Illustration: Sarah Grillo/Axios

Most people should and will accept free money from the government whenever it's offered. The CARES Act was designed to funnel trillions of dollars into workers' bank account and was written with the expectation that few people or businesses would say no to such a gift. Then the messaging changed.

Why it matters: Politicians lost no time in ratifying the anger and resentment aimed at some of the recipients of government-backed funds. The result has been a slew of businesses voluntarily rejecting government assistance.

Driving the news: The New York Times' Neil Irwin noted this week that "with stunning speed, the political conversation has pivoted from whatever-it-takes determination toward a different feeling: outrage."

The big picture: Legislation tends to be gamed, especially when it is written in a hurry. The government's Paycheck Protection Program, in particular, was the focus of a lot of anger after it became clear that relatively large and well-connected companies had managed to receive funding even as many very small — and even needier — businesses had been shut out of the first round.

  • By the numbers: In the initial tranche of the PPP, 44.5% of the money lent out — some $152 billion — went to businesses requesting more than $1 million. In the first week of the second round, by contrast, only 27% of the money went out in the form of seven-figure checks.
  • The average loan amount in the second round is $79,000, down sharply from $206,000 in the first round.

Between the lines: To some extent, the drop-off in average loan sizes is a function of the bigger recipients' ability to receive their money in the first round. But it's also a function of the fact that bigger businesses are listening to politicians, including Treasury Secretary Steven Mnuchin.

  • What they're saying: Mnuchin announced last week that the government would carefully scrutinize every PPP loan over $2 million before agreeing to forgive the money. What's more, he said, those businesses could face criminal liability. He concluded: "I encourage everybody to look at this and pay back these loans now, so we can recycle the money, if you made a mistake.”
  • No business wants that kind of government scrutiny, even if they are sure they qualify for the money.
  • It's easy for members of Congress to summon CEOs into public hearings designed to generate maximum negative publicity. If a CEO doesn't accept the money, she effectively avoids any risk of finding herself in that position.

For the record: Four of the top five businesses on the TrumpBailouts.org list of big recipients of PPP funds, put together by an anti-corruption watchdog group, have subsequently announced that they will be returning the money. Axios has done likewise.

  • Such announcements often come with a statement that "we have decided to return the loan with the hope it finds a home where it is more urgently needed," or words to that effect.
  • There's plenty of money left in the PPP coffers, however. The second $310 billion tranche of PPP money had more than $126 billion remaining at the end of Wednesday, with new loans in the second week so far amounting to just $7.8 billion. Fears that the money would be gone on Day One did not come true.

The bottom line: Jawboning works. Even when businesses are legally entitled to bailout funds, they will often avoid taking that money when faced with political or popular opprobrium.

Go deeper: How many big companies got PPP loans

Go deeper

Updated Aug 5, 2020 - Axios Events

Watch: Small business recovery during the pandemic

On Wednesday August 5, Axios co-founder Mike Allen and "Axios Today" host Niala Boodhoo hosted the last of a six-event series on how small businesses have pivoted during the coronavirus outbreak, featuring Sen. James Lankford (R-Okla.), owner of The Curvy Bride Michelle Files and Satori Yoga studio owner Andrea Stern.

Sen. Lankford discussed the federal government's response to the pandemic, financial support for small businesses, and the importance of NGOs as economic safety nets within communities.

  • On the effectiveness of PPP loans: "The Paycheck Protection Program has had some problems, but overwhelmingly it's been very, very successful. Paycheck Protection Program was designed to keep small businesses and not-for-profits running so their people didn't have to end up on unemployment assistance...and it has done that."
  • How the coronavirus has changed the economies of small towns: A lot of small towns in Oklahoma have had their highest tax revenue they've ever had in the history of their towns this year...They're used to those folks in small towns driving to big cities to shop. But they're not. They're staying at home. They're shopping online."

Michelle Files and Andrea Stern highlighted the unique challenges of running a small business during the pandemic and how their respective businesses have pivoted to digital tools in these changing times.

  • Michelle Files on adapting her brick-and-mortar business to a virtual world: "Mobile appointments...really took off. People loved that they were still able to shop from the comfort of their own home. I would just bring the dresses to them and safely be on a Zoom call from my car with any questions that they would have."
  • Andrea Stern on transitioning to live, online yoga classes: "We decided that livestream was the best way to go...one of the nice parts about livestream is that [instructors] actually have people in front of them. You can get feedback from the students. It was just a matter of getting everyone up to speed on the technology."

Axios co-founder and CEO Jim VandeHei hosted a View from the Top segment with CEO of the Small Business and Entrepreneurship Council Karen Kerrigan, who discussed trends in how small businesses have adjusted to the new economy.

  • "[Small businesses] are massively moving to technology platforms. 51% said that they've upped their use of social media in order to engage with customers and find new customers. So they really embrace technology at this very critical time, which is helping them to survive the COVID-19 economy."

Thank you Facebook for sponsoring this event.

Trump floats executive action even if stimulus deal is reached

Photo: Samuel Corum/Getty Images

The White House is finalizing a series of executive orders addressing key coronavirus stimulus priorities if negotiations with Congress fall apart, and it's leaving the door open for President Trump to use them even if a deal is reached that doesn't encompass all of his priorities, two administration officials tell Axios.

What we’re hearing: “I wouldn't be surprised that, if something gets left off the table, we’d be like ‘we can take this executive action too and be able to win on it anyway,’” one official said.

Felix Salmon, author of Capital
Aug 6, 2020 - Economy & Business

The corporate victims of U.S.-China tensions

Illustration: Aïda Amer/Axios

The travails of TikTok are the most visible example of how the rapidly deteriorating relationship between the U.S. and China can evaporate tens of billions of dollars of corporate value.

Why it matters: When corporations find themselves at the mercy of politicians flexing their geopolitical muscles, they generally end up ruing the encounter.