Progressives raise alarm over letting lobbying groups access PPP funds

Anti-lobbying activists are sounding the alarm over efforts on Capitol Hill to let lobbying groups access emergency loans meant for small businesses struggling during the pandemic.

Competing proposals from Rep. Chris Pappas (D-N.H.) and Sen. Ted Cruz (R-Texas) would allow local chambers of commerce and trade associations like America’s Health Insurance Plans (AHIP) and PhRMA, which represents the pharmaceutical industry, to tap into the Paycheck Protection Program, federal funding that Congress set aside to help non-political businesses weather the coronavirus.

The legislative effort to expand the Small Business Administration (SBA) program comes as many of the intended recipients have complained about favoritism for well-connected firms that were able to obtain the emergency loans quickly and with little hassle.

Progressives argue that the new bills will allow taxpayer funds to boost corporate lobbying interests.

“Every dollar that goes into lobbying groups like AHIP, PhRMA…gets used to influence public policy in some way,” Andrew Perez, executive director of the Democratic Policy Center, told The Hill.

“If the government gives these groups free cash to cover 2.5 months’ salary to support some or most of your staff costs, it frees up money they can use for any other purpose,” he added. “These groups also don’t just influence policy through direct lobbying: They host luxury conferences, they pay for ads and grassroots outreach, and they funnel money to other groups to run advocacy campaigns that serve their business interests.”

David Sirota, who was a speechwriter for Sen. Bernie Sanders’s (I-Vt.) 2020 presidential campaign, also attacked the idea.

“Allowing corporate lobbying organizations and dark money groups to grab this money is akin to feudal lords gorging themselves at a lavish banquet, and then also raiding the last basket of bread that starving peasants are relying on to survive outside the palace walls,” Sirota wrote of Pappas’s bill earlier this month.

“Democratic lawmakers are pushing new bills that would let corporate lobbying organizations and dark money groups in Washington grab some of that dwindling PPP money for themselves before the cash gets to more mom-and-pop businesses teetering on the brink of bankruptcy,” Sirota added. “Moreover, the legislation would knowingly help some politically connected industries effectively double dip on giant bailouts for themselves.”

PPP funding is currently available for charitable organizations and veterans’ groups that employ less than 500 people. It’s unavailable for any “businesses primarily engaged in political or lobbying activities.”

The legislation introduced by Pappas would make local chambers of commerce and trade associations with fewer than 300 employees eligible for PPP funds, but it would prohibit that money from being used to support the paycheck any federally registered lobbyists.

“I am opposed to allowing lobbyists and national lobbying groups to benefit from PPP,” he said. “In addition, under the bipartisan bill we introduced, not one dollar of PPP funding can be used to pay a lobbyist’s salary.”

The U.S. Chamber of Commerce wouldn’t qualify under Pappas’s bill since it has about 425 employees. But local chambers with far fewer workers on staff would be eligible.

PhRMA would qualify with 276 employees, as would AHIP with its payroll of 158 workers. 

The two organizations did not immediately respond to requests for comment about whether they would apply for a PPP loan if they were to become eligible.

Cruz’s proposed bill, which has yet to be finalized, currently includes no such restrictions on headcount. 

“Sen. Cruz is working on legislation to ensure small businesses have the tools they need to re-open their doors and get the economy back on its feet, and that includes making sure local chambers of commerce have access to the Paycheck Protect Program,” a spokesperson for the senator told The Hill.

Some lobbying groups have already challenged the current PPP restrictions on lobbyists, arguing it violates the First Amendment. An appeals court on Tuesday rejected an effort by the American Association of Political Consultants to obtain access to program.

Proponents of the bills from Pappas and Cruz argue that the services provided by local chambers of commerce will be more important than ever due to the extreme financial burdens brought on by nationwide closures of nonessential businesses.

Tom Sullivan, a vice president for small business policy at the U.S. Chamber of Commerce, said providing PPP funding to local chambers would extend a much-needed lifeline to businesses around the country.

“Quite simply, we view local chambers of commerce and civic groups as the economic emergency rooms for businesses throughout the country. These are nonprofits that have hosted SBA officials, elected members of Congress, [Centers for Disease Control and Prevention] officials and public health experts, unemployment experts, and others to help business communities survive,” he said.

“Unfortunately without access to PPP loans, many non-profits will permanently close,” Sullivan added.

Mary Beth Sewald, CEO of the Las Vegas Chamber of Commerce, said her organization has already begun preparing an application for a PPP loan in case one of the bills passes.

“I don’t know a single chamber that isn’t in need of assistance,” Sewald said, adding that her organization has seen a 25 percent decline in dues-paying membership in recent weeks.

Executives at Virginia and Maryland’s chambers of commerce also said they would “absolutely” apply for a loan if the legislation passes.

“We are respectfully and urgently requesting financial support for all 501(c) organizations, as it was provided for other members of the business and nonprofit communities, in future stimulus packages being considered by Congress,” said Ashley Duckman, the Maryland chamber’s vice president of government affairs.

“With over 100 local and regional chambers throughout the Commonwealth of Virginia alone, allowing chambers to apply for these vital loans will ensure a key section of our business community is not left behind on the road to economic recovery,” added Barry DuVal, CEO and president of Virginia’s chamber.

The House plans to vote on a standalone measure Wednesday to alter the PPP by giving small businesses more time to spend the loans, extending that period from eight weeks to 24 weeks. There are currently no plans in either chamber to hold floor votes on either Pappas’s or Cruz’s bill.

Pappas said Congress should be supporting local organizations, especially chambers of commerce, to help businesses reopen and hire back workers as states begin loosening coronavirus-related restrictions.

“This bill is a starting point for bipartisan deliberations on how best to assist local chambers, tourism groups and other organizations dedicated to helping small business owners and workers at this exceptionally difficult time. It will also support organizations that are aiding our brave health care workers as they confront an unprecedented public health crisis,” he said. “We will continue to work with everyone, including constituents, congressional leadership, outside groups, and members of Congress from both parties to refine and improve our proposal.”

From Perez’s perspective, there is much more that needs to be done to improve the legislation.

He argued there should be stronger safeguards to prevent corporate lobbying interests from accessing the funding and cited research from his group that found about 90 percent of trade groups have fewer than 20 employees and annual revenue that’s less than $750,000.

“If Congress wants to assist small chambers, that’s up to them, but they should not be using the pandemic as an excuse to reward the D.C. lobbying groups that ask them for favors and send them PAC donations,” Perez added. “These groups have enough influence over Washington policy discussions already.”

Updated at 3:00 p.m. on 5/27 to note that Cruz’s bill, which has been publicly released, has yet to be formally introduced to the Senate.