When Congress passed the second pandemic stimulus bill, the CARES Act, in late March, a key feature was the Paycheck Protection Program(PPP). This was $349 billion described as targeted to small businesses (in the world of the Federal government small businesses have long been defined as having fewer than 500 employees). Under the terms of this program the money was loaned to businesses chiefly to retain employees In the workforce. If companies spend the money for this purpose the loan will be forgiven.
When the Small Business Administration opened the doors for application through the banking system, the funds were exhausted in a few days. Where’s had all the money gone? Certainly many small businesses received funds. Our local library here in Hudson, NY was one of them. Yes non-profits were included in the program.
Then stories began to emerge of large corporations and institutions gobbling up the funds. For example, Nathan Verdi in Forbes reported on 4/20/20 1that 71 publicly traded companies received PPP funds. 20 companies with market capitalization of more than $100 million received PPP loans. These included Shake Shack ($1.6 billion market cap, burger chain) DMC Global ($405 million, oil industry), Wave Life Sciences ($286 million, biotech), Hallador Energy ($426 million, coal)…. well you get the idea. In our society the rich and corporations get richer no matter a pandemic.
Here’s What Happens When the Rich and Corporations Control the Government
Then, a couple days ago, buried in the back pages of the April 24th NYTimes business section came “The Tax-Break Bonanza Inside the Economic Rescue Package“ 2 by Jesse Drucker. Whereas on might be able to believe that the PPP boondoggle was the result of sloppy procedures and lax oversight, this article demonstrates the ongoing control of the government by the rich and corporations and their shameless greed.
“As part of the economic rescue package that became law last month, the federal government is giving away $174 billion in temporary tax breaks overwhelmingly to rich individuals and large companies, according to interviews and government estimates.
One provision tucked into the federal economic-rescue law increases the amount of deductions companies are permitted to take on the interest they pay on large quantities of debt. Only companies with at least $25 million in annual receipts can qualify for that break.
Another change lets people deduct even more of their businesses’ losses from any winnings they reaped in the stock market, sharply reducing what they owe in capital gains taxes. Only households earning at least $500,000 a year — the top 1 percent of American taxpayers — are eligible.
And yet another provision in last month’s rescue package allows companies to deduct losses in one year against profits that they earned years earlier. The tax break most likely won’t put any extra cash directly into the hands of companies hit by the current crisis for at least a year.
The bottom line is that, barely two years after congressional Republicans and President Trump lavished America’s wealthiest families and companies with a series of lucrative tax cuts, those same beneficiaries are now receiving a second helping.”
The rich and corporations win even during a global pandemic.
Meanwhile, it seems very likely that many, if not most, small businesses, the ones that we visit regularly and that provide much flavor in our local environment, will not re-open, ever. More likely the large chain businesses that have the financial resources will come to dominate even further in our day-to-day lives. For over three decades the monopolization of most sectors of the economy has been advancing. This has reduced competition, innovation, and choice everywhere. The pandemic will accelerate this trend further.
- Recently Noted – Robert Reich: Socialism for the Rich, Capitalism for the Rest – a 4 minute video