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Additional COVID-19 stimulus should be reserved for those who need it

In this March 27, 2020, file photo, President Donald Trump signs the coronavirus stimulus relief package in the Oval Office at the White House in Washington.
Evan Vucci, Associated Press

Senate Majority Leader Mitch McConnell has adjourned the Senate until Nov. 9, thereby delaying any further potential COVID-19 spending bills until after the election. But President Donald Trump continues to promise even more stimulus. “After the election, we’ll get the best stimulus package you’ve ever seen,” Trump said last week.

When it reconvenes, the Senate may consider reauthorizing the federal Paycheck Protection Program — a move that would put another $257 billion in taxpayer dollars on the line, according to the latest version of the bill. The Paycheck Protection Program (PPP) is supposed to grant small businesses loans worth up to $10 million. It also converts the loans into forgivable grants if a recipient business maintains its workforce and rehires employees, or spends the money on rent, payroll or other eligible purposes.

In other words, the loans become expenses borne completely by federal taxpayers.

After the program’s original $349 million ran out in under two weeks, Congress injected another $310 billion into it. And if the PPP’s second go-around is as messy as its last one, substantial taxpayer dollars will go to those who don’t need it. “At least 94 companies that disclosed receiving aid since the program opened April 3 were publicly traded,” some with market values “well over $100 million,” The Associated Press reported.

We also know four members of Congress, at minimum, benefitted from the Paycheck Protection Program they passed.Rep. Roger Williams, R-Texas, for instance, gave his own North Texas car dealership “a forgivable loan valued between $1 million and $2 million,” according to the Dallas Morning News.

Taxpayers are also learning that several large law firms received PPP money and could potentially net billions of dollars in fees during the pandemic and recession. Morgan & Morgan got at least $9 million in PPP loans. “At the same time as it apparently received the federal loans, Morgan & Morgan boosted its advertising from an estimated $50,000 a day to over $300,000 a day” in an effort to “recruit clients to sue other businesses over the COVID-19 crisis,” Legal Newsline found.

The Public Justice Foundation (PJF) is also involved in various COVID-19 workplace liability lawsuits. It received between $700,000 and $2 million in PPP loans granted to its nonprofit division and legal division. Firms like PJF are lobbying against liability shields intended to protect companies from frivolous COVID-19-related liability lawsuits. In a particularly high profile case, the firm is representing Amazon workers who are suing that company over failure to adhere to safety measures.

Elsewhere, two firms are representing Chicago-based McDonald’s workers in a safety-related lawsuit. One received between $350,000 and $1 million in PPP loans and the other has received between $150,000 and $350,000 in taxpayer-backed loans.

Other firms that also received hundreds of thousands of dollars in PPP loans include Warren & Griffin PC, which is representing a former Engineered Floors LLC worker in a wrongful termination lawsuit, and Haeggquist & Eck, which is acting on behalf of workers suing Central Valley Meat Company over working conditions. Napoli Shkolinik PLLC, which received $1-2 million in PPP loans, even describes itself as the “national coronavirus lawyers.”

To be clear, many of these cases have, or could have, merits. And plaintiff firms often perform important work in representing those who are truly hurt by the negligence or misconduct of their employers. A company’s obligations toward its workers don’t end simply because of a pandemic.

But taxpayers can and probably should ask: “Are these firms actually struggling as much as small businesses that needed federal funding to keep the lights on?”

If emergency government assistance during the coronavirus pandemic is purported to be for those who truly need it, there has to be meaningful criteria for establishing financial need. Those who are doing fine financially — and may even stand to make a windfall during these times — certainly do not meet the criteria. If the government cannot correctly classify or identify financial need, then that’s yet another reason to reconsider this use of taxpayers’ money.

All this is happening at a time when national debt has risen well above $27 trillion, a whopping $226,767 for every American household. Thanks in part to stimulus spending, the federal budget deficit hit $3.1 trillion in fiscal 2020, more than double the previous record.

Taxpayers should be leery of any post-election stimulus spending bills. It would be unconscionable for Congress to bring back the PPP program in its current form and any additional money for the program needs, at minimum, a stronger vetting system for the businesses and industries that stand to benefit. Our children and grandchildren will be footing the tax bill for it over the course of their working lives. They deserve far better.

Satya Marar is a policy analyst at Reason Foundation and a contributor at Young Voices.