Mark Cuban says the Paycheck Protection Program isn't enough
Entrepreneur Mark Cuban shares his thoughts on small business relief and restarting the American economy.
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Billionaire entrepreneur and Dallas Mavericks owner Mark Cuban said Tuesday that the Paycheck Protection Program (PPP) has created “zombie companies” and proposed additional stimulus payments to families to jumpstart the economy.
“America’s Newsroom” host Ed Henry brought up Cuban’s stimulus idea, which would give American families $1,000 every other week for two months. The money would have to be spent quickly as a way to stimulate the economy.
Cuban elaborated on the idea saying that the money would be put on a “direct express type debit card … and after ten days the government can decide to just credit it back, so if it's not used, you lose it.”
Cuban, who is part of President Trump's advisory group on reopening economy, added that Americans would be able to “spend it on whatever they want.”
The PPP, which is part of the more than $2 trillion legislative package approved by Congress in March, was designed to get cash in the hands of struggling small businesses and incentivize them to keep staff on payroll, or re-hire workers who have already been laid off. Businesses with fewer than 500 employees are eligible for forgivable loans under the program.
In the legislative package, Congress also provided $250 billion to extend unemployment insurance to more workers, and lengthen the duration to 39 weeks, up from the normal 26 weeks. The provision allowed for an extra $600 to be provided a week for four months to those losing their jobs amid the crisis.
On Thursday, the Labor Department reported that for the week ending May 16, more than 2.4 million laid-off workers applied for unemployment, pushing the nine-week total of losses since states directed residents to stay at home and required nonessential businesses to temporarily close to nearly 39 million.
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Henry brought up the fact that he has interviewed several business owners who said they can't actually use the PPP money on payroll because people aren't coming back to work given they are receiving “more generous unemployment benefits.”
He then asked Cuban, “How do you add that to the mix here when you say you want to hand out more money?”
“You are exactly right,” the star of the reality show "Shark Tank" said in response.
Cuban then explained that the PPP funds were approved in late March but the “money didn’t get to those companies until weeks later," so layoffs took place anyway. He said now there is a "catch-22 situation" where former employees are earning more money on unemployment than they did in their previous job.
He noted that the more generous unemployment benefits are set to end on July 31.
“What I want to do is create a stimulus to enhance demand,” Cuban explained. “Two-thirds of the economy is demand-driven so by stimulating demand, you give those companies a reason and the ability to bring those employees back once that unemployment runs out, so that the timing’s right.”
He then said “zombie companies” received PPP money, adding that "they can’t afford to bring people back because they’re either closed or their demand is lower or the pay requirements for the people they laid off are so much higher now so they’re stuck in the middle, not sure what to do.”
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Cuban went on to say that his stimulus plan “creates demand that coincides with the ending of the unemployment stimulus so that that gives them the ability and the reason to bring them [employees] back.”
Fox News’ Gregg Re contributed to this report.
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