US pandemic aid saved 51m jobs, but wealthy also benefited

A high-profile pandemic aid program protected about 51.1 million US jobs, the Trump administration said on Monday.

The administration revealed how $521.4 billion in taxpayer cash was injected into small businesses as well as into the pockets of the rich and famous.

The job retention data comes amid positive reports that the US services sector rebounded in June to nearly pre-crisis levels, but is tainted by concerns about whether the employment scheme truly benefited the most needy.

The data on the small business Paycheck Protection Program (PPP) has been released after initial resistance and seems to confirm worries among Democrats and watchdog groups that in addition to mom-and-pop shops, the funds went to well-heeled and politically-connected companies – some of which were approved for between $5 million and $10 million.

Those include several firms that lobby on public policy, such as Wiley Rein LLP and APCO Worldwide, as well as prominent law firms like Kasowitz Benson Torres LLP, which has represented President Donald Trump, and Boies Schiller Flexner LLP, reports Reuters.

Kasowitz Benson Torres said the funding helped the law firm preserve hundreds of jobs at full salary at a time when federal courts and its offices were shut down.

The gallery of well-connected names extended deeply into the world of America's privileged and super famous.

Sidwell Friends School, an exclusive private school which educated former President Barack Obama's daughters, was approved for between $5 million and $10 million, as was Saint Ann's School in Brooklyn, which – with tuition exceeding $50,000 per year – is attended by the children of hedge fund managers and celebrities.

Newsmax Media Inc, the media company run by Trump donor Christopher Ruddy, got the nod for between $2 million and $5 million. So did billionaire rapper Kanye West's Yeezy LLC clothing company. Newsmax said in a statement it was eligible for the program and did receive a loan, but declined to elaborate.

Aside from Kasowitz Benson Torres and Newsmax, the other companies and schools did not immediately respond to a request for comment.

The Americans for Tax Reform Foundation, whose stated mission is to curb government spending, was also approved for a loan of between $150,000 and $350,000.

"The initial data is revealing many recipients that are appropriately raising eyebrows, which was one of the many reasons we wanted it public," said Danielle Brian, executive director of the Project on Government Oversight.

Launched in April, the unprecedented program - which has been extended until August 8 - allows small businesses hurt by the pandemic to apply for a forgivable government-backed loan from a lender.

The data shows loans that have been approved, but it does not say how much was disbursed, nor which loans have been forgiven so far. The loans were largely dished out on a good-faith basis, with borrowers certifying their eligibility and the accuracy of the data they provided, meaning the figures on how many jobs were retained has not been thoroughly vetted.

While the data does not say exactly how much money each borrower received, they are placed in one of five bands: $150,000-350,000; $350,000-1 million; $1-2 million; $2-5 million; and $5-10 million. More than 4,800 loans were issued in the top band, while the overall average loan size was $107,000, the data shows.

Loans that appear to breach the letter or spirit of the rules may not be forgiven, and the Treasury plans to conduct a full review of loans of more than $2 million.

The Department of Justice has already brought charges against several PPP borrowers for fraudulently seeking loans, while several federal and state regulators are also probing misuse of the funds.

Despite some eyebrow-raising recipients, the funds reached a wide swathe of businesses: more than $67 billion for the healthcare and social assistance sector, $64 billion-plus for construction businesses, $54 billion for manufacturing and, at the smaller end, more than $7 billion for religious organizations, the data showed.

Senior administration officials hailed the program as a "wild success," with the data showing it supported about 84 percent of all small business employees.

US service sector rebounds

US services industry activity rebounded sharply in June, but a resurgence in novel coronavirus cases that has forced some restaurants and bars to close again threatens the emerging recovery.

The Institute for Supply Management (ISM) said on Monday its non-manufacturing activity index jumped to a reading of 57.1 last month, the highest since February, from 45.4 in May. It has bounced back from a reading of 41.8 in April, which was the lowest since March 2009.

A reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of US economic activity. Economists polled by Reuters had forecast the index increasing to a reading of 48.9 in June.

The report followed the ISM's manufacturing survey last week showing factory activity rebounding to a 14-month high in June. The upbeat surveys, however, have been overshadowed by raging Covid-19 cases in large parts of the country, including the densely populated California, Florida and Texas.

The flare-up in cases that started in late June has prompted several states to scale back or pause reopenings, hitting restaurants and bars hard.

The ISM survey's measure of new orders for the services industry increased to a reading of 61.6 in June from 41.9 in the prior month. There was an increase in export orders, and order backlogs swelled.

The survey's index of services industry employment rose to a reading of 43.1 last month from 31.8 in May.

Though this measure has pulled off 30.0 in April, a level last seen in 1997, it was at odds with a report last Friday showing nonfarm payrolls surging by a record 4.8 million jobs in June. The services sector accounted for 4.263 million of the jobs.