Coronavirus

Here's Why Rep. Justin Amash Opposes the CARES Act

The libertarian-leaning congressman says the Paycheck Protection Program for small businesses discriminates against those that most need it.

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Save for the typical legislative scuffles, consensus around the Coronavirus Aid, Relief, and Economic Security (CARES) Act, meant to help Americans struggling amid COVID-19 shutdowns, has been overwhelmingly bipartisan. Rep. Justin Amash (I–Mich.) is one of the rare exceptions.

"As I said before and after I voted no on the last coronavirus bill, it was never designed to work," he tweeted on Monday. "The approach is inefficient and fundamentally flawed."

Amash's recent criticism primarily focuses on the shortfalls of the Paycheck Protection Program, which launched on April 3 and ran out of $349 billion in funding just shy of two weeks later. The Senate voted Tuesday to funnel an additional $320 billion to the program, though the libertarian-leaning Amash says there are other issues with the legislation that extend beyond how quickly it ran out of money. 

He is particularly concerned with the exclusive loan terms developed by large lending institutions, as they have given larger companies with stronger banking connections access to loans before smaller, independent businesses. Several banks, for instance, initially opted to decline applications from would-be borrowers if the company didn't have a lending history with that institution. After a backlash, Bank of America reversed that policy but continued to reject applicants who had any lending history with another bank. 

That system allowed businesses like Shake Shack, the fast-casual burger chain with thousands of employees, to secure a $10 million dollar federal loan while small businesses were told the money had run out. (To Shake Shack's credit, it decided to give the loan back.)

"By capping PPP and having banks decide which businesses get funds, Congress and the White House created a system in which businesses with strong banking connections are getting easier access to funds while other businesses are shut out," Amash said. "But the businesses that aren't favored by banks are less likely to have access to loans outside of PPP, which means those businesses—the ones that are having the most trouble getting PPP funds—may be the ones that most need access to it."

That's precisely what happened with Shake Shack, which qualified for the Paycheck Protection Program under an exception that hotel and restaurant chains may apply if they employ less than 500 people per physical location. The restaurant received the capital it needed from an equity transaction on the market, prompting management to return the government loan.

Amash also criticized the bill's requirement that loans may only be forgiven if the business uses 75 percent of it on payroll expenses. As I've previously written, that's a lot to ask of small companies who have overhead costs to pay beyond payroll despite having no customers, no revenue, and in many cases, little cash set aside. What's more, the unemployment benefits created by the CARES Act—an additional $600 a month on top of state benefits—have proved more attractive to some workers than remaining employed. Employers must return to their pre-coronavirus employment levels by June 30, 2020, to have their loan forgiven—a task that may prove difficult if the government is paying their staff to stay home.

The Paycheck Protection Program should stop "penaliz[ing] small businesses that find they're unable to rehire employees because newly enhanced unemployment insurance benefits during the pandemic are bigger than workers' paychecks would be," Amash wrote. "Without fixes to the program, many small businesses will continue not to benefit from PPP, and we'll be talking again about the ongoing failings of the program in the coming weeks.

The congressman has also railed against the CARES Act's $500 billion loan for corporations, which he characterized as welfare for big businesses.

"Neither Congress nor the Treasury secretary should be picking winners and losers. Corporate welfare is not only unjust but also reflects government conceit," said Amash. "Only consumers, not politicians, can appropriately determine which companies deserve to succeed."

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  1. The article is the long way of saying “because it is a retarded bill”

    1. At least it is a bipartisan bill.

      1. “Bipartisan” is usually synonymous with retarded.

      2. Stupid *and* evil!

      3. That only means it is twice as stupid.

  2. I’m sure Amash will be more effective at eliminating wasteful government spending when he runs as the Libertarian Presidential candidate. Seriously, is there any way to stop spending? I might vote Democrat this year to get some extra goodies for myself since the Republicans are not serious about the fiscal health of the country.

    1. Hmm. Can that last sentence be bumperstickerized?

      1. Orange man bad?

      2. I’ve seen stickers that say ‘Vote Democrat, it’s easier than working”.

        Might be close enough for some readers.

    2. Not matter which Party wins, the next ten years will be a shitstorm of giveaways to those “unfairly impacted” by CCVirus. Prediction: we will see calls to reimburse the funeral expenses of victims, then the expenses of those who had to travel to the funeral services, then a “mental health” stipend to anyone who had someone die in their neighborhood. It will never end and both parties will revel in getting goodies for their voters.

      1. More than 60% of Covid deaths are men. Still waiting for someone in a goofy hat to get outraged about that particular gender gap…

    3. My “Amash for Liberation 2020” campaign bumper sticker should be arriving any day now!

    4. Biden 2020. Get yours before it runs out.

  3. “By capping PPP and having banks decide which businesses get funds, Congress and the White House created a system in which businesses with strong banking connections are getting easier access to funds while other businesses are shut out,” Amash said. “But the businesses that aren’t favored by banks are less likely to have access to loans outside of PPP, which means those businesses—the ones that are having the most trouble getting PPP funds—may be the ones that most need access to it.”

    Because uncapped spending and letting politicians decide always works out better. What the fuck is this shit?!? Over half the funds went to businesses of revenue under 1 million dollars. If congress didnt want “big businesses” writing loans they should have had exclusions to various threshold metrics.

    When did Amash become an American indian like Lizzie Warren? If you put her name ok that quote youd believe she said it.

    1. If congress didnt want “big businesses” writing loans they should have had exclusions to various threshold metrics.

      Umm, you understand he is a member of congress? He voted no presumably because he wanted those metrics.

      Because uncapped spending and letting politicians decide always works out better.

      False equivalency. Try again!

      1. Where was his amendment? Because this quote criticizes the caps.

    2. I came here for my apology, asshole.

      1. Lol what? The one where you ran away after I showed you were full of shit and repeat Vox headlines as fact?

  4. >>”Corporate welfare is not only unjust but also reflects government conceit,”

    sweet. now do Tekton Tools?

  5. “Here’s Why Rep. Justin Amash Opposes the CARES Act”

    What fucks were given on this subject in the first place?

    1. Certainly none from Nancy Pelosi. Nor ice cream bars.

  6. Many years ago I had a micro business and was looking to buy a similar business. I had my business plan and all of my numbers together and went off to the local SBA bank. They condescended to talk to me for about 10 minutes and basically told me to GTFO because I wasn’t asking for enough money. A couple weeks later I talked to a local bank and they got the deal done with no problem. I had that business for over 20 years.
    This entire small business bailout is complete bullshit for all of the reasons cited above and, like everything else government does, is designed to benefit banks and big business. Over 90% of businesses in the US have fewer than 20 employees and for most of them it’s already game over. The pizza place on the corner. The barber shop. The local micro brewery. That great Greek restaurant downtown. The used car lot. They’re broke and a loan that requires them to pay non existing employees to serve non existing customers with zero revenue coming through the door is a cruel fucking joke. They will not be back just because the governor decides to magically “reopen” the economy.

    1. I have a business with 4 full time on payroll currently and sometimes 8 or 9 contractors. I had revenues in 7 figures in my first year of business. I am a veteran, and we buy a shit ton of american manufactured steel parts. Basically the SBA’s supposed wet dream. We applied for PPP and covid relief the same day each became available. We applied for PPP through 6 institutions. We got nothing. Every other business owner I know is in the same boat.

      I’m glad shake shack, Ruth’s Chris, and a bunch of publicly traded companies and hedge funds were able to get double the supposed hard loan limit each, though.

      What a sham.

      1. So many lies in this statement. You really need me to post the actual numbers again? Lol.

      2. You know what. I apologize that you’re such a fuck up you got the paperwork wrong and ended up being too late to receive some of the funds. I apologize you’re too fucking stupid to understand that complaining over 5% of the budget and ignoring 95% of the budget and blaming the 5% as the reason you fucked up the paperwork shows that you just fucked up the paperwork. I apologize that you have to finally admit you are dependent on government to survive. I apologize that you have been advocating for the lockdowns since day one and are now harmed by the very policy you actively cheered for.

        Better dummy? Maybe learn a few lessons from this huh buddy?

        1. Lol.

          1. I think I broke Jesse.

    2. That assumes the Governor will someday actually decide to reopen anything at all.

      Newsom’s latest is that “if we start to re-opne now, we’ll have another outbreak.” The problem with that is that from what most knowledgeable people I’ve heard on the subject have said, that won’t really be any less true in 6 weeks, and maybe not in 6 months.

      I’m starting to wonder if he might actually believe that there’s some point at which the virus will simply cease to exist and that we can somehow just all hide out until that magically happens. At least he hasn’t thought to load up the fire-fighting airplanes with clorox and just bleach-bomb the entire state block by block.

  7. The only thing this program was intended to do is to keep payroll taxes flowing to the feds.
    Unemployment is income taxable only, and not until filing next year.
    PAYROLL taxes, however, are deducted immediately, matched by the employer, and flow into the treasure daily/weekly/monthly.
    Call me a cynic, but if the actual intention was to help those who have lost jobs by government edict, all that was necessary was to throw a bunch of money at the unemployment insurance fund.
    No one who actually needed a loan to stay afloat would touch the CARES scam. You have to keep all your employees on the payroll, paying wages and taxes, and you can only use 25% for such silly things as rent, insurance and utilities. And, oh by the way, if you don’t keep all those unnecessary employees (you are closed, remember?) on the payroll through the summer, you have to pay it back in a very short time.

    1. As I said above it’s a cruel fucking joke.

  8. Are there any restaurants anywhere that employ more than 500 people per physical location?
    This has been bugging me ever since this law was passed.

    1. I think casinos. Maybe some really large hotels

  9. I guess they will get their universal basic income and green new deal after all. Seems almost engineered.

  10. “the CARES Act”

    The fact that it has a cutesy acronym already makes me suspicious.

    When have *good* laws had cutesy acronyms?

    Thinking of a few good laws, it’s hard to get cutesy acronyms out of them…the Magna Carta, the Petition of Right, the Habeas Corpus Act, the Declaration of Independence, the Bill of Rights…

    1. Running out of cute acronyms for your laws is the absolute firstest world problem.

  11. There’s also the implications on retirement plans. So many people are fucking themselves over on the penalty free withdrawal. A rude awakening is coming for many when the IRS ushers in the audits. All of these rubes just accept the waiver and have no clue what they are doing. “Yeah, I’m on furlough. Need the withdrawal $30k.” These saps will never be able to prove the withdrawal was a necessity and the IRS will sell them up the fucking river.

    Ah, well. Stupid people deserve what they get.

  12. It couldn’t be any more obvious that it’s cause he doesn’t CARE…

  13. $600 per month unemployment through CARES? Isn’t it $600 per week?

    1. Yes, It’s $600/week.

      1. “Under the FPUC, individuals who are otherwise entitled to receive regular unemployment compensation (UC) will also receive a $600 flat payment through July 31, 2020.”
        https://www.littler.com/publication-press/publication/new-dol-guidance-clarifies-eligibility-600-payments-under-cares-act

  14. If the loan system is inefficient and inequitable, maybe a straight out unemployment system would have worked much better, including unemployment for small business owners who had to close shop. (I could point to a letter to WSJ about the system being a recipe for fraud but readers can find it if they wish.) Maybe $600 “extra” per month is too much but that can be easily rectified by a revised progressive tax to recoup that money. But you won’t get businesses open when customers have to wonder if that $1200 is the only money they’ll get during this crisis.

  15. Here’s my question: If anyone has a legitimate, legal small business why should they be refused this small business loan based on certain felony convictions? If their business is legit and they have employees to pay, why should they be discriminated against? Why should their workers be punished for someone else’s past felony? Doesn’t make a lick of sense to me other than being a spiteful, vindictive, “Screw you! You deserve to fail because you never should have succeeded in the first place!”

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