The Media’s PPP Potshots

COVID-19, In The NewsThe Media’s PPP PotshotsDon’t blame companies for taking loans to survive the shutdown.

Budget & Tax, In The News,  | Quick Take
Jul 8, 2020  | 3 min read | Print Article

This article by the Editorial Board first appeared in The Wall Street Journal on July 7, 2020

What do Citizens Against Government Waste, Nancy Pelosi’s husband, and Jared Kushner’s family have in common? All are getting unfairly maligned for having dared take the government’s offer of financial help to survive the government-imposed pandemic shutdowns.

The Small Business Administration on Monday released information about the 4.9 million small-business loans the Paycheck Protection Program has disbursed since March. Cue the gotcha headlines. “Groups critical of taxes, spending not opposed to PPP loans,” declared Roll Call, naming Taxpayers for Common Sense and the Americans for Tax Reform Foundation.

A Bloomberg non-expose noted that among entities receiving a “bailout” were companies with “Trump ties,” “religious organizations,” “investment firms,” and the Kushner family. Republican operatives highlighted that Joe Biden’s former law firm received funds, as did a company in which Speaker Pelosi’s husband, Paul, is a passive investor. Watchdog group Open the Books produced a map of “mega loans,” calling out Kanye West’s sneaker company and Robert Redford’s Sundance Institute.

Lost among the cheap shots is that the PPP bears no relation to typical government pork. Congress created it as a lifeline for companies that were closed by government fiat, not due to mismanagement or poor investment decision. As Americans for Tax Reform noted in a statement, PPP loans are akin to “compensation for a government taking.”

Many of the stories imply cronyism or opportunism, but none offer evidence that political favoritism played a role in the loans, or that the entities in question didn’t qualify for assistance. Congress set up PPP to enable SBA-affiliated banks to distribute cash quickly and widely—without the usual political mediation—and in that regard it succeeded.

According to SBA data as of May 30, PPP had provided support to some 84% of small business employees, underwriting some 51.1 million jobs. Many of those outfits will now have a shot at survival, and they stand in contrast to companies like Hertz or Neiman Marcus, which went bankrupt, or to thousands of small businesses that couldn’t survive the shutdown with or without a government loan.

The politicians and their media retainers shouldn’t attack firms for accepting the loans they were offered to survive the bad decisions made by government.

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