The CARES act, passed in late March, is a $2 trillion relief fund designed to shield Americans from the economic fallout of the Covid-19 pandemic. Individuals, businesses big and small, and local and state governments have access to funds to keep them afloat while much of the nation’s commerce is stalled. Millions of Americans received one-time stimulus checks of $1200 and Unemployment Insurance benefits have been greatly expanded to reflect pressing need.
The CARES Act picture is murky as to which businesses received what funds and from where. In a Senate Hearing on June 10th, Treasury Secretary Steve Mnuchin refused to divulge the recipients of the $600 billion allocated for small businesses. The CARES Act specifically stipulates that loans to business are subject to public disclosure. Transparency is a crucial tool in combating fraud and waste for this historic instance of public assistance. Given this administration’s track record of cronyism and graft, the attempt to stonewall is especially troubling.
As of this writing, the Small Business Administration has dispensed 4.6 million loans to the tune of $511 billion. Most all of it is unaccounted for, at least publicly. The SBA typically makes this information public , and the loan application for the Paycheck Protection Program specifically states that the borrowers information will be released. Nevertheless, Mnuchin has refused to name any loan recipients, making the ridiculously brazen claim that the information amounts to ‘proprietary information.’’
His ludicrous assertion warrants further scrutiny. Aside from the fact that language in the CARES act demanded transparency, the PPP stipulates that under the Freedom of Information Act, any of the information in question must be released to the person making the request. Given the seeming inevitability that this information becomes public, it is notable that Mnuchin appears intent on preventing, or at least stalling the public release of the PPP’s beneficiaries. In an attempt at cooperation, he promised to supply the requested information to the Government Accountability Office, who would then release it. It’s possible that Mnuchin is on the level and genuinely concerned about the privacy of loan recipients, but his rationale makes no sense. House Democrats have demanded information specifically related to who received emergency funds, and how much they borrowed. If KFC were a recipient, the public is entitled to that information. It would hardly constitute anything that could be considered proprietary. It isn’t as if Congress is subpoenaing the Colonel’s secret blend of herbs and spices. It’s also possible that the funds have been misappropriated and Mnuchin knows the story would likely have less impact via a GAO report, rather than a public admission in Congress by the man responsible for the nation’s piggy bank. Given that many of the loans may be forgiven if employees are retained through June, the administration’s cagey stance is worrisome.
Publicly, PPP was touted as a lifeline to small businesses trying to weather the burdensome impact of nationwide lockdowns. Misuse of the funds would have been a consideration at any time, which likely necessitated language of accountability before Congress could reach an agreement. Shake Shack, the restaurant chain with 168 locations across the globe and nearly half a billion in revenue, presents an interesting case study in the kind of malfeasance lawmakers are right to be wary of. The chain, which would fit no one’s definition of a small business received a $10 million loan. Similarly large restaurant groups such as Ruth’s Chris Steakhouse and Potbelly’s did the same. Amid public backlash, Shake Shack returned theirs, stating that though they were entitled to funds, they’d hold off until every restaurant that needed aid had the same opportunity as them. Be it pure public relations, or out of some sense of decency, Shake Shack gave money back so that more needy recipients in the industry might have access to it. In all, 71 publicly traded companies received aid in the 13 days before the funds dried up, according to the Securities and Exchanges Commission. If Shake Shack’s return of their loan exposed a bit of inequity in how funds intended for small businesses were distributed, it begs the question: what is the government trying to conceal? The American taxpayer, who will be on the hook for every penny of the money, is entitled to know.
Politicians have long pontificated that small businesses are ‘’the backbone of the American economy’’ while favoring legislation beneficial to corporate giants. The public presentation of the PPP vs. it’s reality appears to be a continuation of that trend. If 71 companies large enough to be publicly traded received funds, one must wonder how much was left for the small, shuttered businesses the program was intended to help. At best, Mnuchin’s stance can be seen as a continuation of this administration’s incessant obstruction of any oversight. At worst, it’s an attempt to cover-up corporate raiders looting the public coffers of funds earmarked for working-class Americans.