from the previous year. The retail sector lost upward of 75,000 jobs in 2019.”

Department stores and malls are at much greater risk of failing than they were a few weeks ago, when experts were already predicting that up to 25 percent of malls were going to close over the next two years.  Now, that is likely to be much worse.

This is not the time to allow one industry to try to take advantage of another industry.  No one is going to deny the help that restaurants need, but Congress should not include in the coronavirus bills or any other legislation bad policies like expanding the Durbin amendment.