Government bashers, how do you explain this?
Remembering how we made it through COVID
To those who rail that government itself is the real problem, I summon a single letter repeated three times:
PPP
Remember the Paycheck Protection Program? It’s fair to say this federal initiative yanked the nation back from a plunge into another Great Depression, saving millions of jobs, keeping many people afloat.
Along the way, it rescued Cape Cod’s economy.
Larry Drago, who with his wife Laurie founded BizChecks Payroll in Marstons Mills, works with about 1100 Cape businesses, 90 percent with 20 or fewer employees. So he has a great, maybe unique perspective:
“When COVID hit (March 2020), of those 1100 or so businesses, 300 of them stopped processing payroll completely,” he remembers. No one knew when people would get back to work, if there would be work. He uses the example of a plumbing business:
“Ten guys on payroll, the owner has spent his whole life building a business, and now no one is going into anybody’s house, they can’t fix anything. How long will it last? Two weeks, two months, two years?
“The government had to act, and act quickly, or the result would have been catastrophic.”
PPP launched at breakneck speed — by government’s pace. Local lenders like Cape Cod Five, Cape Cod Cooperative, and Seamen’s Savings were at the front lines, channeling a torrent of applications. Many mega-banks from off-Cape first-served their major customers, skewing the program away from those who needed it most. But not here.
“At least 70 percent of the businesses I work with got funding, and it saved them,” Drago says. “I’m not being overly dramatic.”
David Troutman at Scargo Café in Dennis has a somewhat different perspective. Scargo is a well-established, well-loved restaurant seating 120 people, year-round payroll of 75 employees (that translates to around 52 full-time equivalents), serving lunch and dinner seven days pretty much every week of the year.
“It certainly helped us,” he says, “and helped a lot of businesses. But I would say that many, like ours, were going to survive anyway. I wouldn’t have been crushed.”
He didn’t have to test that resilience without a buffer. Troutman used public support to invest in a brick terrace and “igloos” — “expanding outside dining was the only way to survive.” He offered “heroes’ pay” to people in the kitchen, bonuses to managers.
“We weren’t doing 600 dinners a night, but over time I was able to recoup the money I invested,” he says, and now the restaurant is strong as ever.
He saw chef-owned mom-and-pops forced to close, sometimes unable to navigate the PPP paperwork. He also saw business people who used the moment to make a long-anticipated move: “People getting close to retirement took that nice check and cashed out.”
Doing so and cutting jobs undercut the intent, in theory disqualifying them for “forgiveness,” which turned the “loan” into a freebie. But in practice almost all loans were forgiven; national figures compiled by the news organization ProPublica show that an amazing $790 billion of PPP money played out, with $757 billion written off.
Restaurant were earliest in, which shored up the Cape. Non-profits also are a major driver here, and they too used PPP to great advantage.
Anne Scott-Putney, president and CEO of Heritage Museum and Gardens in Sandwich (“the largest cultural attraction on Cape Cod next to the National Seashore”), remembers that “PPP enabled us to keep staff employed,” meaning 32 year-round jobs with 35 seasonal. Her advantage was being an outdoor attraction, minimizing possible contagion:
“Keeping the gardens open felt very important, to offer people a place that felt comfortable, familiar, and safe.”
Heritage had been hosting 130,000 visitors a year, which dropped by 40 percent during the pandemic:
“But the other way to say that is 60 percent came. And as soon as we were able to open the buildings, we did. First came the café, then gift shops, then the museums.”
Holding jobs meant payrolls circulated; economists call this “the multiplier effect” as dollars move through supermarkets, gas stations, restaurants, retail. Those who argue that PPP was too expensive often don’t take this broad grassroots spread into account.
Was it perfect?
Of course not.
Would it have been better if more of the “loans” were repaid by businesses that weren’t pushed to the brink?
Sure.
Did people take advantage, even defraud the government?
Yes, especially when the Employment Retention Credit kicked in — though the same could be said for pretty much every worthy public (and private) economic initiative ever created.
Did it create inflation?
Debatable, certainly possible. Even if it did, compared to the alternative — a catastrophic Depression — that’s a trade to make.
Considering what PPP averted, as part of the broader CARES Act, Cape Cod Chamber of Commerce’s CEO Paul Niedzwiecki, not prone to hyperbole, says this:
“That legislation should be put on a par with the Social Security Act. It truly saved the nation.”
But that never will be recognized by those who prefer to demonize the public sector, like the woman who showed up at a protest carrying a sign that read,
“Keep government out of my Medicare!”
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This gives the lie to Reagan's famous negative quote about government -- "I'm from the government and I'm here to help." Always interesting to me that when some kind of a disaster hits, economic or nagural, the naysayers about government always have their hands out for help.
There was also federal grant funding available for rents, mortgages and landlords that was significantly increased during COVID. All the Cape Codders that I helped to apply for this complain about government involvement and vote republican. Most of them also receive SNAP food benefits and Medicare/Medicaid.