The big anger of the moment is that Ruth's Chris, Shake Shack and Potbelly have gotten loans under the Payroll Protection Program or PPP. The PPP was designated for small businesses which are those with fewer than 500 employees. Congress, however, put an exception for restaurants in the law that allowed those with no more than 500 at any one location to be included in those eligible for loans. That's how larger public companies the three mentioned above got those loans. This wasn't favoritism for big business, despite what the screamers on the left are now screaming. It was completely in accord with the law that Congress passed unanimously. Let me say that again; it passed unanimously. Every Democrat and every Republican voted for this. It is not some sort of slippery move by the Trump administration, no matter what the screamers are saying today.
The point of the exception for the restaurants was put into the law because it was understood by Congress that restaurants would surely be crushed by the corona virus since they were all ordered to be closed indefinitely. Many larger chains had multiple locations and the idea was to try to make sure that employees at these locations were able to stay on the payroll instead of going on unemployment.
As often is the case with government programs, there were some crafty people who took advantage of the way the law was drafted. That's certainly what happened with Ruth's Chris. That company borrowed 20 million dollars even though the maximum loan is 10 million under the PPP. Ruth's Chris took loans out under the names of two different subsidiaries so it got double the maximum. Because the company is so much larger than the expected borrowers, it also didn't get enough to keep the workers all paid. As a result, Ruth's Chris furloughed most of its employees despite getting the loan. It still has enough people on the payroll to use the loan for paying salaries, but this really wasn't the kind of situation that was intended when the PPP was passed.
One thing we do know, though. The large restaurant chains are nearly all public companies. As such, they have to announce when they get this sort of loan. Thus far, the only companies to make such and announcement are the three mentioned at the beginning of this article. That means that $40 million out of $350 billion has gone to the bigger restaurants. If we assume that the number is actually ten times higher, then it's 400 million out of 350 billion, or just about one tenth of one percent that got distributed in this way -- and the number is likely not that high.
What gets me, though, is not that this sort of cash went out in an unintended manner. It's the government; every time they spend, cash just leaks out in ways that weren't expected. I'm bothered by the nonsensical outcry. If you watch MSNBC, you would think that the payments to Ruth's Chris were some sort of nefarious plot by President Trump. Even worse though, are the complaints being made now by various Democrats in the House and Senate who are also blaming the administration. These are the people who VOTED for this law. They set up the rules, and now they're trying to blame others when those very rules are followed.
This relatively tiny leak of PPP funds in accordance with the law passed by Congress is now being used by the Democrats to try to explain why they continue to block additional funds for the millions of other workers who should be getting funds under the PPP. It won't fly. Simply put, this is total BS. If you boil it down, what the Dems are now saying is "We're unhappy that a tiny percentage of the money we thought would go to workers at small businesses went to larger restaurants instead, so now we won't give more money to the workers at small businesses. We're going to freeze them out until their employers go under."
It's crazy.
The point of the exception for the restaurants was put into the law because it was understood by Congress that restaurants would surely be crushed by the corona virus since they were all ordered to be closed indefinitely. Many larger chains had multiple locations and the idea was to try to make sure that employees at these locations were able to stay on the payroll instead of going on unemployment.
As often is the case with government programs, there were some crafty people who took advantage of the way the law was drafted. That's certainly what happened with Ruth's Chris. That company borrowed 20 million dollars even though the maximum loan is 10 million under the PPP. Ruth's Chris took loans out under the names of two different subsidiaries so it got double the maximum. Because the company is so much larger than the expected borrowers, it also didn't get enough to keep the workers all paid. As a result, Ruth's Chris furloughed most of its employees despite getting the loan. It still has enough people on the payroll to use the loan for paying salaries, but this really wasn't the kind of situation that was intended when the PPP was passed.
One thing we do know, though. The large restaurant chains are nearly all public companies. As such, they have to announce when they get this sort of loan. Thus far, the only companies to make such and announcement are the three mentioned at the beginning of this article. That means that $40 million out of $350 billion has gone to the bigger restaurants. If we assume that the number is actually ten times higher, then it's 400 million out of 350 billion, or just about one tenth of one percent that got distributed in this way -- and the number is likely not that high.
What gets me, though, is not that this sort of cash went out in an unintended manner. It's the government; every time they spend, cash just leaks out in ways that weren't expected. I'm bothered by the nonsensical outcry. If you watch MSNBC, you would think that the payments to Ruth's Chris were some sort of nefarious plot by President Trump. Even worse though, are the complaints being made now by various Democrats in the House and Senate who are also blaming the administration. These are the people who VOTED for this law. They set up the rules, and now they're trying to blame others when those very rules are followed.
This relatively tiny leak of PPP funds in accordance with the law passed by Congress is now being used by the Democrats to try to explain why they continue to block additional funds for the millions of other workers who should be getting funds under the PPP. It won't fly. Simply put, this is total BS. If you boil it down, what the Dems are now saying is "We're unhappy that a tiny percentage of the money we thought would go to workers at small businesses went to larger restaurants instead, so now we won't give more money to the workers at small businesses. We're going to freeze them out until their employers go under."
It's crazy.
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