Senate votes unanimously to extend CARES Act
loan program despite businesses' plans to lay off thousands more
2 July 2020
Despite receiving billions of dollars in low interest loans
through the grossly misnamed Paycheck Protection Program (PPP), thousands of US
businesses plan on letting go over 700,000 workers across the country once the
program runs out of funds.
In the survey conducted by the National Federation of
Independent Businesses, roughly 70,000 businesses that received thousands, or
in some cases, millions of dollars in low-interest, forgivable loans, plan to
lay off at least 10 workers each.
Sold as a lifesaver for small businesses and a “free market
solution” to keeping workers employed and paid, the Paycheck Protection Program
was never anything more than a handout to business and a new taxpayer-funded
revenue stream for Wall Street banks. Under the auspices of former Goldman
Sachs executive and current Treasury Secretary Steven Mnuchin, applications for
the loans were submitted through the Small Business Administration with no
oversight, just as intended.
Published last week, the survey concluded that 14 percent of the
4.6 million companies that have received 1 percent interest loans through the
corporate-government slush fund are planning on laying off workers when the
money is depleted. Exploding the narrative that the program would “save jobs,”
businesses are firing workers and slashing hours even though the program allows
a business owner to use up to 60 percent of his or her PPP funds on payroll
through December 31.
Reports of PPP funds being abused since the program’s inception
haven’t stopped Congress from replenishing the program with haste. Loan
applications were extended through May and into June, even as it was reported
that thousands of the approved loans were being siphoned off by hotel and
restaurant chains, cruise ship lines, medical device companies and
well-connected hedge funds.
The PPP was launched in March when the $2.2 trillion CARES Act
was passed 96-0 in the Senate and an overwhelming voice vote in the House. It
was signed into law by President Trump on March 27. The first round of funding
for the program, $349 billion, ran out by April 16, before millions of small
businesses could even get the necessary paperwork to apply. Of the “mom and
pop” small businesses that were granted funds, many didn’t receive the loans
until the end of May.
Even as it was reported that only eight percent of small firms
that applied for loans received any money, Congress swiftly moved to enact a
second round of funding after the initial $310 billion disappeared in two
weeks. In that time, large businesses gobbled up loans worth up to $20 billion
while Wall Street banks made over $10 billion in processing fees.
As social anger grew over the blatant corruption baked into the
PPP, Mnuchin announced that new “guidelines” would be implemented that would
supposedly exclude larger firms. Mnuchin also called for firms and businesses
that didn’t need the loans to return them, which, according to Forbes, added an
estimated $12 billion to the program at the start of June and has left the
program with approximately $130 billion remaining.
The deadline to apply for any new loans was set for June 30,
2020.
However, in a late-night Senate hearing Tuesday, and a textbook
example of unanimity within the ruling class, all 100 US senators--Republicans,
Democrats and nominal independents such as Bernie Sanders--voted on a five-week
extension for the program through August 8. The extension is expected to pass
the House and be signed by Trump as early as this week.
Testifying
before the House Financial Services Committee, Mnuchin expressed his desire for
the five week extension and that the $130 billion left in the fund be made
available not to laid off health care workers or cash strapped school
districts, but to “businesses that are most hard hit...
[including] restaurants and hotels and others, where it is critical to get
people back to work.”
In announcing the extension through a joint press release,
Democratic Senate Minority Leader Chuck Schumer of New York commended the
program as “a lifeline to... small businesses struggling to stay afloat during
these turbulent times... Senate Democrats have ensured that small businesses
can continue to have the opportunity to apply for these loans that can mean the
difference between staying open and closing for good.”
Schumer’s statements attest to the detached reality he and the
rest of the political establishment inhabit. A study conducted by researchers
at the University of Illinois, Harvard Business School, Harvard University and
the University of Chicago in May projected that more than 100,000 small
businesses had shut down permanently since the pandemic escalated in March.
The Bureau of
Labor Statistics just announced this week that nearly half, 47.2
percent, of working-age Americans did not have work the month of
May. In many cities, the line for the food bank stretches as long as the
unemployment line. In addition to layoffs, workers will have to contend with
militarized police departments preparing to evict hundreds of thousands of
workers and families from their homes as the eviction moratorium in the CARES
Act is set to expire at the end of July. There has been no signal from either party
that the moratorium will be extended.
In addition to continuing layoffs and the threat of eviction,
workers are also being squeezed by the continued refusal of the Trump
administration to agree to any extension of the federal $600 addition to state
unemployment benefits. For those workers who have been able to get through busy
phone lines and navigate the labyrinthian unemployment insurance, the $600
weekly benefit has been the only “lifeline.” This lifeline is scheduled to run
out on July 25 and the stage is now set for an economic and social catastrophe
not seen in the US since the Great Depression of the 1930s.
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