Corporate Welfare

The Paycheck Protection Program Is a Mess. Here's Who Is Benefitting From the Dysfunction.

A program designed to keep workers on payrolls showered benefits on lobbyists, advocacy groups, and even members of Congress.

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The list of companies and organizations that received loans through the federal government's flagship coronavirus relief program includes firms linked to powerful politicians, celebrities, lobbyists, and government spending hawks.

On Monday, the Small Business Administration (SBA) released a list of organizations that each received more than $150,000 through the Paycheck Protection Program (PPP).

That program, first approved as part of the $2.3 trillion CARES Act in late March, allocated $670 billion to purchase loans made by banks to businesses and non-profits with fewer than 500 employees. The government would forgive those loans so long as the recipients spent a certain portion of the money on retaining or hiring back employees.

Politico reports that PPP borrowers included companies owned or founded by members of Congress, as well as the educational arms of the Congressional Black Caucus and the Congressional Hispanic Caucus. Several lobbying firms, technically barred from receiving loans if over half their revenue comes from lobbying, also benefited from PPP.

On the executive side of things, the Daily Beast reports that several companies linked to the family of White House Special Adviser (and President Donald Trump's son-in-law) Jared Kushner received PPP loans.

That list includes Observer Holdings LLC, a media company once owned by Kushner himself and currently held by an investment firm run by his brother-in-law. The Beast reports that hotels owned by Kushner Companies, a real estate investment firm owned by members of Kushner's family, also received PPP loans.

Aspiring presidents have had their turn at the trough too. Clothing brand Yeezy, which is owned by rapper and recently announced presidential candidate Kanye West, received a loan of between $2 million and $5 million. (The SBA did not release exact loan amounts.)

Even advocacy groups have been cashing in, including some noted critics of profligate government, spending such as Americans for Tax Reform and the Ayn Rand Institute (ARI).

The latter's acceptance of government aid provoked a lot of jeering on Twitter about the alleged hypocrisy at play, although ARI has said since late May that it would gladly accept PPP loans as an effective return of stolen goods.

Other free market organizations have taken a different approach.

"Central to this mission is our view that the scope and power of government should be limited. Our ability to make that case with credibility and integrity would be irreparably compromised if we accepted a loan right now," wrote Peter Goettler and Robert Levy, president and chairman of the Cato Institute respectively, of their refusal to apply for PPP funds in a Wall Street Journal op-ed. (The Reason Foundation, which publishes Reason, also declined to apply for a PPP loan.)

The list of PPP beneficiaries also includes progressive watchdogs like Public Citizen Foundation, the research and litigation wing of Public Citizen Inc., which received between $350,000 and $1 million from the program. Just yesterday, the group released a report on lobbyists with connections to the Trump administration benefiting from coronavirus relief funds.

Public Citizen notes on its website that it takes "no government or corporate money, which enables us to remain fiercely independent and call out bad actors." Like nearly all the organizations mentioned here, including Reason Foundation, Public Citizen benefits from other tax breaks and incentives, including those that encourage charitable giving.

NBC News reports that 43 Planned Parenthood affiliate organizations received between $65 million and $150 million in PPP loans. Congressional Republicans have argued that these affiliates are too closely tied to the national Planned Parenthood organization to qualify for the small business program. The SBA has demanded that these affiliates return the PPP money they received.

NARAL Pro-Choice America Foundation, an advocacy group, and the National Abortion Federation, which represents abortion providers, also both received PPP loans.

Critical headlines about connected businesses and lobbyists receiving PPP money has sparked a backlash of sorts against "PPP shaming."

The basic argument here is that so long as these funds kept employees on an organization's payroll—whatever type of organization it is—then PPP was a success on its own terms. By accepting aid, these organizations fulfilled the public purpose of the program.

"The PPP was designed to reduce the number of people laid off as a result of the pandemic and lockdowns. It did that," writes Henry Blodget at Business Insider. "Stop blaming companies for doing what the government wanted them to do."

But there are always trade-offs when the government spends money, "money printer goes brrr" memes notwithstanding.

Any PPP loan that went to a politically connected lobbying firm or a billionaire-owned shoe company is a loan that did not go to the government-shuttered restaurant or similar small business down the street. All those PPP dollars could have gone towards relief programs better targeted at the least well off. The money could have also gone straight back into the hands of taxpayers.

Congress has tried to reform PPP by passing a law that gives recipients more time and flexibility when it comes to spending the money received from the program. But Congress has devoted very little time to winnowing down who is actually eligible for the program in the first place.

To be sure, that's a difficult task. Any government program of sufficient size and complexity is going to send some benefits to those who don't deserve them or who won't use them efficiently. Stricter eligibility requirements necessitate more red tape that can slow down or deny relief to even the most worthy recipients. Or maybe ARI is right and anyone who paid taxes is definitionally a worthy recipient.

But there's no doubt the administration of this program has been slapdash and ill-conceived. A lot of ink has already been spilled detailing the lax oversight, excessive red tape, and frequently incompetent administration of PPP. This week's news makes clear exactly what sorts of individuals, businesses, and organizations have benefited from this government dysfunction.

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76 responses to “The Paycheck Protection Program Is a Mess. Here's Who Is Benefitting From the Dysfunction.

  1. A program designed to keep workers on payrolls showered benefits on lobbyists, advocacy groups, and even members of Congress

    I am shocked. and stunned.

    1. Even the Ayn Rand Institute got a bailout.

      1. Yeah, how hypocritical. It will take years to undo that damage.

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      2. I’m sure John Galt is pleased.

        But I won’t be too hard on some of these.

        After all, it was a GOVERNMENT MANDATED LOCK/SHUTDOWN.

        Reply

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  2. Dead people should get a stimulus check.
    After all, they’re people too, and who knows? This kind of stimulus might even bring them back to life.
    You never know.

    1. If not, try a bigger check. Or maybe cash.

  3. I got one of these for my tiny micro business. The vast majority went to quarterlies and property taxes. I think the actual purpose of this program was to simply dump a pile of phoney “money” into the economy and it really doesn’t matter who got it as long as it gets spent. Same is true of the 600 unemployment bonus going to people who didn’t clear that much working.

    1. Hopefully at least 60% went to payroll.

  4. I don’t think this article advances its case very well. It joins in the chorus of loud, but incoherent liberal critics of the PPP distributions. It does not articulate with much precision the possible objections to the program.

    I’m not sure people understand how this program works. There is no means-testing and no creditwortiness determination. There is no effort to determine whether a business is “essential”. It also appears to have been conceived on a completely different track than the topped-up unemployment benefits program, which means – once again – government policy is at war with itself.

    The fact is that there is no benefit to being “connected”, as this piece insinuates. It is therefore not useful to observe that loans that went to influential businesses were unavailable to Main Street. (Nor is it obviously correct, as the program still has $130 billion in loanable funds available.) As the author notes in passing, it is rarely possible to design trillion-dollar emergency programs that do not spare the innocent as well as the guilty. Large companies employ lots of people who stood to lose their jobs, and have in fact done so. While I groan at the execrable Ruth’s Chris (initially) taking millions at the trough, this was precisely in aid of the government’s announced policy of subsidizing unemployment.

    It is possible to imagine a PPP program: targeted to small business (which would reduce effectiveness); designed to winnow out “undeserving” claimants (thus multiplying the paperwork required by several orders of magnitude) and somehow excluding anyone connected with the federal government. It is impossible to imagine designing and implementing a program within the time frame available here. Nor do I think objectors would be persuasive in arguing for such tailoring.

    So, what are we arguing about? Even Reason is going to have some trouble explaining why a government that is shutting down the economy isn’t obligated to help ameliorate the damage, doubly distasteful as that surely is to proponents of small government. Maybe that article, however, would be worth writing.

    1. The only observation is that “connected” companies are skilled at utilizing government programs.

      I would be stunned if it were otherwise.

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  5. I am not sure if this program ever had a chance of working? It was marketed as helping small businesses. The problem is that most small businesses were not prepared to use a program like this, while larger businesses had the resources to quickly take advantage of the program. I have to wonder if it would not have been better to just have the government take over the payroll for some of the small businesses and leave it at that?

    1. One problem with that would be that the govt would never give the payrolls back to the companies.

  6. Off topic, I watched the movie Mr. Jones last night. That is the one about Gareth Jones, the Welsh reporter who first reported the Ukrainian famine. One of the many villains of the story is the infamous Walter Duranty. Duranty won a Pulitzer Prize for being the New York Times’ man in Moscow. He was nothing but a propagandist for Stalin.

    It occurs to me that Duranty is in many ways the influential journalist of the 20th Century or maybe of all time. Duranty is who people like Stetler want to be. Duranty was an ugly mediocrity who walked with a limp. Yet, he got rich, famous, and was able to live a hedonistic lifestyle full of sex with young women because he was willing to be a lying hack for a totalitarian regime.

    Now consider journalists of today. Take someone like Brian like Stetler. They always pay lip service to “freedom of the press” but in truth a free press is the last thing they want. They want a state controlled press where they receive a secure place among the elite in return for telling whatever lies the powers that be demand of them. And they almost have such a life right now within the cocoon of corporate media they inhabit. Stetler is almost Duranty’s doppelganger. He is physically repulsive, not particularly bright, utterly immoral and shameless, and seems to possess no useful skill beyond the ability to tell any lie expected of him no matter how outrageous. This has gotten him to a place almost on par with the ideal of Duranty. The only problem is people like Tucker Carlson and various randos on the internet are allowed to tell the the truth and ruin the entire thing.

    1. “Off topic, I watched the movie Mr. Jones last night. That is the one about Gareth Jones, the Welsh reporter who first reported the Ukrainian famine. One of the many villains of the story is the infamous Walter Duranty. Duranty won a Pulitzer Prize for being the New York Times’ man in Moscow. He was nothing but a propagandist for Stalin.”

      I did not know there was a flick which was honest about Duranty.

      1. It isn’t on Netflix and it seems like Hollywood and the Media don’t like it very much as it isn’t on most streaming services…hits too close to home for many in the media/entertainment world…they know what occurred in the Ukraine just like the owners of the NY Times did but many thought “old world” grudges were more important as well as supporting the communists and that the peasants deserved what they got…

        1. It is on Amazon Prime

        2. Titus couldn’t find the movie with a 1-minute search on his streaming services, therefore, it must be a conspiracy by the librulz to keep the population ignorant and to manipulate them in favor of Stalinism. It is known.

          1. This is why I hesitate to call myself a libertarian anymore. It is due to the paranoid idiots out there who make libertarians look bad.

            Liberty is a wonderful concept and it definitely needs defenders who will not only stand up for liberty, but push the envelope of liberty.

            It does not need paranoid idiots who think that there are villains lurking behind every rock.

            1. Bye Felicia.

    2. Too bad Gareth Jones’ death wasn’t in the movie. He got a couple of bullets to the brain in Mongolia. That’s what happens when you call out an NYT reporter.

    3. At least Duranty’s Pulitzer was revoked posthumously

      1. You forgot the sarcasm tags. The Pulitzer has not been revoked. Apparently the board believes that Duranty toured the Ukraine with his eyes shut tight, so he didn’t know he was lying.

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  7. Yeah the government is at war with itself. The money initially had to be spent mostly on wages and has to be spent in the first 2 months. A business that has been shut down could pay employees to sit at home but most were better off sitting at home on unemployment. And at this point a lot of small businesses still don’t know when or if they’ll ever be allowed to reopen. For a one man business it’s just straightforward government payment. All of my profits go on my schedule C. Figure the average for 2 1/2 months and write yourself 8 weekly checks. There’s no means testing. I never stopped working. Just free money.

    1. I’m sure John Galt is pleased.

      But I won’t be too hard on some of these.

      After all, it was a GOVERNMENT MANDATED LOCK/SHUTDOWN.

      1. Shoot that was meant for jeff on top.

        1. I mean Chipper Morning Wood. Sheesh. They all look alike anyway. I’m a mess today.

          In any event, at this point, a government that still has some businesses in lockdown as millions of people have been allowed to go back and others never missing a beat is an incompetent and immoral one.

          I wish nothing but ill on those governors who have brought harm upon people through lockdowns.

  8. I have to wonder if it would not have been better to just have the government take over the payroll for some of the small businesses and leave it at that?

    They have that program too. It is called Unemployment Insurance.

  9. Fuck all these hustlers. Including the Ayn Rand Institute. That shit is hilarious. Ayn Rand was one lady collecting money she had directly paid in the form of taxes on her work. It’s not the same as an advocacy group dipping into the purse.

  10. “The money could have also gone straight back into the hands of taxpayers.”

    You’re not that naive. We all know these aren’t tax dollars.

    Anyway doesn’t matter. If there were no program, Trump hates America would be your cry. If there were a 100% successful program, Trump piled on the national debt you’d say. There is no way to win here no matter what. The dishonest media and lying left wing have ensnared you.

    1. Oh boo hoo. POTUS gets criticized, sometimes unfairly. Welcome to America.
      Trump is not some unique victim in this case.

    2. Trump’s a coward dipshit that occasionally gets things right. About as often as a coin flip.

      1. So he’s got you beat, right?

        1. Shower thought: What if Sevo is really Trump?

          1. Random thought: What if CMW had two brain cells?
            Fuck off, you pathetic piece of shit; if your mommy and your dog tolerate you, take heart and never go where your intelligence is judged.
            You’ll lose.

      2. Sounds right. But “coin flip” is better than the Blue Team, so I see the only viable choices as:

        1. Vote Trump.
        2. Vote Libertarian.
        3. Don’t vote.

        I went with (2) last time, mainly because I thought there was an outside shot at the 5% threshold. No prayer of that this time, so it’s either (1) or (3) this time. Leaning towards (1), but he doesn’t make it easy.

        1. Even if you can’t hold your nose and vote for either of the liar-in-chief candidates, don’t skip voting. There are Congressional, state, and local elections, where your vote might make a difference. And a power-hungry liberal fascist on your local zoning board can make more trouble for you than any President.

    3. I mean, they could have just not collected taxes for this year. Would have cost about the same.

      1. That’s what Trump proposed and you can imagine the response from the Ds!
        What? Let people keep their money?!

        1. ^^^Exactly!!! The only time Trump is a great big pile of dogsh*t is when the D-Mobsters pushed him into it. So sick of Republicans giving into the mob. Floors me the Rs got behind the 80% D-pitched Cares Act (i.e. Communism 101).

  11. I applied for the SBA program. They only offered me a $2,000 loan. There was nothing in the agreement that stated the loan would be forgiven if I used it for payroll. I declined to take the loan. I don’t need to pay back money with interest when all the government needs to do is end the craziness.

    1. The SBA loans aren’t the same as the PPP loans.

  12. That program, first approved as part of the $2.3 trillion CARES Act in late March, allocated $670 billion to purchase loans made by banks to businesses and non-profits with fewer than 500 employees.

    I recall when the wingnut/teabagger/redneck set went ballistic over Obama’s failed little Solyndra loan of $500 million.

    1. I remember bitching about the Democrat house passing all those spending bills. Oh look, they did it again instead of just agreeing to a tax holiday.

      And let’s not forget that all these businesses are financially fucked because of the actions of the government.

      1. I remember when the alt-Left Bolshevik Democrats put millions of blacks into public housing and refuse to let them out.

      1. I doubt they’d qualify as burger flippers. So in a sense, yes, the loan is keeping these young men from being priced out of the labor market.

  13. That program, first approved as part of the $2.3 trillion CARES Act in late March

    Call it what it is – the 2020 Trump Welfare and Pig Fat Act.

    1. “Call it what it is – the 2020 Trump Welfare and Pig Fat Act.”

      The guy’s amazing! He cooks up the ‘rona in his garage lab, manages to shut down economic activity in all those D-controlled states, and as king, he single-handedly wrote and passed the PPP Act!
      Oh, wait:
      “H.R.7010 – Paycheck Protection Program Flexibility Act of 2020”
      […]
      “Sponsor: Rep. Phillips, Dean [D-MN-3] (Introduced 05/26/2020)”
      https://www.congress.gov/bill/116th-congress/house-bill/7010

      turd, just one more lie in a continuing stream of them. An adult might get embarrassed, but we don’t expect anything of the sort from you.
      Go fuck your daddy.

  14. Why worry about recent and current failures when we can begin to consider the improvements to be shaped by a Democratic Congress and a Democratic President in six months?

    1. You are setting a really low bar there.

    2. Hahahahaha

    3. Rev. Arthur L. Kirkland
      July.7.2020 at 10:20 pm
      “bullshit”
      Thanks, asshole bigot!

  15. “Even advocacy groups have been cashing in, including some noted critics of profligate government, spending such as Americans for Tax Reform and the Ayn Rand Institute”

    In all fairness Ayn Rand has been dead for nearly 40 years. The Institute has almost certainly captured by people more interested in aggrandizing the Ayn Rand Institute for its own sake than they are in the philosophy of Ayn Rand.

  16. Yeah, I’m thinking a lot of these companies that got PPP (rightfully or not) have actually laid off people, especially ones at the bottom.

    What they get takes care of payroll, insurance and some overhead at most. If they’re not bleeding, they will soon.

  17. My sister is a part-time childcare provider at a community college and of course she was laid off in March to receive unemployment during lockdown. With all the stimulus bonuses on top she was taking in 3x her normal salary, making more than me while I continued to work fulltime. She’s been living like a princess. She’s been at the beach since June.

  18. Brilliant article. I had wondered how future generations would view the mind boggling hysteria that is currently gripping the whole world, especially Europe and the USA. We look back at past centuries and wonder how they could have been so stupid. I guess it shows how powerful mass hysteria can be – like a stampede. Thought the writer was a historian, his analysis is so sharp. He has seen through the Emperor’s new clothesHEREClick For Full Details.

    1. Especially europe and the USA? Australia has sent its own military into its second largest city to maintain a new “surge.” A lockdown through the remainder of its southern winter. You should read up on what’s going on in canada. I realize it’s only canada and nothing they do up there matters to anyone but their hysteria and violence is frightening especially considering its preciously sweet reputation.

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  20. Well, we have a historical precedent to compare, do we not? The Great Financial crisis, just over a decade ago.

    There were an array of programs passed into law in February 2009. How do their performance in keeping Americans employed compare to PPP performance in 2020? The employment data are there. Why doesn’t Reason show it?

  21. “…The government would forgive those loans so long as the recipients spent a certain portion of the money on retaining or hiring back employees…”

    I applied for and was approved for one of these. I decided to read the fine print. ALL of the terms of the loan describe repayment and the penalties if you don’t. NOTHING, I REPEAT NOTHING in the terms of the loan regarding “forgiveness,” free money, not paying it back, etc. I passed.

    I know for sure no so-called journalists read the terms. I doubt many of those who applied for and received the loans read the terms. There’s gonna a b a lot of surprised people when the SBA comes calling for their money.

    1. You are officially an idiot. The bank doesn’t forgive the loan, you apply and the US government forgives the loan. The applications are readily available.

      In other news, you are officially an idiot. When someone offers you a loan at 1%, you take it. Invest it in capital now, and you improve your position against inflation, which is guaranteed to exceed 1%.

      1. Invest in _what_? We’re in the first stage of a deep government-caused depression – with both a big drop in GNP and massive inflation to come. Big corporations will lose value, and small business will fold. Aside from short-selling – which only works if you time the market just right, so it is highly risky even for the most seasoned investors, and just plain stupid for most people – there are no investments that are more likely to gain than to lose in real value right now. T-bills, etc., will guarantee you that for $x put in, you get $x + a little back, but not that the dollars you get back will be worth anything after the government runs the printing presses to pay off all that debt it just incurred.

        Gold will probably more or less hold it’s value, but it costs to hold it, and it does not generate more value the way that buying into a successful business does. You make real gains in gold only by good market timing, that is buying it before the rush, and selling it when every idiot is trying to get in. (If you sell when they’re all trying to get in due to runaway inflation, you just sold your gold for paper profits that are about to evaporate…)

        You’ve got to find something better to do with your money than hide it in a mattress while inflation nibbles away at it, but in an economy like this, none of the choices are good enough to make borrowing money to invest a likely winning strategy.

  22. More programs, more opportunities for lobbyists a interests groups to influence government. Idiocy, repeated over and over.

  23. He kind of forgot some companies there. He has his TDS on high when this was written.
    Nobu, the international luxury chain of sushi restaurants and hotels, took up to $28 million in loans from the U.S. small business relief program as part of the Paycheck Protection Program (PPP), according to recently released government filings. The chain, which includes 46 restaurants and 13 luxury hotels across the world, was co-founded by actor Robert De Niro, celebrity chef Nobuyuki “Nobu” Matsuhisa, and film producer Meir Teper. Nobu took 14 loans totaling as much as $27.7 million

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  25. So… The government took over unemployment insurance, job insurance, pandemic insurance, business insurance, house insurance, food insurance, water insurance, life insurance and lets not forget paycheck-to-paycheck insurance.

    Heck with all that insurance surely there isn’t even a 1% reason for people to be responsible for themselves. Let’s get over the idea we have any “freedom”… Uncle Sam OWNES you… Citizens are all but a slave to the Uncle Sam Plantation who will grace you food and shelter (at their discretion) in exchange for slave labor and a big fat debt to go along with it. You have no option….. You are a SLAVE of our ever growing communist government!!!

    Always remember — Government doesn’t produce SH*T… What they give is what they STOLE.

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