One of the most significant Covid-19 relief programs that Congress passed was the Paycheck Protection Program, which was intended to encourage small businesses to keep their staff employed, as well as help with rent, utilities and other expenses.
However, according to a report by the Freedom Foundation, teachers’ unions, government employees’ unions, and AFL-CIO advocacy organizations received 226 loans totaling $36.7 million—even though they were allegedly ineligible.
As the Freedom Foundation explains, “nonprofit eligibility was primarily limited to tax exempt organizations operating under 26 U.S.C. § 501(c)(3), which covers most traditional charitable nonprofits. As labor unions are generally registered with the Internal Revenue Service (IRS) under 26 U.S.C. § 501(c)(5), most were not initially eligible for PPP loans.”
In December 2020, eligibility was expanded to include some labor unions, but the $36.7 million in loans occurred before this expansion.
Using the term “loan” to define this program is an obfuscation. While these technically were loans initially, it was made clear that so long as the recipients didn’t lay off any staff, the loan would be forgiven. Essentially, it was a grant program.
The irony of public sector unions receiving funds is that unions are funded by taking a percentage of its members’ pay, so as long as the members kept their jobs, the unions would not see a change in revenue. Of course, the government didn’t lay anyone off because of the pandemic, so this was free money for them.
The largest recipient was the Michigan Education Association, which received $6.4 million in forgivable Paycheck Protection Program loans.
Unions took money that could have been used to keep neighborhood restaurants open and used it to pad their bank accounts.
The #WasteOfTheDay is presented by the forensic auditors at OpenTheBooks.com. This article originally appeared on RealClearPolicy.com.
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