Members Of Congress Receive COVID-19 Small Business Loans
Above photo: CARES Act from Hall Benefits Law.
Members of Congress obtained disaster loans for their businesses through the Small Business Administration’s Paycheck Protection Program (PPP).
According to news reports, Texas Representative Roger Williams and Missouri Representative Vicky Hartzler both received PPP loans for companies they own, indicating a clear conflict of interest regarding the program’s distribution of federal aid.
Roger Williams Chrysler Dodge Jeep told the Dallas Morning News the dealership received a PPP loan.
“We applied through our local bank and have been able to keep over 100 employees on payroll and prevent their families from experiencing further hardships during this unprecedented pandemic,” the company said in a statement. The dealership did not specify the loan’s amount and Williams did not respond to repeated requests for comment for this story.
“This is a man who used his position of power and influence to get into that two-week window,” said Julie Oliver, his general election opponent. She told Shadowproof his wife and children are employed by the dealership. “Were they the beneficiaries of PPP to the detriment of small businesses in our district?”
Williams’ most recent financial disclosure report indicates his wife makes nearly $80,000 annually from the dealership.
In Missouri, Hartzler’s husband, Lowell Hartzler, applied for PPP loans for the family’s businesses.
“As small business owners, my husband Lowell and I…took action to ensure the continued ability to maintain the employment of all team members during this time,” Hartzler said in a press release on her website. “Like millions of small businesses across the country and nearly 47,000 small businesses in Missouri, our family businesses applied for and received PPP loans to ensure our employees could remain employed and the business could pay expenses.”
Hartzler did not clarify which businesses were granted the loans and for how much.
Her most recently filed financial disclosure report from 2018 indicates that Hartzler’s family owns farms and a tractor company.
Hartzler defended her decision to not support a ninth congressional oversight committee for the Coronavirus Aid, Relief, and Economic Security (CARES) Act. She said she already supported three other such committees.
The congresswoman did not respond to repeated requests for comment.
‘We Haven’t Even Gotten A Response To Our Application’
Under the CARES Act, the PPP is designed to help small businesses (those with 500 or fewer employees) and businesses in some industries with more than 500 employees maintain their payrolls and pay other expenses like rent, mortgages, utilities, and interests. These loans do not need to be repaid if the company keeps its staff on payroll for eight weeks.
Members of Congress receiving PPP loans for their businesses raises questions about favoritism in the process. Transparency about which companies are receiving these loans is crucial.https://t.co/BAvlOD8Bpw
— Citizens for Ethics (@CREWcrew) May 4, 2020
Williams has an average net worth of roughly $67 million and is one of the richest members of Congress, according to the Center for Responsive Politics.
Hartzler’s net worth is more than $9 million, and she is one of the top 100 richest Congress members.
While Williams and Hartzler secured disaster loans, many small businesses are still struggling to obtain relief.
“We haven’t even gotten a response to our application for our very small business. Crickets,” Deborah Smith Photography said in a tweet.
More than 30 percent of small businesses have yet to receive to PPP assistance, according to a recent U.S. Census Bureau survey of 90,000 small businesses.
Small business owners have reported website glitches, application submissions falling on deaf ears, and too many rigid rules that won’t help keep their companies afloat.
Corporate behemoths, however, have been able to access PPP funds. That includes corporations, who have representatives’ spouses on their payroll.
Fiesta Group Inc., a publicly traded company, received two federal loans totaling $15 million in April. Robert Powell, who is Florida Representative Debbie Mucarsel-Powell’s husband, is the vice president for legal at Fiesta Group.
According to Securities and Exchange Commission (SEC) filings, Fiesta Group returned the monies after fervent public backlash.
Seventy-four members of Congress (including Williams and Hartzler) own businesses or have relatives or spouses who own businesses. These businesses—large and small—range from farms, ranches, real estate and marketing agencies, automotive dealerships, construction companies, law, consulting, and investment firms, manufacturers, and even salons, distilleries, plumbers, pharmacies, and dentistry practices.
The list of members includes representatives and senators with an estimated net worth topping $20 million and reaching into the hundreds of millions of dollars, like Senator Dianne Feinstein (D-Calif.), Representative Rick Allen (R-Georgia), Representative Markwayne Mullin (R-Oklahoma), and Representative Vernon Buchanan (R-Florida).
Of this number, only 14 of them responded to repeated inquiries stating that they did not apply for federal loans, including those with considerable wealth: Representative Don Beyer (D-Virginia), Representative Buddy Carter (R-Georgia), Representative Scott Peters (D-Calif.), Senator Mike Braun (R-Indiana), Representative John Rose (R-Tenn.), and Representative. Jim Costa (D-Calif.).
The CARES Act does contain a conflict of interest provision prohibiting members of Congress or their immediate families from receiving aid. However, as detailed in a House Ethics Committee memorandum released in April, this clause is only restricted to emergency relief funds.
“The prohibition in § 4019 of the CARES Act is limited to the emergency relief funds described in § 4003. Thus, members or businesses in which members or certain individuals in their immediate family have an ownership interest may be able to apply for assistance under other parts of the CARES Act, such as the Paycheck Protection Program,” the memo reads.
This subtle loophole has permitted lawmakers like Williams and Hartzler to circumvent potential conflicts of interest and access government relief.
Both the Ethics Committee and the SBA declined to comment.
Bill Proposed To Make Loans To Elected Officials Public
In response to politicians and corporations benefiting from the program, Representative Katie Porter (D-Calif.) introduced legislation this month to make PPP data public.
“Full transparency of PPP data is the only way to quickly and fairly show who is using this program to line their pockets,” Porters declared.
Just a couple days before her announcement, Porter criticized Williams for taking out a loan and called for greater transparency of the relief program.
“His estimated net worth is in the tens of millions, but he still took out a PPP loan for his car dealership instead of chipping in to keep workers on the payroll,” Porter wrote in an editorial for NBC News. “Williams could afford to pay his workers for months and still be in the richest 1 percent of Americans, but instead he’s passing those costs onto taxpayers.”
Oliver commended Porter on her proposed bill. “If we don’t have that measure of accountability and transparency, then the questions can be asked,” Oliver added.
As the famous saying by historian John Dalberg-Acton goes, “Power tends to corrupt, and absolute power corrupts absolutely.” And so, without a clear check on power, political corruption runs wild.
Jessica Buxbaum is a freelance journalist currently based in Los Angeles, California. Her work has appeared in Supermaker, The Independent, Prospect Magazine, and several other publications.