For the many Democrats thirsting for a punchier, feistier Biden White House, a recent Twitter thread bashing the alleged hypocrisy of Republicans in Congress was a revelation. After Marjorie Taylor Greene, Matt Gaetz, and others took to the airwaves to attack Joe Biden for his student-debt-cancellation plan, the White House mocked several of the lawmakers for having their Paycheck Protection Program loans forgiven. (The GOP has characterized student-debt relief as an unfair giveaway to more affluent college graduates, though Biden’s plan squarely targets the middle class that these lawmakers purport to fight for.)
The White House pointed out that Greene, the doyenne of the far right, had $183,504 forgiven in the pandemic-era program — which sent out federal cash with few strings attached to millions of small and large businesses across the U.S. Gaetz had $482,321 forgiven. Vern Buchanan, a Florida Republican, had at least $2.3 million forgiven. As Democrats face inevitable conservative backlash for defending Biden’s long-promised student-loan-cancellation plan, they have merrily embraced a new talking point: Republicans took out PPP loans, therefore they are selfish hypocrites gobbling up federal cash when it suits their purposes.
This isn’t entirely false. Republicans rail against federal largesse until it benefits them. Right-wing voters hate socialism until they are collecting Social Security checks and receiving Medicare benefits. Various progressive activists, groups, and even Bernie Sanders have raised similar points, chastising Republicans for defending the PPP while excoriating student-loan cancellation.
Baked into this critique is another implication: the PPP was a giveaway to the rich while canceling student loans will benefit working and middle-class individuals. By highlighting how large some of the PPP loans were, Democrats are denigrating the 2020 program and making it plausible for left-leaning voters and institutions to mock the concept of blanket pandemic relief. Downstream from the White House messaging, one recent viral political cartoon conflated PPP-loan forgiveness with “billionaire tax breaks” and “corporate subsidies.”
The Biden White House is consciously — or unconsciously — creating a dangerous and misleading narrative on the left that may undercut future disaster-aid efforts. Student loans should be forgiven, but they were not designed to be; PPP loans very much were. It is better to conceive of the PPP loans as a mass bailout absent means-testing, the type that cried out for far more federal oversight but may have saved the country. Despite the program’s waste and lack of focus, many deserving workers and businesses still managed to benefit.
It is ironic, in some sense, that it’s only the Republicans defending the $800 billion Payroll Protection Program passed in the earliest weeks of the COVID-19 pandemic (with strong support from House Democrats and Senate Republicans alike). At the time, the economy was teetering on the brink of a second Great Depression. Schools were closing, and city centers were emptying out. Restaurants, bars, gyms, hotels, and movie theaters were shuttered indefinitely. Business shutdowns never witnessed in modern times were underway.
In such dire circumstances, Congress had to act quickly. The PPP, signed into law by President Donald Trump, was designed to pump cash at a rapid clip into as many businesses in need as possible. The goal was simple: Prevent mass layoffs.
Acting in such haste, lawmakers created a bailout fund that was easily exploited by nefarious actors. Two-thirds of the $800 billion ended up in the hands of business owners and shareholders. A postal-service employee received an $82,900 loan for a business called “U.S. Postal Services.” A man in Georgia spent $57,000 in PPP loans on a rare Pokémon card. And Tom Brady’s company took out an enormous PPP loan of almost $1 million, feeding into the perception that the ultrawealthy were getting fat off of pandemic aid.
The reality was much more complicated, though. The PPP did, as its critics argue, create remarkable opportunities for fraud that the U.S. government will be prosecuting for years to come. But it saved many, many small businesses, especially those in Democrat-run states and cities, where pandemic precautions were taken most seriously. New York, Los Angeles, San Francisco, and Chicago would have suffered small-business apocalypses without PPP loans as coffee shops, restaurants, bars, and gyms quickly ran out of cash and closed permanently. Considering the unprecedented nature of the bailout, it worked better than expected. Within one month of being approved, companies that got loans had an average head count 8 percent higher than comparable businesses that didn’t, according to a Bureau of Labor Statistics study. After seven months, their work forces were still 4 percent larger, maintaining this advantage even as hiring nationwide began to bounce back. Businesses that received a loan from the program were 5.8 percent less likely to close within one month after receiving the money and 3.5 percent less likely to do so within seven months.
But the PPP was not efficient enough, and too many wealthy actors benefited at the expense of working-class staff. The lesson for the next catastrophe is to build in more oversight or to directly subsidize the payrolls of smaller businesses for a limited amount of time — as Denmark did. The urgency with which Congress acted, however, was entirely correct and a rare example of the U.S. political system reacting swiftly to an existential crisis.
Without the PPP, enhanced unemployment benefits, stimulus checks, and other bailout measures, the U.S. would have been in absolute free fall — with the pandemic eviscerating a great amount of employment and income. Instead, the economy stabilized. Today’s worries about inflation, while understandable, pale in comparison to the alternative: an employment picture on par with the 1930s. We should remember that it took a full decade, if not longer, to climb out of the last depression. No one wants to live through that again.