It shouldn’t take a Barack Obama economic adviser to explain the bad optics of holding up $251 billion in badly-needed small-business aid while showing off your twin $12,000 freezers and ice-cream hoard, but here we are anyway.  In an interview with Roll Call, Karen Mills acknowledges that Democrats have specific policy goals in mind for managing the COVID-19 pandemic’s economic crisis.

To that, though, Mills says first things first, and the first thing is to rescue America’s small businesses:

Karen G. Mills, who led the Small Business Administration during President Barack Obama’s first term, has a message for top Capitol Hill Democrats: Refill the so-called Paycheck Protection Program’s coffers now and ask questions later.

The SBA program, established as part of the $2.3 trillion COVID-19 aid package to help battered small businesses, ran out of cash to make new loans on Thursday morning, barely two weeks after it began taking applications.

“Congress has to act as soon as possible,” Mills told CQ Roll Call in an interview Thursday, adding that she’s spoken recently with Democratic senators and Speaker Nancy Pelosi’s office. “What I’m saying is: Number one, get the money replenished.”

Democrats also want some changes to the PPP, some of which make sense. There have been concerns that better-off business owners have pushed through to the head of the line and that some may be getting more than they actually need. The average loan has been $239,000 thus far, perhaps a bit too high and fund-draining in this crisis. However, even the changes that Democrats want to the PPP only make sense in a non-emergency situation, Mills said. Other than a couple of quick changes that could be easily applied, the SBA doesn’t have the time to handle it:

“Complexity is not our friend here,” she said. “Things that have to be implemented quickly can’t have a lot of bells and whistles, or else there will be too many unintended consequences — one of which is delay. And we don’t have time to delay.”

Mills said there’s an easier way to ensure that the smallest small businesses get help: Congress should put a lending cap on $100 billion of the guarantee funds, limiting those to loans under a certain maximum, like $45,000. According to SBA data released Tuesday, the average PPP loan has been $239,000.

One point Mills doesn’t make is that Congress approved the PPP by voice vote in the Senate and the House. This is Congress’ creation, their best shot at providing a rescue. It seems to be working, at least in getting some resources to the small businesses government forced to close. If Congress doesn’t like the way it’s operating, then it should come back into session to deal with it. Failing that, Pelosi et al should replenish the fund until its members decide to finally show up in a crisis.

So what now? Apparently talks have resumed with Treasury Secretary Steve Mnuchin about re-funding PPP. At yesterday’s press briefing, Donald Trump promised that “something’s going to be happening,” but there hasn’t been any word yet that Democrats will agree to replenishing the fund without its other demands being met:

The banking industry is calling on Congress to increase the program’s funding. “Additional funding for all lenders is needed now to ensure there are no breaks in service to small businesses seeking assistance as a result of the coronavirus outbreak,” said Richard Hunt, president of the Consumer Bankers Association. In the next round of funding, 25 percent of the $250 billion should be set aside for small community banks to make these loans, according to the Independent Community Bankers Association.

The PPP program reached its funding limit while a separate program, called Economic Injury Disaster Loans, is also running short on funds. The funding shortfall has already caused that program to slash the size of loans it gives to small businesses, SBA officials say. …

There had been scant progress for the past week, but talks finally started Wednesday with aides to Mnuchin, Pelosi and Senate Minority Leader Charles E. Schumer (D-N.Y.). They did not yield results in time for action at a brief Senate “pro forma” session Thursday afternoon, as some had hoped. But the negotiations were ongoing, with Trump sounding notes of optimism at his daily coronavirus briefing Thursday evening even while criticizing Democrats’ demands.

“We’re negotiating with Democrats. And they should, frankly, approve it quickly. This is a great thing for our country. It’s a great thing for small business and for the workers,” Trump said. “And we’re having a hard time getting them to approve it. I think it’s going to happen. It should happen really unanimously. But they’re trying to get things and we’re not too happy with what they’re trying to get.”

What Democrats want is a massive grant program to states in order to subsidize state and local government jobs. No one seriously thinks those jobs will get destroyed; even if they get furloughed, government will quickly reinstate its bureaucracies. Pelosi’s trying to protect SEIU and AFSCME jobs (12.6% of the overall workforce) at the expense of nearly half of all Americans who work in small businesses, whose jobs really will get destroyed unless we can find a way to backstop those small-business owners.

In short, Mnuchin and the White House are acting like this is an emergency. Pelosi is acting like it’s an intrusion on her ice-cream break. It doesn’t take a former SBA chief under the most recent Democratic administration to see just how badly that plays. But here we are.