Recommendations to improve the CARES Act
In light of the economic damage caused by Covid-19, the House of Representatives and Senate passed the CARES Act to help struggling businesses and employees. Some of the measures implemented included stimulus checks, loans to corporations, and the Payment Protection Program.
The CARES Act allocated a sizable chunk of money allocated to loans for businesses, but controversially included $454 billion in corporate loans. Many have bemoaned that most corporations did not require the money to survive. Additionally, the process of giving the money was heavily scrutinized, as many pointed politics played a role. For example, Clay Lacy, who operated a small airline company in Los Angeles, donated the maximum to Donald Trump’s campaign and received a sizable loan of $27 million. In fact, more than $30 billion were returned by corporations after taking money from PPP. Some of these corporations include the Los Angeles Lakers, Nathan’s Famous, and Shake Shack. The PPP aimed to help small businesses pay employees, not finance corporations. However, the SBA, who supervised the program, did not ask them to return the money; only after public outcry did the corporations return the money
In my opinion, the CARES Act committed a grave mistake in directly loaning the funds to corporations. The process did not allow for enough oversight over the loans. Corporations possessed the ability to use the corporations from raises for executives to payments for struggling employees. Instead, the CARES Act should have given money to corporations for the sole purpose to replace the salaries of affected workers. This would prevent loans from being misused. Additionally, this would simplify the process for helping affected workers, as they would not have to apply for unemployment benefits.
Additionally, the CARES Act required a greater focus on small businesses, who were affected most severely. To help small businesses pay their employees, the CARES Act established the Paycheck Protection Program, also known as the PPP. The PPP gave about $670 billion in loans for small businesses to pay their employees. However, small businesses needed more money. There is a need for a program to help small businesses owners pay for their utilities, insurance, and the rent. With money mainly given to help pay the employees, it is easy to see how owners would struggle to deal with other expenses. In fact, more than 80% of restaurant owners said they believed they could not survive the crisis. I believe some of the loans given to corporations should have instead been given to found a new program that helped small business owners deal with expenses outside of paychecks. Many owners have to deal with deep cuts in revenues due to lockdowns, and the need exists for such a program.
