Last week, President Trump called on Shake Shack to return a $10 million loan it secured from the Paycheck Protection Program, one of the key provisions of the recent federal stimulus packages intended to support small businesses devastated by the coronavirus closures and restrictions. The burger company and other restaurant chains, such as Potbelly Sandwich Shop and Ruth’s Chris Steak House, drew public ire last month for taking money from the program, which is plagued by limited funds and a backlog of applications from less politically connected small businesses.
All three businesses have come to their senses in the past two weeks and have returned the money. Prudent corporate executives would take Shake Shack’s folly as a lesson not to rent-seek during a national crisis. However, some industries are still proceeding with this tone-deaf lobbying.
Such is the case with the National Association of Broadcasters, which is currently lobbying Congress for the same PPP carve-out that almost allowed Shake Shack to grab millions. For the sake of protecting taxpayers and small businesses, Congress should say no.
While PPP loans are earmarked only for companies with fewer than 500 employees, Shake Shack and others initially received said loans because of a provision of the law that allowed restaurants companies to count individual restaurants as a workforce rather than the grand total the companies employed. Thus, a burger chain such as Shake Shack, which employs 6,101 people, would still qualify because a single location only has several dozen employees.
Now, the broadcasting industry wants the same carve-out, allowing individual stations with fewer than 500 employees to qualify for PPP loans. Should the industry’s desired tweak be enacted, megacorporations with hundreds of stations and billions in revenue could take taxpayer money intended for small businesses.
These loans would be on top of generous handouts the industry already receives from the federal government. Ross Marchand of the Taxpayers Protection Alliance explains in Townhall:
Certainly, the broadcast industry has taken a financial hit during the coronavirus, with advertising down 27%. However, virtually every industry is struggling right now, and it’s critical that the federal government focuses its relief efforts on small businesses and industries directly affected by shutdown orders.
Unlike said vulnerable industries, TV viewing has unsurprisingly shot up during the virus, with evening news shows reporting their largest audiences in years. With the 2020 election just around the corner, TV stations should hopefully make a healthy profit in political advertising later this year.
The industry is also likely to draw in more advertising dollars in the coming years as it continues to consolidate, according to the Poynter Institute’s Rick Edmonds, as large broadcast companies are in a stronger position to negotiate deals with cable companies in order to carry their channels. Poynter’s headline puts it well: “Local broadcasting can take a financial punch.”
During this time of crisis, lawmakers must dispense taxpayer funds responsibly.
Big businesses in every industry, be it restaurants, hotels, or broadcasting, should not use this opportunity to advance their crony schemes to increase their bottom line. Congress should say no to the broadcast industry’s attempt to tweak the bailout program to its advantage.
Casey Given (@CaseyJGiven) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is the executive director of Young Voices.
