Chinese firms got millions of PPP bailout money. The Paycheck Protection Program (PPP) provided relief for struggling small American businesses. With a $660 billion fund, help came to those who needed it, and it also arrived at some unintended recipients. Somehow, millions of dollars of forgivable loans went to Chinese-owned companies.
PPP Bailout Money | Chinese Firms Got Millions in Coronavirus
Consulting firm Horizon Advisory reviewed available PPP reports and found some interesting data. According to them, around 125 Chinese firms received between $192 to $419 million in PPP loans. The firms are either Chinese-owned or invested in Chinese financing. Among the borrowers were 32 companies that received more than $1 million each.
Small Business Relief
With a $2.2 trillion fund, the PPP provided loans to eligible firms during the pandemic. To qualify, firms must be small businesses with fewer than 500 employers. If they used 60% of the money for payroll, with some for rent and overhead, the loan becomes a grant instead. A program this big and well-funded will attract a lot of attention. Publicly traded firms applied and got approval for loans. As these companies got called out, many returned the money.
With the rules open for some interpretation, the PPP may have allowed some loopholes. Among the gaps was allowing American subsidies of foreign companies to apply.
Horizon Advisory co-founders Emily de La Bruyère and Nathan Picarsic noted the PPP’s lack of safeguards. They said that the “extent and nature of P.R.C.-owned, -invested and -connected entities among the P.P.P. loan recipients indicate that without appropriate policy guardrails, U.S. tax dollars intended for relief, recovery and growth of the U.S. economy — and small businesses in particular — risk supporting foreign competitors, namely China.”
Previously: PPP Recipients Revealed, 51 Million Jobs Saved
Companies that availed of the bailout include Continental Aerospace Technologies and Aviage Systems. Both are part of the Chinese military conglomerate Aviation Industry Corporation of China. CAT received $10 million in loans, while Aviage got $350,000.
HNA Group’s US subsidiaries HNA Group North America LLC and HNA Training Center NY got $1 million each. HNA Group is a Fortune Global 500 that deals in real estate, aviation, and financing.
Another one is BGI Americas Corporation, a subsidiary of China’s gene-testing BGI Group. When called out, BGIAC returned the money.
Biotech firm Dendreon Pharmaceuticals received a loan worth $5 million to $10 million. Its parent company, Nanjing Xinbai, is a state-invested company with ties to the CCP. These are the same organizations that President accuses of stealing intellectual property.
Mobile payment firm Citcon USA LLC received $150,000 to $350,000 in loan money. Its major investor, ZhenFund has ties to Alipay and WeChat, which are also targeted by Trump.
Fixing The PPP Bailout Money Loopholes
Horizon Advisory acknowledges that loans to Chinese companies saved American jobs. Butt, they also noted that these companies may have access to other sources of capital.
With the pandemic still wreaking havoc in the US, Congress is working on a second relief package. Republican lawmakers have submitted a provision that limits Chinese participation in future bailouts. Businesses owned in part or full by Chinese companies are not allowed to apply for loans. The same applies to companies with a Chinese resident on the board of directors.
Chinese companies receiving American tax dollars to continue operating on US soil? Companies owned by the same group of people accused by the President of stealing IP? The same country the President blames for the origin of the virus currently damaging the US? The irony is thick in this situation. The already shaky Sino-US relationship is facing yet another test.
Watch this video about the PPP Bailout Money:
Do you agree that PPP and other relief efforts should exclude Chinese companies? After all, they opened American offices and hired Americans during a global pandemic. Then again, they seem to operate under their own rules, and China is a US rival and competitor. Share what you think by leaving your comments below!
Moore: Republican’s Newest Stimulus Bill Has Fundamental Flaw
Stephen Moore says the Senate Republicans got most of the newest stimulus bill right but believes that it contains a “fundamental flaw” and President Trump shouldn’t sign it.
Moore, a member of President Trump’s economic recovery task force and an economist at FreedomWorks, says the plan put forward by Senate Majority Leader Mitch McConnell “isn’t half bad” and will help get the country back on track. He also says that we can “take solace in the fact that the price tag is “only” $1 trillion” compared to the HEROES ACT passed by Democrats and Speaker Nancy Pelosi that totalled a whopping $3 trillion.
Moore provided his thoughts on whether or not he sees a benefit from what he calls the “major planks” of the plan.
Another Round of $1,200 Stimulus Checks
Moore gives a “thumbs down” to this aspect of the bill. He believes it is counterproductive and rewards inactivity. He says “Dropping free money into people’s pockets is no road to prosperity. This isn’t a stimulus, it is a redistribution of money from producers to non-producers.”
Additional Funds For The Paycheck Protection Program
Moore says “let’s wait and see” how this plays out. It’s important that the government be repaid for these loans, and they don’t become forgivable grants, says Moore.
Unemployment benefits are reduced to $200 per week until states create their own plans that pay up to 70% of previous wages.
Letting the $600 per week unemployment benefits expire was “essential” says Moore, who gives this initiative a “thumbs up.” He says the CBO (Congressional Budget Office) found that five out of six workers were making more money staying unemployed than going back to work. He also points to a study by Casey Mulligan at the University of Chicago that found the additional unemployment benefits would reduce employment by almost 10 million jobs by the end of the year. Moore says “There is NO jobs recovery if this policy continues. No backing down.”
Liability Protection for Schools, Businesses, Churches, etc. As They Reopen
“Thumbs Up” says Moore. He says businesses that reopen need to be protected from frivolous lawsuits should someone get sick. Without liability protection, the Committee to Unleash Prosperity found that at least 500,000 jobs would be lost.
$100 Billion To Help Schools and Universities Reopen
Moore gives this a solid “thumbs down.” He says at the moment, most public schools have announced that they won’t be reopening in the fall, so what do they need the money for? “Any federal funding for schools this year and next should only be for schools that are open FULLTIME.”
Education Freedom Grants To Cover Scholarships For Private Schools and Payments To Parents For Homeschooling
“I feel like I’ve died and gone to heaven,” says Moore. He gives this a resounding “thumbs up.” He adds, “This will give potentially millions of parents, mostly with low incomes, a chance to send their kids to good schools this fall. Distance learning is a failure for at least half of the bottom half of children; they need in-class instruction.”
100% Deductibility For Business Meals and Entertainment
This gets a solid “thumbs down” from Moore. “What would a stimulus bill be without a few special interest giveaways to the corporate lobbyists?” he asks.
While Moore’s opinion of the bill is that they got it half right, he does point out what he believes is a fundamental flaw: a lack of a payroll tax cut through the rest of the year. He says it would help “150 million workers and nearly 30 million small businesses and self-employed business owners.”
Moore adds, “This would create up to 3 million jobs over the next six months and give a pay raise of 7.5 percent for every nurse, teacher, home care worker, construction worker, and police officer in America – the heroes of our economy.”
He worries that the bill that McConnell presented yesterday won’t survive negotiations with Democrats.
“All in all, a good bill. The problem is it will get much worse as Trump and McConnell begin to negotiate with Pelosi. There is not one single feature of the Pelosi bill that is positive for the economy,” says Moore.
His final thought is for the person who will eventually sign the bill into law.
“President Trump should not sign any final product without the payroll tax cut,” says Moore.
Republicans Ready With ‘Well Rounded’ Stimulus Bill
Treasury Secretary Steve Mnuchin said Republicans have finalized the latest stimulus bill. The newest plan adds up to about $1 trillion. Mnuchin also said they plan to introduce it today.
Appearing on Fox News Sunday, Mnuchin said, “We do have an entire plan. The [Trump] administration and the Senate Republicans are completely on the same page,” after delays prevented the plan from being completed last week. Senate Majority Leader Mitch McConnell said the White House wanted more time to “review the fine details.”
Many expect the proposal to include another round of $1,200 stimulus checks for Americans. It will also include liability protections for businesses and funding for schools as they reopen. Mnuchin said he hoped the proposal could gain bipartisan support in Congress.
“We can move very quickly with the Democrats on these issues. We’ve moved quickly before and I see no reason why we can’t move quickly again. And if there are issues that take longer, we’ll deal with those as well,” Mnuchin said.
On Unemployment Benefits
A sticking point with the Democrats could be the reduction in unemployment benefits. Many Republicans believe that the $600 weekly benefit is slowing the U.S. economic recovery since so many workers are making more money on unemployment insurance than they did on the job.
Instead of a $600 per week benefit, Republicans want the newest plan to include unemployment assistance that will replace roughly 70% of wages.
Mnuchin added that certain pieces of the legislation are a higher priority than other issues. These pieces include the likes of unemployment benefits and liability protection for businesses and schools. He said they can pass the legislation in parts and pieces to quicken the negotiating process.
“This will be the fifth set of legislation so there’s no reason why we can’t have number five, six and seven as we need to deal with issues,” he said. “And obviously, anything we do we need bipartisan support.”
The White House Reacts
White House Economic Advisor Larry Kudlow described the proposal as “a very well rounded package” and “a very well targeted package.”
“There’s a $1,200 check coming, that’s going to be part of the new package,” Kudlow said in an interview on CNN’s “State of the Union,” adding that the package will also include $16 billion in additional funding for testing and tax incentives to encourage companies to rehire employees.
“The check is there, the reemployment bonus is there. The retention bonus is there. There will be breaks, tax credits for small businesses and restaurants.” Kudlow added.
He also said the Trump administration is expected to lengthen the federal eviction moratorium. The moratorium prevented renters in buildings with mortgages backed by the government from being evicted.
Kudlow also added that the administration’s plan to cap unemployment benefits at approximately 70% of wages is “quite generous by any standard.” As recently as last week Republicans were considering the idea of extending the unemployment benefit but reducing it to $400 per month, or $100 a week, through the rest of the year.
Trump Wants Payroll Tax Cut, What That Means For You
The next stimulus bill proposal is expected to be released as early as this week. With this, one of the major battleground items in the bill will be a payroll tax cut.
As we mentioned on Friday, National Economic Council chief Larry Kudlow wants a payroll tax cut included to help spur economic growth. Kudlow views the tax cut as a wage subsidy the government would give to employers. These employers would, in turn, pass it on to their employees.
Treasury Secretary Steve Mnuchin would rather send another stimulus check. He believes that the Democrat-led House would never approve a payroll tax.
Yesterday, President Trump raised the stakes by saying that he would consider not signing the next stimulus bill if it doesn’t include a payroll tax cut.
“I want to see it,” Trump said during an interview with Fox News. “I’ll have to see but, yeah, I would consider not signing it if we don’t have a payroll tax cut, yes.”
So what is a payroll tax cut, and how would it benefit the average American?
What Is A Payroll Tax Cut
For working Americans, 7.65% of your earnings are subtracted from each paycheck to help pay for Social Security and Medicare (6.2% goes to Social Security; 1.45% goes to Medicare). Your employer also pays an equal amount of taxes.
The Social Security tax is only collected on the first $137,700 of earnings; however, if you earn more than $200,000 per year, an additional 0.9% Medicare tax is collected on wages over $200,000.
What hasn’t been determined yet is if President Trump is insisting on a 100% tax cut or a smaller percentage. Let’s assume it’s a 100% payroll tax cut. For someone making $25 per hour and working a standard 40 hour work week, the savings would be $76.50 per week. This goes for a little more than $300 per month.
It’s also unclear how long the tax cut would last. In previous comments, President Trump mentioned extending the tax cut through November or possibly the remainder of the year.
The goal of the tax cut would be to allow workers to keep more of their wages in each paycheck. This would give them more money to spend and help boost the economy. Critics say that the money wouldn’t get into the economy quickly enough with a tax cut. Instead, like Treasury Secretary Mnuchin, they prefer to send out stimulus checks that are available for immediate spending.
The other knock against a payroll tax cut is that it does nothing for those who aren’t collecting a paycheck, i.e. the tens of millions of unemployed Americans.
There is also concern about diverting money – at least temporarily – away from the chronically under-funded Social Security and Medicare programs. While the thought is to simply close the funding hole at a later date, there’s no framework in place to ensure that will occur.
We should know additional details of the plan this week when the proposal is released and we hear more from President Trump.
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