Volume 6 Number 270
Chazzer is a Yiddish word for a greedy person, literally meaning “someone who behaves like a pig.” Its very sound is distasteful, just rolling off the lips with the z’s emphasized, like chaa-zzzz-er.
The pandemic has brought out so much good from people everywhere, volunteers, healthcare workers, first responders, caregivers, charity givers, just about everyone. Except there are people who took advantage, and these were not petty criminals. When the government was doling out big bucks intended for the neediest businesses, it was surprising to most of us that what appeared big businesses were first in line to cash in. Organizations like the Los Angeles Lakers, whose average player receives a cool eight million dollars a year in salary, got in line for a handout. And they were initially granted $4.6 million.
Image by Depositphotos.com
How did this happen? After all, this was the Paycheck Protection Program (PPP), intended to provide relief for small businesses. The intention was to help the likes of Main Street diners, beauty salons, laundries, service stations, accounting firms or even single employers like music teachers, housepainters, etc. The job of overseeing this was even turned over to the Small Business Administration (SBA).
Nearly three hundred publicly traded companies applied for loans for a cool $905 million, and initially got $243 million. That is because if a company had less than 500 employees at a location, it qualified as a small company. So, the LA Lakers, despite their enormous player payroll, qualified because they only had about 300 employees to work in their office and maintain their Staples Center arena. After all, with the arena now closed, the Lakers had certainly been affected by the lack of business.
It’s not that those greedy officers of companies didn’t know that they were literally taking it out of the hands of the truly needy. Everyone knew that $350 billion had been allocated for smaller businesses by the SBA. You had only to look around you to know that there were real companies eligible for that money everywhere. That figure of $350 billion meant there was a concrete amount of money to be allocated. Therefore, if a bigger company got in line first, there would be fewer dollars allocated for those who it was really intended. Those big companies lined up at the trough were despicable.
Further, didn’t those staffers writing the law, or some sharpies at Speaker Pelosi’s or Senator Schumer’s offices, realize that in the 21st century there are plenty of financial, telecommunication and real estate firms that have small headcounts but make big bucks? After all, Ms. Pelosi, who helped write the bill, has a husband who is a multi-millionaire; he has a company that only has a handful of employees. She must have known what was going to happen. (It would be interesting to see if hubby applied for a PPP loan.) There are huge fast food companies or hotels who put each location as a different company, all with less than 500 employees, who were eligible.
Sure enough, many of the real small guys, whom the bill was intended to primarily benefit, were stiffed because they usually didn’t have a relationship with a bank that was doling out the funds. The money, $350 billion, ran out so quick that there was an outcry because the small businesses, who the program was intended for, were left with their nose pressed against the bank windows.
It’s not surprising that the law was written that way, because the bill was initiated and originally written by Republicans in the Senate. Sure, the Democrats had to engage in compromise back and forth, but the loopholes were big enough to drive a truck through. The Democrats had to be blind not to see what was coming down the pike.
Too late, Treasury Secretary Mnuchin announced that public companies with “substantial market value and access to capital markets” weren’t eligible and that those firms that had tapped the fund had two weeks to return the money. Mnuchin also warned the companies that they had to certify the conditions caused them to be facing economic injury by. Plus, those receiving more than $2 million would be audited.
Well, just about every company in the country has had economic injury except for Amazon and essentials like supermarkets and drugstores. He also added that this money wasn’t intended for these well-heeled kinds of companies. You can bet the bill never said who it “wasn’t intended for.”
As of April 26, a big 24 companies, out of close to 300, coughed it up and returned the money. The government clawed back the money because of the disastrous publicity about such companies as the Lakers, Pot Belly, Shake Shack, Ruth’s Hospitality Group (Ruth Chris Steakhouse), and AutoNation, which returned a whopping $77 million. (Probably each of its stores counted as a separate business.)
The big non-returners are probably all in for the letter of the law, but not the spirit. They all qualify as chazzers. If the bill had been written properly those 300 big guys would have been denied $243 million, which could have gone to over 1,200 truly small businesses who have been denied their rightful $200,000 (on average).
Now, in early June, the real small businesses have become wary of taking the money from the government. More than $130 billion is left in the PPP fund from the second round. It’s not that they don’t need or want the money. They’re nervous because the government has constantly changed the rules, to a point that it’s become chaotic, about who is eligible and what the requirements are to qualify for it to be free and clear. They fear that instead of a giveaway, they will be forced to pay it back with interest, which they don’t want to face in these times. Thousands have sent the money back without spending a nickel of it, according to data from the SBA. It’s a pathetic situation when the ones that are supposed to be helped (small businesses) turn away, because the cure (governmental intervention) is worse than the disease (fear of insolvency).
Businesses weren’t the only ones looking to hop on the bandwagon. Colleges and universities were awarded a $12.5 billion coronavirus bailout. None of this has to be paid back. The funds were allocated based on the number of students who received Pell grants. These grants come from federal government funds and are awarded to economically needy students to help them cover tuition and other college costs.
On the surface this makes sense. The more needy students a school has the more money it gets. But this doesn’t take into account that there are a number of schools out there that are loaded. This comes from donations from wealthy alumni that had been wisely invested over the years. Some of these colleges and universities are worth billions. Using the Pell grant criterion, the money was just thrown around willy-nilly.
It was found that the 25 universities with the largest endowments, that is collectively worth $350 billion, got a neat $800 million in grants. That was like awarding “ice to eskimos.” If they wanted to, they could subsidize all these students themselves and hardly feel the pain.
Actually, this was brought to the country’s attention by that noted benevolent philanthropist, president Donald Trump. So, Harvard, with an endowment of over $40 billion, decided not to apply for their nine million dollar cut of the aid. Princeton and Stanford quickly followed suit.
But plenty took the money. According to Forbes of May 5, 2020, here are the allocations for some other wealthy schools: Ohio State University $42 million ($3.6 billion endowment); Northwestern University $8.5 million ($9.7 billion endowment); The University of Chicago $6.2 million ($7 billion endowment); and Massachusetts Institute of Technology (MIT) $5 million ($13.2 billion endowment). After all, as Senator Everett Dirksen (D.-Ill) once said, “A billion here and a billion there, pretty soon it starts to add up.”
In all fairness, 70 percent of the money is going to public colleges whose student body is usually more needy than that of private schools. Public schools are facing funding cuts for higher education due to anticipated big drops in state revenues.
There was no evaluation of what the academic record of the schools were that were being shipped the money. The 10 worst schools judging by their terrible graduation rates were given $66 million. This was despite having graduation rates of 4-9 percent.
Beauty schools called cosmetology colleges were allocated over one hundred million in bailout money. Surely these, with more modest goals, were also entitled to help. It looks a little different when you know that these schools often charge higher student tuition prices than established universities, using Pell grants and student loans to pad the cost of education. So rather than closing these con artists, we sweetened their pot.
The government, as part of two relief bills, gave hospitals a whopping $175 billion, far more than was given to universities. For most of the hospitals around the country, especially those in rural areas, that was a Godsend. In truth they were all suffering. Between being besieged by coronavirus patients without appropriate staff or equipment, and now being deprived of elective surgeries, the major source of income, hospitals all around the country were hurting.
Again, it was a simplistic eligibility calculation that determined how much each hospital was to be allocated. It was decided that the initial allocation of the money would be on the basis of how much each health care provider was paid by Medicare in the last year. Later, they would consider such minor factors as the number of low-income and insured patients served, and, oh yes, the prevalence of coronavirus infections in a hospital. But right off the bat, money was just being thrown around. Again, the hospitals didn’t even have to pay back any of the money.
So next up on the money-grubbing scale were the wealthy hospitals. You know, those esteemed citadels of healing. The government in its largesse felt it wasn’t necessary for them to ask for the cash, so they would just lay it on them.
The criterion of “Medicare patients” is patently inappropriate. There are hospitals out there flush with money, who have plenty of Medicare patients and aren’t suffering. An analysis in USA Today of May 10, 2020 shows that the 20 richest non-profit hospitals combined had a cool $116 billion in investments and endowments. Three hundred and sixty-five hospitals, the wealthiest ones, in 2018 reported investment portfolios exceeding $100 million.
Not only that, but the wealthier hospitals are going to be taking full advantage of whatever the government offers for distributing the rest of the bailout money. They have a brigade of people with lampshades and sharp pencils, set to document every expense that they can attribute to the coronavirus response, to the last dime. That is the job of accountants but isn’t it up to the higher-ups to put the brakes on some of these shenanigans and say, “We’re not going to do that. This isn’t right.”? Looks like those types of peerless leaders are few and far between.
When they take the money which is just shoveled at them without being asked, the big hospitals should be using the bailout to support their staffs, especially those farther down the ladder: the janitors, food service workers, security, nurse’s aides, room cleaners, etc. Seems a lot of the big boys are stiffing these needy workers despite getting billions in aid. Thirty-six of these major hospitals have laid off, furloughed or reduced the pay of their employees. For example, HCA Healthcare, one of the wealthiest with a worth of over $36 billion, received one billion in bailout funds, but shortly warned they would lay off thousands of nurses if they didn’t agree to wage freezes and other concessions. The thing of it is, these big institutions are supposed to be sitting on tens of billions, kept for a rainy day. Covid-19 is no rainy day, it’s a massive hurricane and these rich hospitals should draw on their funds instead of beating up on their staff while taking money from Uncle Sugar, for just that purpose.
You can’t expect these rich hospitals to refuse the money, but you didn’t hear about them sharing with some of the less fortunate hospitals in their region. And certainly, once again, our legislators failed to initially send it to those needing it the most.
The need is dire. The organization representing safety-net hospitals, America’s Essential Hospitals, says that some of its 300 member hospitals have on average only 10 days of cash reserve and operate on average margins of 1.6 percent.
It appeared at first blush that the current government aid would have been created with a mind toward the misappropriations that occurred in the 2009-2010 allocation. All these giving extra benefits to the bigger and richer institutions have the imprint of Republican legislators. But the Democratic-held House had an equal say in the bills that were passed. While there were necessary compromises to make, the results shouldn’t have been so blatantly one-sided. After all, the purpose of this package was to aid the greater, needy populace and institutions. But has there been a single bill passed in recent years that was a giveaway to the needier among us, like we constantly do for the needy rich?
It’s not hard to rectify this situation. In future situations, aid to businesses, colleges and universities, and hospitals should consider that the smallest and neediest should be sent to the head of the line in applying and being granted operating funds. Then by degrees, dependent on the criteria of neediness, the remaining companies would be allowed to apply. Importantly, some ceiling should be established, so wealthy institutions are omitted from the program. Also, the SBA should alter the basic designation it uses so that small but wealthy organizations are no longer allowed to participate as “small businesses.” These steps will help assure that any funds designated for small businesses in the future are going to those who need them most.
It was not unexpected for businesses to try and cash in on these financial grants. After all, they are in business to make money. One would think that our rich colleges and universities and medical centers would march to a higher standard. The problem is that these institutions now are also run like businesses. So, is it any surprise that some turned out to be money grubbing chazzers just like their business counterparts?
“There is a sufficiency in the world for man’s need but not for man’s greed.”