Government programs seldom work as intended. Even if they’re not afflicted by waste and administration, they frequently produce unintended consequences and tend to get made use of by– or are created for– special interests.
So when Congress created a massive brand-new stimulus program overnight as part of the CARES Act in March 2020, there were bound to be problems.
The Paycheck Defense Program (PPP) was planned to provide forgivable loans to small businesses struggling to make it through the government-imposed COVID-19 lockdowns. As long as the recipient used the funds for their designated purpose– normally, keeping staff members on payroll– loans might later be forgiven. Up until now, so good.
However subsequent research study estimated that, while the $800 billion PPP likely conserved 2-3 million tasks, it was poorly targeted, with just a quarter of the funds reaching “workers who would otherwise have lost jobs.” Other research study determined that “PPP payments mainly benefited those least in requirement.” Inefficient and inefficient? Examine.
Further, as even President Biden has confessed, the federal government’s COVID-19 stimulus costs, of which the PPP belonged, has played a big role in the inflation currently controling headings. Unintentional repercussions? Examine.
And, to top it off, a current Flexibility Structure report files how as many as 226 forgivable loans totaling $36.7 million were provided to labor unions and associated companies that were obviously disqualified for the funds.
Service entities of all kinds at first got approved for the PPP, as did 501(c)( 3) charitable nonprofits. However, from March 2020 to March 2021– when the newly-Democrat Congress passed President Biden’s American Rescue Plan– most other type of tax-exempt organizations, including labor unions, were not eligible for PPP funds.
A few of the more notable receivers throughout this period included a lots instructors’ unions and advocacy organizations, who unabashedly worked to exploit the pandemic for their own benefit any place possible and withstood a return to normalcy in American public schools as long as they could.
Nearly a lots unions representing other civil servant at the state and municipal level also received PPP funds for which they were obviously disqualified.
And 5 AFL-CIO entities– the AFL-CIO is essentially a trade association for unions– got nearly a half-million dollars in loans between them.
All of these groups tend to be extremely active in elections, and it is entirely possible that the PPP loans freed up other funds for politicking.
From a policy viewpoint, it is difficult to argue unions needed the funds. In addition to the PPP funds gotten by private companies to preserve payroll, the federal government provided hundreds of billions of dollars to states, city governments, and school districts, much of which went to keeping people employed and, if unionized, paying fees.
Up until now, unions haven’t been too excited to talk about their receipt of PPP loans.
A spokesman for the American Federation of State, County and Community Employees (AFSCME), one of the country’s largest federal government unions, “deflected questions about the misdeed” when asked by the Epoch Times about AFSCME affiliates getting funds for which they were disqualified. And the head of the Ohio Retired Educators Association informed the Daily Signal simply that, “We used, and they provided it to us, and we were happy for it.”
This isn’t unexpected. At minimum, unions looking for PPP loans would have incorrectly attested to their eligibility on the application form, and possibly consisted of other inaccurate details. If done purposefully, such misrepresentations could include considerable– even criminal– charges.
But the government shares part of the duty for failing to prevent the inappropriate loans.
While the Small Business Administration (SBA) administered the PPP, it contracted with a network of thousands of personal banks around the nation to really process and approve loan applications. Clearly, numerous dropped the ball when it pertained to thoroughly evaluating union applications.
In one especially outright case, the Bank of Labor– owned by the Boilermakers Union– authorized a quarter-million-dollar loan to a Boilermakers affiliate.
Records obtained under the Flexibility of Info Act show that SBA authorities looked out by White House staff as early as July 2020 that unions appeared to be getting PPP loans for which they were ineligible, but the SBA does not appear to have actually taken any action to address the matter. Unions continued to receive loans they weren’t qualified for, and some even received 2nd loans. So far, according to SBA information, at least $24.2 million of the troublesome loans determined by the Freedom Foundation have actually been forgiven.
But it’s not far too late to undo some of the damage. The Liberty Structure submitted its findings to the SBA’s Inspector General, who has formerly identified other defects in the SBA’s handling of the PPP, and to the Department of Justice’s National Center for Disaster Scams.
If federal authorities do the best thing– which is undoubtedly a lot to ask for nowadays, especially from an administration so enthralled with unions– they’ll a minimum of attempt to recover the funds on behalf of American taxpayers.
Maxford Nelsen is Director of Labor Policy at the Freedom Structure. Download the full SBA loan recipient spreadsheet at www.FreedomFoundation.com.