Paycheck Protection Program needs oversight
Big companies should not be getting money smaller companies need to survive
When the history books are written on the government’s response to the coronavirus pandemic, there ought to be a chapter devoted to the Paycheck Protection Program. It will make for fascinating and, in many respects, disappointing reading.
Part of the $2.2 trillion federal CARES Act, the program, initially funded at $350 billion, is aimed at helping small business (those with fewer than 500 employees), which have been decimated by the shutdown of large parts of our economy.
The idea was to keep them and especially their workers afloat. But there have been problems since the beginning. Among the biggest: That the program ran out of money almost immediately. Across the country, businesses that need the money were shut out of the initial round of funding, prompting Washington, D.C., to approve a second round.
Early reporting suggests that Iowa fared better than most other states in the first round of funding. A Bloomberg News article last week said in the first two weeks of the program, Iowa ranked sixth among the states in terms of the amount of eligible payrolls covered by approved applications. Other states didn’t do so well, notably California and New York. Illinois also did relatively poorly. The Bloomberg story said that Illinois ranked 31st. (We should note that this refers to businesses that were approved for funding, not necessarily those that have received the money.)
Unfortunately, the program has been a boon to some big companies that never should have bellied up to the bar in the first place. Some big hotel and restaurant chains and manufacturers, some of them worth billions of dollars, got money from the program.
This appears to have been done legally. Congress made conscious decisions to help the restaurant and hospitality industries so that even subsidiaries of larger chains could access the money. Still, some of this is beyond the pale. There have been reports that some of the corporate recipients boasted of their access to private capital shortly before going to the government for help.
Even the Los Angeles Lakers, which ESPN reported is valued at more than $4 billion, got money. (The Lakers, among some other companies, have returned the money, or said they’ll do so. Some, however, have refused to do the right thing and give the money back).
This hardly seems to be what Congress, or anybody, had in mind for the Paycheck Protection Program. It was clearly aimed at businesses that did not have access to other funds.
We understand that when Washington, D.C., shovels money out the door quickly, there are bound to be errors. But the amount of money being spent here is unprecedented. And when the original Paycheck Protection Program required that applicants certify they needed the money because of “economic uncertainty,” it seemed clearly ripe for abuse. No wonder the program ran out of money fast.
A new installment of $310 billion has been added to the program, and that’s a good thing. Interest is clearly robust. The Quad-Cities Chamber of Commerce said last week that 68 percent of local businesses responding to one of its surveys said they’d applied for federal help, with the Paycheck Protection Program being the most popular.
It also looks like the federal government has learned some lessons in disbursing its second round of PPP funding. The Treasury Department issued more explicit guidance saying that, in order to get money, applicants had to “certify in good faith that their PPP loan request is necessary.”
The department also is requiring that companies consider whether they have access to funds from other sources when submitting an application.
These are the kinds of safeguards that should have been put in place in the beginning, and it points to the need for aggressive congressional oversight of this and other coronavirus-related programs.
The federal government is spending huge amounts of money, and while we support these expenditures in this time of crisis, auditors and watchdogs within the government must make sure the money goes to the people and businesses that truly need it. They should also be as aggressive as possible in retrieving the money from those who don’t.
— The Quad-City Times