Profits over people?
Loopholes and a lack of oversight led to the program’s colossal bungling.
The Paycheck Protection Program (PPP) was part of a stimulus plan supposedly meant for the little guy—the mom-and-pop shops struggling to survive amid a pandemic-spurred economic meltdown.
Instead, giant chains like Ruth’s Chris Steak House, Shake Shack, and Potbelly (those with estimated net worths sometimes reaching into the billions) each received tens of millions of dollars in federal loans that were supposed to be reserved for small businesses needing help to stay afloat.
After a barrage of criticism, some of these companies have promised to return the funds, and Congress has unleashed a second round of cash with the expectation that small businesses will actually get a deservedly greater slice this time. But the fact that this happened in the first place is cause for concern. History, it seems, is merely repeating itself once again—subsequently deepening the racial, economic, and social fissures in this country. Here are the key takeaways.
The initial April 3 launch was messy, rushed, and capped off with controversy. A New York Times investigation revealed that more than 200 publicly traded companies received over $750 million in loans.
The Intercept found that major donors to President Donald Trump’s reelection campaign scored large sums. Data analyzed by Reveal and the New York Daily News determined that more than half of businesses in GOP-controlled states were approved for loans, while blue states hardest hit by the pandemic (California and New York) were approved at a rate of less than 20 percent.
In fewer than 14 days, 14 years of loans were gobbled up, leaving Main Street shut out of the $349 billion in emergency relief earmarked for them.
Why? PPP loans were designated for companies with fewer than 500 employees—but corporations that have multiple locations but don’t employ more than 500 employees at each location could qualify.
Ruth’s Chris Steak House and Shake Shack got $20 million and $10 million, respectively. These organizations have now promised to return the money, but hotel management chain Ashford, which obtained a nearly $60 million loan, refused to give it back. And according to lawsuits, big banks allegedly prioritized applications from companies that would garner them the most money in processing fees.
Turns out that big banks who were bailed out during the 2008 recession with taxpayer money didn’t return the favor to said taxpayers.
On Monday, April 27, Congress injected the next $310 billion in relief, but despite the Trump administration sewing up some of these glaring loopholes, gaps still remain and allow major corporations to access small business loans.
Hotel and restaurant chains—no matter their size—are still eligible for loans. Offshore manufacturers qualify because the program stipulates the 500-maximum rule only applies to a company’s staff size in the United States, not its total global workforce. Some industries are even exempt from the 500-or-fewer rule, like soft drink bottlers, ammunition manufacturers, and even yacht businesses.
Politicians have pretty much always been in corporations’ pockets, so the continuous neglect of American workers might come as no surprise. The American political agenda routinely serves the most privileged—both in economic and racial terms—and the Trump administration’s efforts have widened gaps in both race and class.
The Center for Responsible Lending reports that 90 percent of the original PPP funding went to wealthy and less-diverse businesses, leaving small business owners of color—an already disadvantaged subset of the business community—out in the cold. Time will tell whether round two turns out to be any different.
According to Data for Progress, voters overwhelmingly want a progressive “People First” agenda that protects public health, expands health care coverage and absentee voting, and keeps workers on payroll.
In times of emergency, we've watched as many politicians react hastily and under pressure to save the status quo. But the desire to return to normal is, upon closer examination, tone-deaf so long as normalcy means capitalist control and a blatant disregard for the country's most disadvantaged.
Disparities between classes and racial groups are as American as apple pie (though many seek to deny them), but they are increasingly coming into focus as the world reels in the face of this global health crisis and the economic crisis it has spurred.
The PPP could have been the government’s chance to begin to address growing socioeconomic divides in this country, but it rescued some of the most privileged rather than those it claimed to serve: those most in need.
Though devastating, these gaps are certainly not surprising or new, and, by the looks of it, they will only continue to grow. For now, it remains to be seen what exactly the consequences of this expansion will be.
Sign me uppp
Sign up for our newsletter: Supernews.
Scam-demic?
“The stress of the pandemic, along with a pressing need for resources, leaves Black women at risk of trusting individuals who offer a lifeline—even if it sounds too good to be true.”
Digital policing
The technology firm announced it will not offer end-to-end encryption for free users in order to better assist law enforcement.
