Here’s a deep philosophical question: If a $40 billion organization applies for a government bailout in a forest and no one’s around to question it, does the cash flow make a sound? Sadly, we will never have a chance to learn the answer to that question. Yesterday, Treasury Secretary Steve Mnuchin hailed Shake Shack — market cap $1.7 billion — for belatedly coming to its senses and agreeing to return $10 million it got from the Paycheck Protection Program.
What about an organization that has a $40 billion endowment? Harvard got a similar amount of money from other programs in the CARES Act rather than the PPP, but Trump demanded that they give that money back, too. “They shouldn’t have taken it,” Trump declared in yesterday’s briefing, and late last night emphasized the point:
President Donald Trump demanded again that Harvard pay back the $8.6 million it received under a stimulus package to ease the economic impact of the coronavirus lockdown – hours after the school said it planned to keep the funds.
“Harvard should give back the money now. Their whole ‘endowment’ system should be looked at!” the president said in a tweet late Tuesday.
Earlier in the day, the world’s wealthiest university tweeted that it was allocated the money as part of the historic $2.2 trillion package passed last month to stimulate the collapsing economy.
Harvard claims that the $9 million-plus it got from CARES Act funds will go to students for financial aid. Forbes sounds skeptical that this was the original plan as opposed to a response to criticism from a broad range of skeptics running from HuffPost and Trevor Noah all the way to Trump, and Harvard won’t say when and how that decision was made:
Harvard is under attack for the $9 million in stimulus money it’s getting from the federal government. “America’s Richest University Grabs Nearly $9 Million In Taxpayer Aid,” blasted a Huffington Post headline yesterday. On Comedy Central last night, Trevor Noah said Harvard was “just being greedy.” Donald Trump Jr. tweeted that Harvard was getting cash that should have gone to “a small business that actually needs the money.”
But according to a statement emailed late yesterday by spokesman Jason Newton, Harvard won’t use any of its $9 million stimulus check to make up for losses it has absorbed since it moved classes online in mid-March. “Harvard is actually allocating 100% of the funds to financial assistance for students to meet their urgent needs in the face of this pandemic,” says the statement.
How did Harvard decide to pass all the money to students, who made the call, and when? Was it in response to criticism? “I’m not going to get into when the decision was made,” says Newton. Harvard declined repeated requests to interview President Lawrence Bacow and other university officials.
Even this explanation is nonsense. How many Harvard students need this much financial aid? This ain’t exactly State U, after all. Harvard students already live on campus, and the neediest are almost certainly on full scholarships anyway, given the high tuitions and living expenses. Most of their students come from families that can afford to support their children even in tough times. Even if this money was needed, however, $9 million represents 0.0225% of Harvard’s overall endowment. Come on, man.
Needless to say, this is a *chef’s-kiss* perfect fight for Trump to pick. He’s a populist president with a mostly conservative agenda taking on the bastion of Progressive Academia and elitist snobs, and depantsing them as hypocritical and corrupt. One has to overlook the fact that Congress passed a law that allowed for this to happen in the first place, just the same way Shake Shack took advantage of PPP, but that’s Congress’ issue, not Trump’s. This is perhaps the juiciest of all limousine-liberal examples, and it’s a wide-open opportunity for Trump to repay all of the disgust and scorn dumped on him by Academia and the progressive elite. Expect him to run with this for a long, long time.
However, Mnuchin and Trump did allow for a free pass to other such corporations and organizations to get out of the line of fire. If companies with plenty of capital follow Shake Shack’s example and return the cash, there won’t be any need to name and shame them later. Or worse. This amnesty sounds like a one-time-only offer from Mnuchin, who hints that legal consequences may soon follow to claw back that cash less voluntarily.
Update: Harvard surrendered this afternoon, albeit reluctantly. Still claiming that they would have put the money to good use, Harvard now doesn’t want to be a distraction, or something:
Harvard is grudgingly giving up nearly $9 million in coronavirus relief after President Trump called out the elite university over federal aid awarded to schools as others are fighting for their economic lives.
The university announced Wednesday afternoon the school “has decided not to seek or accept the funds allocated to it by statute” as part of the nation’s Higher Education Emergency Relief Fund.
“We have previously said that Harvard, like other institutions, will face significant financial challenges due to the pandemic and economic crisis it has caused,” the school said.
“We are also concerned however, that the intense focus by politicians and others on Harvard in connection with this program may undermine participation in a relief effort that Congress created and the President signed into law for the purpose of helping students and institutions whose financial challenges in the coming months may be most severe,” the statement adds.
Harvard said they will inform federal education officials of their decision “immediately,” adding they hope “special consideration will be given to Massachusetts institutions that are struggling to serve their communities and meet the needs of their students.”
You know who else could help out? Harvard and its $40 billion endowment. Nine million here, nine million there, and pretty soon it would add up to, er … maybe 0.1% of their nest egg.
The most unkindest cut of all came from the fellow Ivy League school a bit to the south:
#PrincetonU has determined it will not accept funding allocated under the CARES Act. Princeton has not yet received any of these funds, and never requested any of these funds. pic.twitter.com/En4nhqyqkc
— Princeton University (@Princeton) April 22, 2020
Ouch, baby, very ouch.