Republican Convention 2020

The RNC Shouldn't Be Bragging About the Paycheck Protection Program

The PPP hasn't worked as planned, and one cheery exception does not disprove the rule.

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"A few months ago, like so many businesses, we got the crushing news [that] a large event we were serving was canceled because of the virus," Tanya Weinreis, owner of Mountain Mudd Espresso in Billings, Montana, said onstage at Monday night's Republican National Convention. "My company was one of the first to receive a PPP [Paycheck Protection Program] loan, and praise God, it has been a lifesaver. Not only were we able to keep every single employee, but we've been hiring weekly ever since."

Weinreis's situation is a common one, with widespread COVID-19 shutdowns and changes in consumer behavior closing tens of thousands of businesses. But her happy ending—a PPP loan that not only helped her business stay afloat but expand—is by no means shared universally.

The multibillion-dollar PPP loan program was aimed at helping small businesses retain employees amid government-imposed closures. But the program, implemented at breakneck speed, was riddled with errors and fundamental flaws from the beginning. A notable misstep in the initial loan forgiveness terms was the requirement that 75 percent of loan dollars go toward payroll at a time when many employers had, and still have, nothing for their employees to actually do.

The requirement that businesses use PPP funds to pay employees was complicated by the creation of a $600 federal weekly unemployment benefit, which, when combined with state unemployment benefits, made it more lucrative for many former small business employees to stay unemployed. Employers were stuck funneling loans almost exclusively toward payroll costs, with no reason to actually pay their workers, while those same employees often had a perverse incentive to quit and go on unemployment. And there are plenty of other expenses entrepreneurs needed to cover in the interim when they had no other money coming in, such as rent.

Many business owners struggled with a fragmented and bureaucratic loan process and a technical framework that quickly crashed. Those that received funding often weren't granted the reprieve they needed. Consider the case of New York City's Mark Fisher Fitness, which, in April, rehired 28 employees they had laid off the previous month. It then promptly let go of most of its staff again after 8 weeks, because the PPP necessitated that it spend its loan money within the first two months of receiving it.

And while politicians and bureaucrats hailed the program essentially as open to all, many small business owners were denied loans altogether, especially if they didn't have a lending history with the lender they selected to help them procure a loan, or if they had a lending history with a different bank. Yet large businesses like Shake Shack somehow made out with multimillion-dollar loans. (Shake Shack returned its PPP loan.)

"In terms of saving people's jobs, the program spent vastly more money than the number of jobs it saved. It did not cause a sharp increase in employment that would be commensurate with the nearly $600 billion that was spent," economist Michael Stepner told CBS MoneyWatch in June. "We spent more than $670 billion on this program, and most of it did not go to saving people's paychecks."

The PPP is not even solely President Trump's accomplishment. Congress passed the program with bipartisan support. It's also possible that Weinreis's success has a lot to do with Montana's small number of coronavirus cases and scant lockdown restrictions, allowing her to use the monetary boost from the government more liberally than someone without any business to speak of.

"I am so grateful we have leaders like President Trump standing up for local businesses like mine," Weinreis said. "Thank you, President Trump, it is exciting to be part of this great American comeback story." That comeback story, however, isn't a comeback just yet, and in any case, it's not one that Trump can claim.

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  1. It was a dumb idea that was poorly managed.
    Color me surprised.

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    2. As an employer of 115 pre-pandemic, 104 today, I consider the PPP a really sweet deal for small businesses. Understandable why an associate editor responsible for zero employees, who never had to come up with $60k every month for a health insurance bill, would have no clue why the PPP was so great.

      1. Seriously! The PPP was a big help to my small business. I can understand taking issues with some of the PPP’s resultant failures. But this Libertarian position of throwing the baby out with the bathwater in order to try to make the narrative desired point that “big government bad” is a little disingenuous.

  2. That is what you pulled out of that night?

    Not Herschel Walker and Tim Scott? Not direct confrontation against attacks on freedom of thought, speech and religion?

    And out of a mind-boggling.. what are we up to? 8 trillion? More? A loan program that gets stepped on by an unemployment benefit? Hell, at double the annual budge in just a few months, I don’t know how they didn’t step on everything. The whole thing is insane.

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  3. Remember when we used to live tweet the convention?

    At least they have dropped the pretext that these things are anything other than canned commercials.

  4. The women of the RNC, are better looking than the ‘women’ of the DNC. So there’s that.
    MAGA!

    1. That’s why the Dems attract soyboys. (R) women are out of their league.

  5. You will notice that reason did not provide much coverage at all of the DNC. No surprise suddenly they care. Full on TDS. Voting libertarian is a vote for Biden and the Stalinists.

    1. You will notice that reason did not provide much coverage at all of the DNC.
      Except for the five or six articles they wrote about it, sure.

      Voting libertarian is a vote for Biden
      Nah, you’re thinking of the guy with the (D) next to his name.

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  8. >>got the crushing news [that] a large event

    did you add the “that” to her quote? it was unnecessary and you should strive to not use “that” it is a crutch.

  9. Our medical group was unable to meet payroll as the health care district cancelled all elective surgery.
    We are small enough to qualify for the PPP program and were given a loan.
    It kept us and our nurses in business.
    The much larger competing group was too big to get such a loan and cut everyone’s salary by 30%.
    We are now being inundated with resumes from all the people fleeing the other group.

  10. So the PPP was sabotaged by states that unnecessarily forced business closures and you’re saying it’s a bad program?

    If political success is conditioned upon Democrat approval, then you’re no libertarian.

  11. I have been in business for 35 years and survived 9-11 and the 2008 financial crises. In March of 2020 we had 50 employees. In April of 2020 my business saw a 90% decrease in revenue. Our PPP loan was funded just as we were running out of money. It allowed to to stay in business and keep all 50 employees on payroll until we were able to make significant changes in our business model, reduce expenses, and find new revenue sources. It worked as a ‘bridge loan” during that critical time. Today were are barely surviving but we are still able to provide paychecks and put dinner on the table for over 40 employees. Without PPP we would have never made it and would have been forced to close the doors on a 35 year old business and put 50 employees in the unemployment line, which in California can take many weeks and even months to receive any benefits. I have been around a long time and have seen many government stimulus programs that promised “shovel ready jobs” that were a disaster. The PPP program was not perfect but is by far the best stimulus program ever created. It provided immediate money to employers who used it to cover immediate payroll expenses and allowed millions of employees to receive uninterrupted paychecks.

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