For richer and poorer, Uncle Sam's coronavirus response widened the gulf
1 / 9WASHINGTON — For two decades, Jeff Esaw of Stratford, Connecticut, has been serving up Southern barbecue to the gastronomes of elite hideaways dotting the state's coastline.
Brant, a paper-mill magnate who recently sold a Jean-Michel Basquiat painting from his collection for more than $100 million, said the paycheck protection loan — designed to help struggling small businesses meet payroll during the pandemic — was handled by the limited liability company's chief financial officer, Jack Field, who also signed for the loan on the Palm Beach estate.
The Fed's moves clearly widened the gulf between rich and poor, said Casey B. Mulligan, the former chief economist for Trump's White House Council of Economic Advisers. The aid legislation passed by Congress and signed by Trump reinforced systemic barriers to government programs, perhaps unintentionally, according to several lawmakers, think tanks and at least one internal administration watchdog.
Washington's lifelinesTrump and lawmakers from both parties are quick to credit themselves with splurging to provide aid to Americans who lost their jobs or were in danger of losing them, as well as most middle- and upper-middle-income workers. And they did. For months, the SBA declined to identify any of the businesses that received loans from its program, which are fully forgiven if the recipients use 60 percent or more of the funds to cover payroll costs. But in June, under pressure from Congress, interest groups and the news media, the agency released a list of 661,218 businesses and nonprofits that got loans of $150,000 or more.
Despite the challenge of limited data from the SBA, experts who study the subject say there are both empirical and anecdotal reasons to believe that less-well-to-do business owners — often Black and brown entrepreneurs — suffered disproportionately and received less help from the government. Dan Eberhart, a Republican donor who owns several companies, said banks — which the government tapped to administer lending — were far more likely to tend to financially healthier borrowers, and to those who had borrowed from them before, in the early days of the crisis.
At the same time, there was something of a gold rush among well-capitalized investment firms, elite private schools, politicians and celebrities to take advantage of the broad eligibility rules for the program and push payroll costs to taxpayers. A Government Accountability Office report issued July 29 noted that one-third of the federal contract dollars obligated in response to the coronavirus through June went to 10 companies. One of them, Parkdale Mills, a privately held first-time contractor in Gastonia, North Carolina, bought out its minority stakeholder for $60 million less than a week after signing a $531.
"If they don't come around and they put us in the position where we have to close our doors, they will be effectively killing people," Gottlieb said in a telephone interview. Since then, the Fed has bought about $2.3 trillion in Treasurys and mortgage-backed securities and held the key interest rate in place. The Fed also bought billions of dollars in corporate debt from household-name companies like AT&T, UnitedHealth Group and Comcast .
Some of the facilities have been up and running virtually since the law was enacted, others are in their infancy, and more could be rolled out.
That is, the Fed isn't likely to use all of the authority it has to backstop corporate debt, encourage banks to lend and bolster the stock market — unless there's a resurgence of panic in the marketplace.
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For richer and poorer, Uncle Sam's coronavirus response widened the gulfExperts say there are strong reasons to believe less-well-to-do business owners have suffered disproportionately and gotten less help from the government during the crisis.
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