There's a hard reality that is rolling out of the coverage of the federal government's Paycheck Protection Program. And that reality is not that companies such as Ruth's Chris Steak House got money that they are now giving back. Nor is that reality the hard-to-accept fact that entities such as Ashford Inc., a Dallas-based hotelier that's a publicly traded company, received $126 million and so far says it has no intentions of rebating those funds back to the folks in Washington.
The hard reality about the program and other government efforts to ride to the rescue in this crisis is that even when it comes to the federal government, there are limits to what can be done. The $2.2 trillion rescue package signed into a law a few weeks ago was rushed through Congress by a desire to act quickly, as people were losing their jobs in the face of the coronavirus pandemic. And that's fair enough. But the thinking then was that there wasn't time to debate the finer details, nor was there time to figure out how it all might play out. This was an emergency, and what was needed was a strong government intervention enacted into law immediately.
At the time, we noted that even the feds couldn't spend trillions both quickly and effectively. Alas, what we got was a government program that directed money to millions but may also widen the gulf between average Americans — many of them either own small businesses that weren't able to initially get PPP forgivable loans or who work for such companies — and those Americans who run or work for large, well connected firms. That's to say nothing of the well-heeled lobbyists.
Of course, it should be surprising to only those who live under rocks that larger companies with teams of accountants and strong relationships with banks would be well equipped to successfully apply for government-backed loans. Nonetheless, with outrage growing out of a realization of where the money was actually going, Congress authorized another tranche of funding for the Paycheck Protection Program.
Our point here isn't to side with those turning against larger companies that captured a share of the money they were legally able to apply for. Nor is our point to justify large companies taking the money. Rather it is to point to something bigger that seems to be lost in the debates over forgivable loans.
There are times when only the government can act, but those actions have limits and often unforeseen consequences. We'll have trillions in new debt after all of this is over. We may also see resentment grow within the ranks of the public regarding who benefited from one program or another. And in the end, what will be key to both our prosperity and civic comity is a form of success that's outside the reach of Congress.
We urged Congress to break this relief package into smaller bills that could get more sunlight. Taking a little more time to hammer through this legislation could have avoided some of this mess and made it more likely that more money would reach those for whom it was intended.
Now, the action that was taken is leaving many with a bitter taste for how the program was run initially. Even as it has helped millions, it has left many others wondering why the money ran out before help reached them.
That bitterness was likely inevitable because the private economy is larger than even the federal government can sustain for long. What's needed for our long-term success is for private employers to create value for customers and for average Americans to make decisions that enable them to be self-supporting. We need philanthropy, we need compassion within our governmental policies and programs, but what makes all of it possible is a thriving private economy. There is no getting around the hard reality that our friends in Washington will not be able to do for Americans what American ingenuity can do for our country.
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