Category: reason

Shake Shack Received a $10 Million Small Business Loan. They’re Giving It Back.

Shake Shack, the fast-casual burger chain with hundreds of locations across the country, announced Monday it will be returning a $10 million small-business loan granted through the Paycheck Protection Program. 

“While the program was touted as relief for small businesses, we also learned it stipulated that any restaurant business—including restaurant chains—with no more than 500 employees per location would be eligible,” Danny Meyer, the CEO of Union Square Hospitality Group (USHG), and Randy Garutti, the CEO of Shake Shack, wrote in a statement. “We cheered that news, as it signaled that Congress had gotten the message that as both as an employer, and for the indispensable role we play in communities, restaurants needed to survive.”

But that $349 billion fund, intended to inject life into small businesses struggling amid COVID-19 shutdowns, ran dry last Wednesday, prompting Meyer and Garutti to reassess the funding they’d received. 

“Late last week, when it was announced that funding for the PPP had been exhausted, businesses across the country were understandably up in arms,” they wrote. “If this act were written for small businesses, how is it possible that so many independent restaurants whose employees needed just as much help were unable to receive funding?”

Shake Shack, which has laid off 2,000 employees and is facing operating losses of over $1.5 million each week, received the capital it needed through a public-market equity transaction. Though the company says that the $10 million would be helpful, they acknowledge that other businesses need it more and said that they will return it “immediately.”

The Paycheck Protection Program’s allocated funding evaporated in less than two weeks, setting off another debate on Capitol Hill. As of Monday afternoon, it appeared that Democrats and Republicans were nearing an agreement that would funnel $310 billion toward small small-business loans, with an additional $75 billion for hospitals and $25 billion for increased virus testing. 

That large hotel and restaurant chains were ever eligible for government assistance prompted a backlash that only intensified as smaller dining establishments learned they would not receive funding. Not only do those larger companies have a much higher likelihood of securing down funding from private lending markets, they also have strong corporate relationships that allow them to expedite the application process.

“This industry rises and falls together,” they wrote. “And if there is a concern that once again the government will have not allocated adequate funding, then send business to the front of the PPP line which has more limited access to outside funding.”

The two men also drew attention to some of the more problematic parts of the program, noting that the loan forgiveness terms are highly unrealistic and that many small businesses are unable to secure help from major lenders in the face of exclusive loan terms.

In order to qualify for loan forgiveness, 75 percent of expenses must be spent on payroll—already a tough ask for companies that have no customers, but still bills to pay. Yet the legislation also stipulates that companies restore pre-coronavirus “full-time employment and salary levels” by June 30, 2020. Meyer and Garutti suggest that the government “make all PPP loans forgivable if an adequate number of employees are rehired by a minimum 6 months following the date that a restaurant’s state (or city) has permitted a full reopening to the public.” It’s a decent idea, but as with aspects of the PPP as written and implemented, the 6-month window would be easier for some companies to comply with than others. 

“Shake Shack, like all restaurant businesses in America, is doing the best we can to navigate these challenging times. We don’t know what the future holds,” wrote Meyer and Garutti. “Our people would benefit from a $10 million PPP loan but we’re fortunate to now have access to capital that others do not. Until every restaurant that needs it has had the same opportunity to receive assistance, we’re returning ours.”

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Federal Regulations Are Making the Grocery Store Supply Crunch Worse

Seeing empty shelves at your grocery store might come as a shock even in the middle of a pandemic—sometimes capitalism looks like how socialism looks all the time—but the problem isn’t a shortage of food. It’s that supply chains are struggling to adapt to changing circumstances.

Prior to the COVID-19 pandemic, about half of all American food expenditures (and about 15 percent of consumption) were at restaurants and other commercial dining establishments. Those numbers have shifted dramatically in recent weeks, and “a distribution system that was built to supply restaurants with bulk items is struggling to adapt to far smaller packaging for home use,” The Washington Post reported last week.

One complication in reconfiguring those supply chains on the fly to direct more food to grocery stores and less to restaurants: federal regulations.

“Many of the ingredients, processes and regulatory requirements for manufacturing food products destined for grocery stores and restaurants are virtually identical,” says Betsy Booren, senior vice president for regulatory and technical affairs with the Consumer Brands Association, an industry group that represents grocery stores and food producers. “What does most often differ is the packaging and labeling of food destined for restaurants versus grocery stores.”

Think about a package of hamburger buns. The one you might buy in a grocery store contains the exact same buns that a producer might also send to a restaurant down the street. But there are two key differences in packaging. First, the restaurant isn’t buying them in packages of eight or 12 at a time. Second, while the restaurant does have to comply with Food and Drug Administration (FDA) requirements for publishing nutritional information on menus, the buns they are buying don’t come with as many specific labels and data on the package.

In March, the FDA waived some of its labeling requirements to allow restaurants to sell their unused food directly to the public. Repackaged, unprepared food from restaurants must contain a description of the product and the FDA’s mandatory warnings about potential allergies, but more detailed information—like the “nutritional facts” found on anything you might purchase in a grocery store—can be skipped.

(Of course, even federal regulatory approval has not been enough to prevent some insane local officials in places like Boston and Los Angeles from banning restaurants from acting as impromptu grocery stores.)

“It’s not terribly unreasonable to have these sort of minimal safety rules remain in place,” says Gregory Conko, a senior fellow with the Competitive Enterprise Institute, a free market think tank. “But from a regulatory perspective, it would be great if that rule could apply beyond restaurants so you could ship that same product to a grocery store.”

With the food service industry facing a 60 percent decline in sales due to the COVID-19 outbreak, those labeling requirements have complicated efforts to reroute food from restaurant supply chains to grocery stores.

“Companies are looking for opportunities to divert this food to other supply streams, including grocery stores,” says Booren.

Easing those restrictions won’t fix all the problems, but it would help. Grocery stores may be unable to accept foods packaged and labeled in certain ways because there is simply no demand from consumers to purchase large bulk containers of certain items, or because it is not cost-effective for grocery stores to break down the bulk food and repackage it into smaller portions for sale, Booren says.

That’s one of the reasons why the dairy supply chain has been particularly hard hit. Stories of milk trucks dumping their goods, for example, are likely the result of too much supply and not enough demand. Restaurants consume far more milk and butter than most consumers do, and those products spoil quickly.

Some states have stepped up to the task. Wyoming, for example, passed a new law that allows ranchers to sell cuts of meat directly to consumers. Anything that can be done to ease food supply chain bottlenecks should be considered right now.

Conko says the current mess should put the spotlight on some regulatory issues that have been ignored for years, including some seemingly inexplicable regulatory overlap between the FDA and U.S. Department of Agriculture (USDA)—like the fact that frozen pizzas are subject to FDA regulation unless they have a meat topping, in which case they fall under USDA jurisdiction. Or the fact that an egg-laying chicken is regulated by the USDA, but the egg the chicken lays is regulated by the FDA until it is cracked open and used as an ingredient in another product, at which point the USDA takes over again.

With so many unnecessary or questionable regulations being suspended or abolished during the coronavirus outbreak, Conko sees an opportunity to streamline food supply chains too.

“We really ought to rethink the way we do this across the board,” Conko says. “Does this now all of a sudden add weight to those arguments? Maybe a little, but I think they were pretty strong to begin with.”

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Federal Regulations Are Making the Grocery Store Supply Crunch Worse

Seeing empty shelves at your grocery store might come as a shock even in the middle of a pandemic—sometimes capitalism looks like how socialism looks all the time—but the problem isn’t a shortage of food. It’s that supply chains are struggling to adapt to changing circumstances.

Prior to the COVID-19 pandemic, about half of all American food expenditures (and about 15 percent of consumption) were at restaurants and other commercial dining establishments. Those numbers have shifted dramatically in recent weeks, and “a distribution system that was built to supply restaurants with bulk items is struggling to adapt to far smaller packaging for home use,” The Washington Post reported last week.

One complication in reconfiguring those supply chains on the fly to direct more food to grocery stores and less to restaurants: federal regulations.

“Many of the ingredients, processes and regulatory requirements for manufacturing food products destined for grocery stores and restaurants are virtually identical,” says Betsy Booren, senior vice president for regulatory and technical affairs with the Consumer Brands Association, an industry group that represents grocery stores and food producers. “What does most often differ is the packaging and labeling of food destined for restaurants versus grocery stores.”

Think about a package of hamburger buns. The one you might buy in a grocery store contains the exact same buns that a producer might also send to a restaurant down the street. But there are two key differences in packaging. First, the restaurant isn’t buying them in packages of eight or 12 at a time. Second, while the restaurant does have to comply with Food and Drug Administration (FDA) requirements for publishing nutritional information on menus, the buns they are buying don’t come with as many specific labels and data on the package.

In March, the FDA waived some of its labeling requirements to allow restaurants to sell their unused food directly to the public. Repackaged, unprepared food from restaurants must contain a description of the product and the FDA’s mandatory warnings about potential allergies, but more detailed information—like the “nutritional facts” found on anything you might purchase in a grocery store—can be skipped.

(Of course, even federal regulatory approval has not been enough to prevent some insane local officials in places like Boston and Los Angeles from banning restaurants from acting as impromptu grocery stores.)

“It’s not terribly unreasonable to have these sort of minimal safety rules remain in place,” says Gregory Conko, a senior fellow with the Competitive Enterprise Institute, a free market think tank. “But from a regulatory perspective, it would be great if that rule could apply beyond restaurants so you could ship that same product to a grocery store.”

With the food service industry facing a 60 percent decline in sales due to the COVID-19 outbreak, those labeling requirements have complicated efforts to reroute food from restaurant supply chains to grocery stores.

“Companies are looking for opportunities to divert this food to other supply streams, including grocery stores,” says Booren.

Easing those restrictions won’t fix all the problems, but it would help. Grocery stores may be unable to accept foods packaged and labeled in certain ways because there is simply no demand from consumers to purchase large bulk containers of certain items, or because it is not cost-effective for grocery stores to break down the bulk food and repackage it into smaller portions for sale, Booren says.

That’s one of the reasons why the dairy supply chain has been particularly hard hit. Stories of milk trucks dumping their goods, for example, are likely the result of too much supply and not enough demand. Restaurants consume far more milk and butter than most consumers do, and those products spoil quickly.

Some states have stepped up to the task. Wyoming, for example, passed a new law that allows ranchers to sell cuts of meat directly to consumers. Anything that can be done to ease food supply chain bottlenecks should be considered right now.

Conko says the current mess should put the spotlight on some regulatory issues that have been ignored for years, including some seemingly inexplicable regulatory overlap between the FDA and U.S. Department of Agriculture (USDA)—like the fact that frozen pizzas are subject to FDA regulation unless they have a meat topping, in which case they fall under USDA jurisdiction. Or the fact that an egg-laying chicken is regulated by the USDA, but the egg the chicken lays is regulated by the FDA until it is cracked open and used as an ingredient in another product, at which point the USDA takes over again.

With so many unnecessary or questionable regulations being suspended or abolished during the coronavirus outbreak, Conko sees an opportunity to streamline food supply chains too.

“We really ought to rethink the way we do this across the board,” Conko says. “Does this now all of a sudden add weight to those arguments? Maybe a little, but I think they were pretty strong to begin with.”

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Should Justin Amash Run for President?

Since Rep. Justin Amash (I–Mich.) announced Wednesday that he has been “carefully consider[ing] a presidential run,” presumably with the Libertarian Party, there have been three bits of interesting news:

1) An April 14-16 Morning Consult national poll of 1,992 registered voters, the first of its kind in seven months, had the libertarian congressman at just 1 percent, compared to Joe Biden’s 46 and President Donald Trump’s 42 (5 percent said “someone else” and 6 percent said they would not vote). Removing Amash’s name from the options did not change the point-spread between the two leading candidates.

2) First-quarter fundraising numbers came in from Amash’s 3rd Congressional District in Michigan, and—unsurprisingly, given his announcement that he stopped campaigning actively in mid-February while pondering his presidential future—the independent incumbent finished in fourth place for January-March numbers, with $97,000, after having led the field the previous quarter. Republican supermarket magnate Peter Meijer, who this week won the endorsement of the influential former Amash backers in the DeVos family, raised $353,000, including a $150,000 loan to himself; state Rep. Lynn Afendoulis (R–Grand Rapids) raised $190,000, and Democrat Hillary Scholten raised $152,000. Amash still has a slight lead in cash on hand, with $645,000, compared to $634,000 for Meijer, $259,000 for Scholten, and $248,000 for Afendoulis.

3) As mentioned in this morning’s Reason Roundup, the coronavirus is hammering crucial signature-gathering exercises for third parties, potentially preventing the Libertarian Party from reaching its previously expected goal of being on the ballot in all 50 states.

So at this late date, one month out from the party’s scheduled (if physically uncertain) nominating convention, should Amash throw his hat into the ring? The reaction is mixed on the new Reason Roundtable podcast, featuring Nick Gillespie, Katherine Mangu-Ward, Peter Suderman and Matt Welch. The quartet also, as you would imagine, discusses the coronavirus response, particularly the reopening debate, protests thereof, and the never-ending bailout/stimulus/printer-go-BRRRRing.

Audio production by Ian Keyser and Regan Taylor.

Music Credit: ‘Late Night Drive’ by Nat Keefe & BeatMower.

Relevant links from the show:

“Justin Amash Has Been Actively Pondering a Libertarian Presidential Run for 2 Months, and Will Decide Soon,” by Matt Welch

“Judge Jim Gray Thinks the Libertarian Party Needs Pragmatism, ‘Stature’ for 2020 Presidential Run,” by Brian Doherty

“Justin Amash Outraises Democratic and Republican Opponents in Fourth Quarter,” by Matt Welch

“Key Election Forecaster Switches Justin Amash’s House Seat to ‘Lean Republican’ in 2020,” by Matt Welch

“Candidates Vie to Represent the Libertarian Wing of the Libertarian Party,” by Matt Welch

“Will Justin Amash Run for President as a Libertarian in 2020?” By Matt Welch

“Pushy Politicians Make Stay-at-Home Protests Necessary,” by J.D. Tuccille

“Don’t Get Fooled by Fake Photos of Coronavirus Lockdown Protests,” by Elizabeth Nolan Brown

“Celebrities and the Media Shouldn’t Sneer at Coronavirus Lockdown Protesters,” by Robby Soave

“It Took Less Than 24 Hours for Trump To Undermine His New Plan for Reopening State Economies,” by Eric Boehm

“Trump’s Plan To Reopen the Economy Admits Governors Are in Charge, but We’re Probably Months Away From Anything Resembling Normalcy,” by Eric Boehm

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Should Justin Amash Run for President?

Since Rep. Justin Amash (I–Mich.) announced Wednesday that he has been “carefully consider[ing] a presidential run,” presumably with the Libertarian Party, there have been three bits of interesting news:

1) An April 14-16 Morning Consult national poll of 1,992 registered voters, the first of its kind in seven months, had the libertarian congressman at just 1 percent, compared to Joe Biden’s 46 and President Donald Trump’s 42 (5 percent said “someone else” and 6 percent said they would not vote). Removing Amash’s name from the options did not change the point-spread between the two leading candidates.

2) First-quarter fundraising numbers came in from Amash’s 3rd Congressional District in Michigan, and—unsurprisingly, given his announcement that he stopped campaigning actively in mid-February while pondering his presidential future—the independent incumbent finished in fourth place for January-March numbers, with $97,000, after having led the field the previous quarter. Republican supermarket magnate Peter Meijer, who this week won the endorsement of the influential former Amash backers in the DeVos family, raised $353,000, including a $150,000 loan to himself; state Rep. Lynn Afendoulis (R–Grand Rapids) raised $190,000, and Democrat Hillary Scholten raised $152,000. Amash still has a slight lead in cash on hand, with $645,000, compared to $634,000 for Meijer, $259,000 for Scholten, and $248,000 for Afendoulis.

3) As mentioned in this morning’s Reason Roundup, the coronavirus is hammering crucial signature-gathering exercises for third parties, potentially preventing the Libertarian Party from reaching its previously expected goal of being on the ballot in all 50 states.

So at this late date, one month out from the party’s scheduled (if physically uncertain) nominating convention, should Amash throw his hat into the ring? The reaction is mixed on the new Reason Roundtable podcast, featuring Nick Gillespie, Katherine Mangu-Ward, Peter Suderman and Matt Welch. The quartet also, as you would imagine, discusses the coronavirus response, particularly the reopening debate, protests thereof, and the never-ending bailout/stimulus/printer-go-BRRRRing.

Audio production by Ian Keyser and Regan Taylor.

Music Credit: ‘Late Night Drive’ by Nat Keefe & BeatMower.

Relevant links from the show:

“Justin Amash Has Been Actively Pondering a Libertarian Presidential Run for 2 Months, and Will Decide Soon,” by Matt Welch

“Judge Jim Gray Thinks the Libertarian Party Needs Pragmatism, ‘Stature’ for 2020 Presidential Run,” by Brian Doherty

“Justin Amash Outraises Democratic and Republican Opponents in Fourth Quarter,” by Matt Welch

“Key Election Forecaster Switches Justin Amash’s House Seat to ‘Lean Republican’ in 2020,” by Matt Welch

“Candidates Vie to Represent the Libertarian Wing of the Libertarian Party,” by Matt Welch

“Will Justin Amash Run for President as a Libertarian in 2020?” By Matt Welch

“Pushy Politicians Make Stay-at-Home Protests Necessary,” by J.D. Tuccille

“Don’t Get Fooled by Fake Photos of Coronavirus Lockdown Protests,” by Elizabeth Nolan Brown

“Celebrities and the Media Shouldn’t Sneer at Coronavirus Lockdown Protesters,” by Robby Soave

“It Took Less Than 24 Hours for Trump To Undermine His New Plan for Reopening State Economies,” by Eric Boehm

“Trump’s Plan To Reopen the Economy Admits Governors Are in Charge, but We’re Probably Months Away From Anything Resembling Normalcy,” by Eric Boehm

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A Harvard Plan To Use Massive COVID-19 Testing To Reopen the Economy

To fully restart the U.S. economy by August, massive population testing for infections with the virus that causes COVID-19 is essential, according to the roadmap to pandemic resilience just issued today by the Safra Center for Ethics at Harvard University. Testing results should be available the next day at the latest. The roadmap also sketches out a system of tracing the contacts of people who are infected by the coronavirus. Those contacts are warned about their exposure and tested numerous times. If a contact’s tests turn positive they should be provided supported isolation that includes job protections, safe shelter, food, and health care. The authors of the report estimate that this scheme for testing, tracing, and supported isolation (TTSI) would cost between $50 to $300 billion over two years. As they note this is extremely cheap compared to “the economic cost of continued collective quarantine of $100 to 350 billion a month.”

How much testing would be required to implement their proposed roadmap? “We estimate that steady-state testing levels that would permit replacing collective stay-at-home orders as the main tool for disease control with a testing—tracing-and-warning—supported-isolation, or TTSI, methodology will eventually need to reach a capacity to test 2 to 6% of the population per day, or between 5 and 20 million people per day,” note the authors.

How would they achieve a rapid increase in testing capacity? Given how badly federal agencies botched testing as the coronavirus outbreak was growing, the authors wisely recommend turning to the private sector. “The government should not hesitate to pay substantial sums to incentivize the private sector to apply ingenuity and speed to develop solutions,” note the authors. “Prizes and advance market commitments are two tools to be considered.”

In order to warn people who have come into contact with an infected person that they should be tested, the authors recommend initially hiring and training 100,000 contact tracers at a cost of $3.6 billion. Such manual contact tracing could be supplemented with opt-in peer-to-peer cell phone warning apps. The researchers suggest that the deployment of such apps include maximal privacy protection, use open-source code amenable to independent and regulatory audit, and prohibit the use of any data from these apps for commercial purposes.

Frustratingly, the Safra Center authors do not discuss prohibiting government abuse of the tracking functions and data collected by the apps (that is, immigration authorities and law enforcement). In order to forestall our government from using the pandemic as an excuse to further violate our civil rights and privacy, we should adopt the proposals recommended by the Ada Lovelace Institute (ALI) in its similar testing-and-tracking scheme for the United Kingdom. The ALI authors warn that “there is a real risk that the expansion of state intrusion into individuals’ lives that occurs during emergencies endures beyond the originating crisis.” Consequently, they recommend:

Legal and technical sunset clauses must be built into the design of new powers and technologies. Government must provide advance primary legislation regulating the processing of data by both public and private sector actors in the use of technology to transition from the crisis. Government must encourage privacy-by-design in technical implementations and must choose privacy-preserving protocols to underscore technical measures.

Recommendations like these must be part of any wide-scale U.S. COVID-19 testing and tracing plan.

The Safra Center authors sketch out a four-phase program aimed at fully reopening the economy by the end of this summer. During phase one, they recommend increasing publicly-funded diagnostic testing capability to 2 million tests per day, focusing on everyone with symptoms and their close contacts, as well as essential workers, nursing home residents, and incarcerated people. With this amount of testing, they estimate that 40 to 55 percent of people could return to work.

With the testing and tracing regime solidly in place, COVID-19 case rates would decline, thus enabling the initiation of phase two in the next month. With further expansion of testing and tracing, 70 percent of the workforce could return to work. Those who can work at home would still do so and vulnerable people (e.g. those over age 60) would continue to limit their time in the community. In phase three, increased testing and tracing that covers 80 percent of the workforce in localities would allow most non-telecommuting laborers to return to work. In phase four, universal testing would be available and schools could reopen.

The roadmap, as outlined, could likely work. However, assuming that the real and substantial technical difficulties in ramping up that much daily testing can be overcome, the ongoing economic distress makes it unlikely that the public would endure the implementation of such a careful plan. And even if the public did remain patient, it’s doubtful that the bureaucrats and politicians in Washington, including our chaotic president, have the competence to pull it off.

 

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A Plan To Use Massive COVID-19 Testing To Reopen the Economy

To fully restart the U.S. economy by August, massive population testing for infections with the virus that causes COVID-19 is essential, according to the roadmap to pandemic resilience just issued today by the Safra Center for Ethics at Harvard University. Testing results should be available the next day at the latest. The roadmap also sketches out a system of tracing the contacts of people who are infected by the coronavirus. Those contacts are warned about their exposure and tested numerous times. If a contact’s tests turn positive they should be provided supported isolation that includes job protections, safe shelter, food, and health care. The authors of the report estimate that this scheme for testing, tracing, and supported isolation (TTSI) would cost between $50 to $300 billion over two years. As they note this is extremely cheap compared to “the economic cost of continued collective quarantine of $100 to 350 billion a month.”

How much testing would be required to implement their proposed roadmap? “We estimate that steady-state testing levels that would permit replacing collective stay-at-home orders as the main tool for disease control with a testing—tracing-and-warning—supported-isolation, or TTSI, methodology will eventually need to reach a capacity to test 2 to 6% of the population per day, or between 5 and 20 million people per day,” note the authors.

How would they achieve a rapid increase in testing capacity? Given how badly federal agencies botched testing as the coronavirus outbreak was growing, the authors wisely recommend turning to the private sector. “The government should not hesitate to pay substantial sums to incentivize the private sector to apply ingenuity and speed to develop solutions,” note the authors. “Prizes and advance market commitments are two tools to be considered.”

In order to warn people who have come into contact with an infected person that they should be tested, the authors recommend initially hiring and training 100,000 contact tracers at a cost of $3.6 billion. Such manual contact tracing could be supplemented with opt-in peer-to-peer cell phone warning apps. The researchers suggest that the deployment of such apps include maximal privacy protection, use open-source code amenable to independent and regulatory audit, and prohibit the use of any data from these apps for commercial purposes.

Frustratingly, the Safra Center authors do not discuss prohibiting government abuse of the tracking functions and data collected by the apps (that is, immigration authorities and law enforcement). In order to forestall our government from using the pandemic as an excuse to further violate our civil rights and privacy, we should adopt the proposals recommended by the Ada Lovelace Institute (ALI) in its similar testing-and-tracking scheme for the United Kingdom. The ALI authors warn that “there is a real risk that the expansion of state intrusion into individuals’ lives that occurs during emergencies endures beyond the originating crisis.” Consequently, they recommend:

Legal and technical sunset clauses must be built into the design of new powers and technologies. Government must provide advance primary legislation regulating the processing of data by both public and private sector actors in the use of technology to transition from the crisis. Government must encourage privacy-by-design in technical implementations and must choose privacy-preserving protocols to underscore technical measures.

Recommendations like these must be part of any wide-scale U.S. COVID-19 testing and tracing plan.

The Safra Center authors sketch out a four-phase program aimed at fully reopening the economy by the end of this summer. During phase one, they recommend increasing publicly-funded diagnostic testing capability to 2 million tests per day, focusing on everyone with symptoms and their close contacts, as well as essential workers, nursing home residents, and incarcerated people. With this amount of testing, they estimate that 40 to 55 percent of people could return to work.

With the testing and tracing regime solidly in place, COVID-19 case rates would decline, thus enabling the initiation of phase two in the next month. With further expansion of testing and tracing, 70 percent of the workforce could return to work. Those who can work at home would still do so and vulnerable people (e.g. those over age 60) would continue to limit their time in the community. In phase three, increased testing and tracing that covers 80 percent of the workforce in localities would allow most non-telecommuting laborers to return to work. In phase four, universal testing would be available and schools could reopen.

The roadmap, as outlined, could likely work. However, assuming that the real and substantial technical difficulties in ramping up that much daily testing can be overcome, the ongoing economic distress makes it unlikely that the public would endure the implementation of such a careful plan. And even if the public did remain patient, it’s doubtful that the bureaucrats and politicians in Washington, including our chaotic president, have the competence to pull it off.

 

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Ilhan Omar’s Bill Would Enable the Feds To Seize Landlords’ Properties for Trying To Collect Rent During Coronavirus

The movement to cancel rent during the COVID-19 pandemic is going national. On Friday, Rep. Ilhan Omar (D–Minn.) introduced the Rent and Mortgage Cancellation Act, which does what the title suggests, and much, much more.

Omar’s legislation—which is being co-sponsored by “squad” Reps. Alexandria Ocasio-Cortez (D–N.Y.), Rashida Tlaib (D–Mich.), Ayanna Pressley (D–Mass.), alongside three other progressive Democrats and a bevy of left-wing activist groups—would cancel rent and mortgage payments for the entire country “regardless of income or payment level.”

The rent and mortgage suspension would only apply to primary residences and would remain in effect until a month after the end of the national emergency President Donald Trump declared on March 13. Tenants and homeowners would not have to make payments on leases or mortgages during that whole time, nor could their landlords or lenders use their failure to pay as a cause for eviction or foreclosure.

In addition, tenants and homeowners could not be charged late fees or penalties, nor could they have their credit scores downgraded. People who feel they’ve suffered an “adverse action” for exercising these protections could sue their landlord or mortgage lender in federal court for damages.

The attorney general would also be empowered to take civil action against property owners and mortgage lenders for violating renters’ and homeowners’ rights under the act. Violators could be hit with a $5,000 fine for a first offense and a $10,000 fine for the second offense. Landlords who violate the act three or more times could be fined $50,000 or could even have their property seized.

That means the government could snatch up a landlord’s rental property just for reporting three tenants who didn’t pay their rent to a credit reporting agency.

These are all extreme measures, which Omar argues are justified by the extreme circumstances of the COVID-19 pandemic.

“Congress has a responsibility to step in to stabilize both local communities and the housing market during this time of uncertainty and crisis,” said the Minnesota congresswoman in a press release. “In 2008, we bailed out Wall Street. This time, it’s time to bail out the American people who are suffering.”

One common criticism of rent and mortgage forgiveness policies is that they just pass on the costs of housing to rental property owners and lenders who have their own bills to pay.

To that end, Omar’s legislation would create two funds to compensate landlords and mortgage lenders for any income they lose as a result of her bill. But this money would come with a lot of strings attached.

In order to be eligible for relief funds, landlords couldn’t raise rents for five years. They would also not be allowed to discriminate against tenants based on their credit score or criminal history during that same five year period. According to a summary of the bill put out by Omar’s office, landlords making use of these relief funds would also have to give tenants a 10 percent equity stake in their properties.

A relief fund for mortgage lenders would also be created and would come with requirements to report detailed lending data to federal housing authorities. Both funds would be administered by the Department of Housing and Urban Development (HUD).

The bill would create a new Affordable Housing Acquisition Fund, also administered by HUD. This fund would give money to government entities and nonprofits to buy up private buildings and convert them to income-restricted affordable housing. To facilitate these purchases, property owners would have to notify HUD when they intend to sell a rental property, and then give low-income housing providers 60 days to make an offer on their building.

Anyone who did purchase a property through HUD’s affordable housing fund would have to agree to provide tenants with free “wrap-around” services, including healthcare, childcare, employment and education assistance, and financial literacy education.

One might ask themselves how exactly free financial literacy classes at federally-funded public housing fits into an emergency response to the COVID-19 pandemic. The answer is it doesn’t.

Rather it appears that Omar is using the pandemic, and the swell of support for rent cancellation that it’s created, as a vehicle for enacting her ambitious, preexisting housing policy goals.

Much of what’s included in Omar’s bill appears borrowed from the $1 trillion public housing legislation that she introduced in November of last year. That bill called for creating millions of new public housing units that would come with free social services provided on-site.

Omar’s latest legislation is effectively an attempt to strong-arm landlords into getting this same result.

To summarize, her bill would eliminate landlords’ ability to earn income from their properties, and then attach a number of incredibly costly conditions for accessing relief funds.

Landlords who balk at the bailout conditions Omar proposes, but who can’t afford to earn $0 for the duration the coronavirus emergency would be left with the option of selling their properties. When they do put their properties on the market, they’d be first required to offer them to low-income housing providers who’d be receiving generous federal aid to snap up units.

This is all incredibly coercive, not to mention constitutionally dubious. It’s also wildly impractical from a fiscal perspective. The federal government is currently looking at a quadrupled $3.8 trillion budget deficit this year, according to estimates from the Committee for a Responsible Federal Budget.

In addition to this staggering amount of debt, Omar’s bill would have the federal government offering to pay the nation’s rent and mortgage bills, not to mention financing the purchase of an untold number of private rental buildings.

The extremity of the Minnesota congresswoman’s proposal also makes it unlikely to gain much traction in Congress. That’s good news for advocates for private property, even if it does speak ill of Omar’s priorities as a legislator. With even some Republican members of Congress talking about rent forgiveness, there’s potential that a more modest and targeted bill could actually attract significant support.

The radicalism of Omar’s proposal is nevertheless evidence of just how much of an opening some progressives see in the coronavirus pandemic to enact any number of policies that would have been unthinkable in February.

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Ilhan Omar’s Bill Would Enable the Feds To Seize Landlords’ Properties for Trying To Collect Rent During Coronavirus

The movement to cancel rent during the COVID-19 pandemic is going national. On Friday, Rep. Ilhan Omar (D–Minn.) introduced the Rent and Mortgage Cancellation Act, which does what the title suggests, and much, much more.

Omar’s legislation—which is being co-sponsored by “squad” Reps. Alexandria Ocasio-Cortez (D–N.Y.), Rashida Tlaib (D–Mich.), Ayanna Pressley (D–Mass.), alongside three other progressive Democrats and a bevy of left-wing activist groups—would cancel rent and mortgage payments for the entire country “regardless of income or payment level.”

The rent and mortgage suspension would only apply to primary residences and would remain in effect until a month after the end of the national emergency President Donald Trump declared on March 13. Tenants and homeowners would not have to make payments on leases or mortgages during that whole time, nor could their landlords or lenders use their failure to pay as a cause for eviction or foreclosure.

In addition, tenants and homeowners could not be charged late fees or penalties, nor could they have their credit scores downgraded. People who feel they’ve suffered an “adverse action” for exercising these protections could sue their landlord or mortgage lender in federal court for damages.

The attorney general would also be empowered to take civil action against property owners and mortgage lenders for violating renters’ and homeowners’ rights under the act. Violators could be hit with a $5,000 fine for a first offense and a $10,000 fine for the second offense. Landlords who violate the act three or more times could be fined $50,000 or could even have their property seized.

That means the government could snatch up a landlord’s rental property just for reporting three tenants who didn’t pay their rent to a credit reporting agency.

These are all extreme measures, which Omar argues are justified by the extreme circumstances of the COVID-19 pandemic.

“Congress has a responsibility to step in to stabilize both local communities and the housing market during this time of uncertainty and crisis,” said the Minnesota congresswoman in a press release. “In 2008, we bailed out Wall Street. This time, it’s time to bail out the American people who are suffering.”

One common criticism of rent and mortgage forgiveness policies is that they just pass on the costs of housing to rental property owners and lenders who have their own bills to pay.

To that end, Omar’s legislation would create two funds to compensate landlords and mortgage lenders for any income they lose as a result of her bill. But this money would come with a lot of strings attached.

In order to be eligible for relief funds, landlords couldn’t raise rents for five years. They would also not be allowed to discriminate against tenants based on their credit score or criminal history during that same five year period. According to a summary of the bill put out by Omar’s office, landlords making use of these relief funds would also have to give tenants a 10 percent equity stake in their properties.

A relief fund for mortgage lenders would also be created and would come with requirements to report detailed lending data to federal housing authorities. Both funds would be administered by the Department of Housing and Urban Development (HUD).

The bill would create a new Affordable Housing Acquisition Fund, also administered by HUD. This fund would give money to government entities and nonprofits to buy up private buildings and convert them to income-restricted affordable housing. To facilitate these purchases, property owners would have to notify HUD when they intend to sell a rental property, and then give low-income housing providers 60 days to make an offer on their building.

Anyone who did purchase a property through HUD’s affordable housing fund would have to agree to provide tenants with free “wrap-around” services, including healthcare, childcare, employment and education assistance, and financial literacy education.

One might ask themselves how exactly free financial literacy classes at federally-funded public housing fits into an emergency response to the COVID-19 pandemic. The answer is it doesn’t.

Rather it appears that Omar is using the pandemic, and the swell of support for rent cancellation that it’s created, as a vehicle for enacting her ambitious, preexisting housing policy goals.

Much of what’s included in Omar’s bill appears borrowed from the $1 trillion public housing legislation that she introduced in November of last year. That bill called for creating millions of new public housing units that would come with free social services provided on-site.

Omar’s latest legislation is effectively an attempt to strong-arm landlords into getting this same result.

To summarize, her bill would eliminate landlords’ ability to earn income from their properties, and then attach a number of incredibly costly conditions for accessing relief funds.

Landlords who balk at the bailout conditions Omar proposes, but who can’t afford to earn $0 for the duration the coronavirus emergency would be left with the option of selling their properties. When they do put their properties on the market, they’d be first required to offer them to low-income housing providers who’d be receiving generous federal aid to snap up units.

This is all incredibly coercive, not to mention constitutionally dubious. It’s also wildly impractical from a fiscal perspective. The federal government is currently looking at a quadrupled $3.8 trillion budget deficit this year, according to estimates from the Committee for a Responsible Federal Budget.

In addition to this staggering amount of debt, Omar’s bill would have the federal government offering to pay the nation’s rent and mortgage bills, not to mention financing the purchase of an untold number of private rental buildings.

The extremity of the Minnesota congresswoman’s proposal also makes it unlikely to gain much traction in Congress. That’s good news for advocates for private property, even if it does speak ill of Omar’s priorities as a legislator. With even some Republican members of Congress talking about rent forgiveness, there’s potential that a more modest and targeted bill could actually attract significant support.

The radicalism of Omar’s proposal is nevertheless evidence of just how much of an opening some progressives see in the coronavirus pandemic to enact any number of policies that would have been unthinkable in February.

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Attempt to Vanish (Cubed) Post Critical of the Sandy Hook Hoax Libel Judgment

Lenny Pozner, the father of a boy (Noah Pozner) killed in the Sandy Hook shooting, sued James Fetzer and Mike Palacek, who cowrote the book “Nobody Died at Sandy Hook.” The book had claimed, among other things, that

  • “Noah Pozner’s death certificate is a fake, which we have proven on a dozen or more grounds.”
  • “[Mr. Pozner] sent her a death certificate, which turned out to be a fabrication.”
  • “As many Sandy Hook researchers are aware, the very document Pozner circulated in 2014, with its inconsistent tones, fonts, and clear digital manipulation, was clearly a forgery.”

Pozner said this libeled him, and in June 2019 a Wisconsin judge agreed, and granted Pozner summary judgment on liability. In October, the jury awarded Pozner $450,000 in damages, and in December, the judge issued an injunction barring Fetzer “from communicating by any means” these libelous statements. (Such anti-libel injunctions, following a judgment on the merits, are generally viewed as constitutional by most courts that have recently considered the matter.)

But in October, a request was submitted to Google, in Pozner’s name, seeking to deindex material that simply discussed the case and criticized the court decision, such as various copies of “The Legal Lynching of a Truth-Seeker: Jim Fetzer’s Stalinist-Style Show Trial” and “Sandy Hook and the Murder of the First Amendment.” The court’s judgment of course didn’t find these items (posted in response to the judgment) to be libelous, and it offers no basis for Google to deindex them.

In November, I wrote about this, and in January I learned that Amazon Web Services had gotten a takedown demand (which Amazon didn’t act on) to remove that post. So I wrote about that, and today I learned that Google had gotten a request to deindex that post, also submitted under the name “Leonard Pozner.” (When I last corresponded with Pozner about his Amazon Web Services takedown demand, he said that he didn’t want me to contact him again, so I haven’t checked with him whether this latest deindexing request was also actually from him.) So we now have an attempt to vanish a post about an attempt to vanish a post about an attempt to vanish posts critical of the Sandy Hook hoax libel judgment, hence the title of this post.

Of course, there’s no real basis for this deindexing request. My posts weren’t the subject of any injunction; they were, to my knowledge, entirely accurate (they certainly don’t endorse the libel to which they indirectly refer); no-one ever sued over them. The PDFs attached to the deindexing request are documents from the original libel case, but those were against people who claimed the Sandy Hook shooting was a hoax, not against me (and not in reference to my posts). My posts do criticize the earlier vanishing requests, but of course nothing in the court order can preclude such criticism, or purports to preclude such criticism.

I’m pretty sure Google won’t do anything about this deindexing request, but I thought I’d mention it just to illustrate how some people are trying to vanish criticism from the Internet.

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