“As coronavirus spread, Susan Collins took $12,000 from the corporate hotel industry. Then Collins wrote a special loophole into her bill allowing large, out-of-state hotels to get millions — while only one in 10 Maine small businesses were getting the help they needed.”

— Voice-over in campaign ad from challenger Sara Gideon

Sara Gideon is the Maine House speaker and presumed front-runner for the Democratic nomination to challenge U.S. Sen. Susan Collins (R).

Collins played a key role in crafting the bipartisan Paycheck Protection Program, designed to keep small businesses afloat during the coronavirus pandemic. Under the program, roughly 75 percent of the money received had to be directed to keeping workers getting paychecks. In a tough ad, Gideon suggests Collins crafted the bill to benefit campaign contributors while leaving small businesses adrift. “Susan Collins,” the ad concludes. “She’s not for you anymore.”

This is a good example of how a narrative can be crafted to leave a false impression.

The Facts

Maeve Coyle, a spokeswoman for the Gideon campaign, insisted that every statement in the ad is documented. “The point is that Senator Collins has close ties to the special interests that hurt Mainers through her design of a program that allowed special interests to access funds intended for small businesses,” Coyle said.

At issue are donations totaling $12,500 that Collins received in February.

  • International Franchise Association Franchising Political Action Committee, $1,000
  • International Franchise Association Franchising Political Action Committee, $1,500
  • Hilton Worldwide Political Action Committee, $2,500
  • American Hotel and Lodging Association Political Action Committee (HOTELPAC), $2,500
  • HOTELPAC, $5,000

Collins’s quarterly filing indicates she raised more than $2 million in the first quarter of 2020 — and more than $12 million for her reelection race. So this $12,000 is just a tiny part of that pie.

Note that the ad says “as the coronavirus spread” she received the donations. Certainly, the coronavirus was spreading in February. But because the Trump administration failed to ramp up testing, it was spreading silently. Even toward the end of February, President Trump was claiming there were only 15 confirmed cases in the United States and little need for much money from Congress to deal with the problem.

So it seems a stretch to argue that the donations were given with an eye toward influencing coronavirus legislation that was crafted in mid-March. (One caveat: The global hotel industry was uniquely placed to see the impact the coronavirus would have on its business. Hilton has hotels in Wuhan, China, with one property near the seafood market thought to be the source of the virus.)

The ad highlights the headline of an article in the Daily Beast — “How Susan Collins’ Small Business Bill Helped Bail Out Big Ones” — but even that article says: “Those contributions — a fraction of the money she’s raised is this cycle — came before the PPP [Paycheck Protection Program] bill was under consideration, as the economic damage the virus would inflict became clear in March.”

The ad then claims “Collins wrote a special loophole into her bill allowing large, out-of-state hotels to get millions.” The implication is that in exchange for the campaign money, Collins did the bidding of her donors.

The addition of the provision was no secret at the time. The Paycheck Protection Program, which will allow companies to seek loan forgiveness if they keep paying employees, is aimed at small businesses with fewer than 500 employees. Big hotel chains, obviously, would not qualify, but a change in the language allowed individual hotels to seek PPP loans.

“Representatives from the American Hotel & Lodging Association reached out to Republicans and Democrats to push them to insert the language, arguing that it would allow the federal assistance to cover an additional 33,000 hotels, with a total of about one million employees,” the New York Times reported. “The large corporations that own the big brands — like Marriott or Hilton — would not be eligible. But any individual hotel, including from one of these brands, that has fewer than 500 employees would be. Many hotels are owned by franchisees.”

Notice the mention of Hilton. That was one of Collins’s donors. So Hilton’s corporate headquarters would not qualify. But a Hilton franchise in Maine would qualify, if the hotel had fewer than 500 employees.

Hilton hotels are mostly owned by franchises or the company manages hotels for third-party owners. As of Dec. 31, 2018, Hilton’s managed and franchised properties “included 689 managed hotels and 4,874 franchised hotels consisting of 882,873 total rooms,” the company told the Securities and Exchange Commission in a recent filing. Hilton itself owned only “71 properties totaling 21,720 rooms.”

It would certainly be in the interest of Hilton management to not let its franchised properties go out of business as vacation and business travel evaporated overnight. But this particular provision was not especially controversial. “There was bipartisan support for including operators of multiple franchises who, though they fly the flag of a corporate brand — Marriott, for example — and get marketing support, are essentially independent small businesses,” Bloomberg News reported.

Sen. Christopher A. Coons (D-Del.) told Bloomberg that the measure was “designed to put a floor under the restaurant and travel and hotel industries that are genuinely struggling, and the small businesses that so many of us are familiar with.”

Controversy erupted in the early days of the PPP program when some large chains admitted in public filings that they took advantage of sloppy wording in the provision to claim PPP funds. Many companies, under pressure from lawmakers and Trump, returned the money. The ad highlights another headline — “Dallas hotelier gets $58.7 million in small business funds” — but the companies run by Dallas hotelier Monty Bennett said they returned the money.

The $650 billion program ran out of the first $349 billion allotment in just 13 days, but more than $130 billion remains untapped in the second round of funding. Treasury Secretary Steven Mnuchin told Congress on June 10 that $12 billion has been returned by companies that were not supposed to get it. So, in the end, less than 2 percent appears to have originally gone to companies that were not deserving of the money.

The ad relies on the public perception that payouts to big companies helped drain the PPP fund, claiming that “only one in 10 Maine small businesses were getting the help they needed.” The ad flashes a headline from an April 16 article in the Bangor Daily News: “1 in 10 Maine Small Businesses Got Loans.”

That was obviously in the early days of the PPP program, but Coyle said the article is still relevant and attributes that statistic to Collins’s office. Reporter Jessica Piper, who wrote the article, said: “I can confirm the 1 in 10 figure did not come from Collins’ office.”

As of May 30, 25,721 small businesses had received loans. But whether that’s a little or a lot depends on how one counts the number of small businesses in Maine. The Gideon campaign says there are 147,270 small businesses, according to Small Business Administration, or so 17.5 percent have received money. But the Collins campaign argues that most of those are self-employed individuals or shell companies, and the same SBA data show only 32,797 firms in Maine with 1 to 499 employees. That would mean 78.4 percent received loans.

“That [147,270] number includes ‘businesses’ or shell corporations that do not have employees,” said Kevin Kelley, a Collins campaign spokesman. “The PPP, by design, is intended to keep workers getting a paycheck.”

Separately, a weekly non-random survey by the Census Bureau has found in recent weeks that 66 to 73 percent of the firms surveyed in Maine said they had received PPP funds. The Washington Post, in a comprehensive report on June 10, said that after a rocky start, the “federal government’s small-business Paycheck Protection Program is suddenly looking like a measured success.”

The Trump administration has refused to reveal which companies took PPP money, and Hilton did not respond to queries about which Maine franchises applied for PPP aid. In a June 6 report, the Treasury said that about 8 percent of the money, $41 billion, went to firms involved in “accommodation and food services.”

Coyle declined to respond to repeated questions about whether the ad implies Collins engaged in a quid pro quo with her donors.

“The PPP program was intended for small businesses. Small businesses across the country, including in Maine, should not have experienced the difficulty they did — and some still are — in getting the support necessary to keep them in business,” Coyle said. “One major reason they experience that difficulty is the loophole that Senator Collins inserted when designing the program. It allowed big corporations access to money that was not intended for them at the expense of Maine small businesses.”

The Pinocchio Test

Gideon’s ad takes several discrete elements — relatively minor campaign contributions to Collins, a bipartisan effort to allow franchises in hotel chains to obtain PPP money, and early numbers on PPP recipients in Maine — to sketch a misleading narrative. Without quite saying so, the ad implies that Collins worked on behalf of her corporate donors and left small businesses in Maine high and dry.

There were certainly problems with PPP at the start, and the amendment in question could have been drafted more tightly. But after public pressure, many companies that should not have obtained funds, such as the one highlighted in the ad, returned funds. In the end, a relatively small percentage of the money appears to have gone to undeserving recipients before it was given back.

Meanwhile, individually owned hotels under a corporate brand were able to keep paying their workers, a key goal of the PPP. The numbers are a little fuzzy, but it appears that a large percentage of businesses in Maine with fewer than 500 employees obtained PPP money. Indeed, whereas PPP funds ran out at first, now there is a surplus.

Overall, this ad is highly misleading and worthy of Three Pinocchios.

Three Pinocchios

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