The Backlash Against PPP Is Why the U.S. Can’t Have Nice Things

Democratic leaders, however, were much warier than Mnuchin, and during the early stages of pandemic-relief planning argued for means testing, making sure that only the neediest Americans received money. This may well have been good politics, because it played defense against caricatures of tax-and-spend liberalism and appealed to widespread public beliefs that government budgets are bloated by waste, fraud, and abuse, but it was dubious policy.

For one thing, as Eric Schnurer wrote in The Atlantic in 2013, there really isn’t that much waste, fraud, and abuse in the system. For another, means testing threatens to undermine the point in this case. It’s wise to be concerned about benefits accruing disproportionately to the wealthy—but that’s a matter for broader, more deliberate changes in policy, not for a crisis. “In (very rough) figurative terms, Pelosi was evincing a preference for allowing some of those drowning to go without life preservers, if that’s what it took to prevent wasting preservers on those who were perfectly capable of swimming to shore on their own,” Eric Levitz wrote at New York magazine.

The question of politically unpalatable but eligible businesses receiving money under PPP is separate from actual fraud. The Trump administration’s efforts to stifle oversight of the PPP money and circumvent inspectors general raise alarms, but legal recipients are legal recipients. Some businesses may have provided false certifications, or failed to live up to the terms of the program, but that’s not the focus of the current backlash.

Also, much is still unknown about the government response to the pandemic, just as not all of the flaws in the response to the 2008 financial crash were immediately plain. Some of the problems are already emerging, though. Many businesses were unable to obtain PPP funding, at least initially—especially ones owned by people of color.

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But the problem there is less a lack of money than a lack of political will. In other words, the issue is less that Ruth’s Chris got money that Acme Neighborhood Restaurant should have gotten, than that Congress should have appropriated, and still should appropriate, more money in stimulus so that any eligible business could receive a loan promptly. The government’s ability to spend in this situation is really only constrained by its own imagination.

Even with these flaws, the stimulus so far has gone pretty well. Many Americans are hurting, and not every small business got the money it received—but the spending gave the economy a shot in the arm. As Tom Gara writes, the first rounds have helped prop up the economy, but several key programs are due to run out soon.

The danger of this kind of naming and shaming is that it will imperil the government’s next round of stimulus. If businesses are afraid of political backlash, they might not take government funds, and instead make deeper cuts. (It doesn’t matter whether a given institution “should” find money elsewhere, but whether they will.) If Congress is afraid of backlash, it may narrow its future stimulus efforts—which already seem grievously small—wagering that potential pain in the form of a prolonged recession is easier to pass off than acute pain in the form of political controversy. The backlash against a successful government program is why the United States can’t have nice things.

David A. Graham is a staff writer at The Atlantic.