It’s February 17, 2021 and welcome to First 100. You can sign up to receive First 100 by email by click here.


Joe Biden did a neat job at a Milwaukee town hall last night, demonstrate empathy and reasonableness that is completely at odds with the way the work was done in the past four years. Politically, there have been a few flashpoints. Biden will get a lot of heat from the left for rejection of the cancellation up to $ 50,000 in student debt (while accepting his campaign promise of a token $ 10,000 cancellation) and saying “I don’t think I have the power” to do it by decree.

By grouping debt cancellation with “the people who went to Harvard and Yale,” Biden employed a diversion tactic that does not reflect the overwhelming majority of student borrowers. According to a Color of Change Survey, 56% of black voters have student debt, more than half of which is well over $ 10,000. And it keeps them from owning a home, moving to a better neighborhood, or even retiring. Dismissing full scale debt cancellation is really a matter of racial justice.

But I do not want to dwell on this question today, because another has passed without much notice. And that’s a testament to poor implementation by Team Biden that they need to fix, for the future of the economy and our society, really.

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Biden answered back-to-back questions from small business owners. The former was concerned about a minimum wage of $ 15 an hour, and Biden decked it out pretty well, even pushing down this CBO report showing more unemployment due to the wage hike than other studies. Then the owner of Black Husky Brewery, which saw its activity drop by 50%, addressed the microphone.

“We have relied mainly on loans, grants, as well as our own reserves to survive,” said owner Tim Eichinger. “However, the new aid has been too slow, and recently it has become more restrictive on how we can apply it. What will you do to ensure that small family businesses like ours outlast large businesses?”

Biden began to explain how banks did not approve Paycheck Protection Program (PPP) forgivable loans for those with whom they had no existing relationship, and how Donald Trump did not want Inspectors General. dig into the program, and as a result “40 percent of the money” went to “multi-million dollar corporations,” much of it fraudulently. Biden’s PPP loans, he said, would go to “mom and pop businesses that keep communities together.”

This does not respond to the main complaint that the new assistance, mostly under Biden’s watch, has been too slow. And to a large extent it is because of this obsession with fraud.

The definition of small business in the CARES Act and subsequent bills is a business with 500 or fewer employees. For chain restaurants and hotels, this could be 500 employees at each location. This is how Congress drafted the bill. Due to the urgent needs of closed businesses with no cash flow, PPP was designed with minimal subscription to withdraw cash quickly. This meant that there would be a lot of “fraud”, although the definition of fraud expands to include “some businesses get help that I don’t like”.

There has certainly been some actual fraud, such as using PPP to buy luxury cars and a mansion. There was also double dipping, like Ruth’s Chris Steakhouse using two branches that each peaked on a $ 10 million loan. But the fancy car guy got arrested and Chris de Ruth returned the money. A bunch of other companies have been hounded by a new cottage industry fraud hunters and returned relief, which led to layoffs of their staff, who were not scammers but poor crooks who worked for targeted companies.

The Inspector General of the Small Business Administration has identified 55,000 “potentially” ineligible loans worth $ 7 billion, for an initial outlay of more than $ 500 billion. That’s less of a 1.4% error rate, and in return, the companies that really needed the money got it fast.

We now see the flip side. Due to the outcry over fraud, the December relief bill added significant anti-fraud measures to the 285 billion dollars in recovery of PPP. And that was predictable slowed down the process. The SBA implemented a validation system for loans, which stopped relief due to error messages or withholding codes on 30-50 percent of claims, according to the Consumer Bankers Association. Some companies have been waiting for weeks. More worryingly, homeowners with a history of bankruptcy or criminal records receive “false positive” flags despite being fully eligible for the program. This could correlate with minority-owned businesses, given the incarceration statistics in this country.

Trying to target fraud upstream seems like a bad idea. At present, the SBA has issued $ 125.7 billion in PPP loans in 2021, well below half the money available after several weeks of operation. (In fairness, this has accelerated over the past week.) For some businesses, a second PPP drawdown or a first loan they couldn’t get earlier equals survival. But the anti-fraud mania has kept that relief out of reach and has harassed tens of thousands of businesses. I guarantee it costs the economy more than that $ 7 billion in potential fraud to deny PPP loans and create closings, on top of spending hours of work churning loans through the system.

In addition, the $ 15 billion “Save Our Scenes” relief for independent live entertainment venues included in the December bill has not yet paid a dollar. This is separate from PPP but also managed by the SBA as a grant program, the first real grant in their history. And the SBA just doesn’t have it operational, weeks after going through Congress. These businesses do not have the option to reopen at this time and generate income as the bills are piling up. But again, preventing ‘undeserving’ places from accessing relief appears to be a concern. “Even if the money is going to flow at some point, we don’t know when,” said Audrey Fix Schaefer of the National Association of Independent Cinemas, a pop-up coalition of site owners who was the main driver of Save our steps. “If you need oxygen and someone tells you help is on the way, until you get oxygen you can’t breathe.” NIVA raises funds to help keep sites alive.

Last Friday, the SBA released a frequently asked questions document on what is officially called the Shuttered Venue Operators Grants program, with lots of verbiage about eligibility and proper use of funds, but nothing about when the request will be ready.

I spent the last two days balustrade to libertarian types who use implementation concerns in times of crisis to advance their political agenda to abolish regulations. But it is true that not all regulations are well designed, especially in times of crisis. In this case, SBA is a particularly bad federal agency which is in desperate need of reform, and the galloping media discourse on fraud is hampering the ability to expedite relief.

Biden ran on the skill. Most people are concerned about the new legislation, but the implementation of the existing law is the job of the president. Getting it right will determine the survival of small independent businesses. They don’t care as much about the fraud as they are about getting the relief that will allow them to pay the rent and their employees. Biden blew it up with that answer, and SBA needs to pull it together or the black hole of small business closures will get bigger.

What day of Biden’s presidency is it?

Day 29. Biden is meeting with union leaders today over the COVID relief plan and a future infrastructure bill.

Today i learned

  • Retail sales jumped 5.3% in January, after the distribution of checks for $ 600. (Calculated risk)
  • Winter storms in most of the country causing “widespread delays”In vaccine shipments and deliveries. (Washington post)
  • What exactly is Silicon Valley supposed to do for help with vaccine distribution? Google offers free ads? Seriously? (Politics)
  • The Texas Weather Crisis gives Biden an opportunity to talk about energy improvements and debunk the false argument that these were frozen wind turbines. So far, this is a missed opportunity. (Politics)
  • Dr Fauci pushed back his estimate free access to vaccines until May; earlier he had said April. (Axios)
  • Max Sawicky in the Biden team end the era of austerity. (Jacobin)
  • A group of scientists want the CDC update labor standards to account for the fact that COVID-19 can spread through the air. (New York Times)
  • Whether to prosecute Trump is a Department of Justice and not a White House decision. (Memo on talking points)
  • Biden plans to bypass the MBS in Saudi relations. (The HuffPost)


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