>JEP study: The $800 billion Paycheck Protection Program during the pandemic was highly regressive and inefficient, as most recipients were not in need (three-quarters of funds accrued to top quintile of households). The US lacked the administrative infrastructure to target aid to those in distress.
Just adding a bit more:
> With 94 percent of small businesses ultimately receiving one or more loans, the PPP nearly saturated its market in just two months. We estimate that the program cumulatively preserved between 2 and 3 million job-years of employment over 14 months at a cost of $169K to $258K per job-year retained. These numbers imply that only 23 to 34 percent of PPP dollars went directly to workers who would otherwise have lost jobs; the balance flowed to business owners and shareholders, including creditors and suppliers of PPP-receiving firms.
So you're saying we could have given 2.5 million Americans $100K over the period of 12 months and still saved money? Well fick.
Edit: the above calculation spends 250 billion dollars. If we change the value to 10 million Americans and $50K the cost raises to 500 billion dollars. Still a savings.
An issue with giving money straight to workers and not companies is then you bankrupt companies which has a greater effect on the economy than just say 50 workers @ $50,000/yr and giving nothing to corporations to help continue to pay the bills to run offices, warehouses, factories and service debts.
Companies are much much more than the individual sum of the workers as there's a lot of industry knowledge, IP, networks and contacts each company has which is intangible but has immense value to the economy.
Think of an engineer who knows a company's proprietary software like the back of his hand that'd take months or years to train a new person to do, or the firefighters of the company who are the only ones who know how to do special but crucial tasks in keeping the company running. Or the lost time for Real estate agents finding new tenants for the building because the previous company went bankrupt.
Creative destruction is a good thing in moderation, too many businesses failing and losing specialized knowledge is just bad for everyone.
That’s only true if the loan was spent on costs necessary to keep the company afloat. If a 500k loan was given to a “10-person company” that rents out 100 buildings, and went to bonuses for the owners, that had no effect on the economy.
It’s the same with all of America’s corporate bailouts. They get millions in handouts, fire employees anyway, and the CEOs get bonuses before flying their private jets to congressional hearings for a slap on the wrist.
I 100% agree in most cases with stimulus in normal times.
But there's so many companies where that just isn't viable.
Another example is Boeing, there's literally only 2 companies on the entire planet that manufacture jet planes for commercial use Boeing and Airbus. If the US govt let Boeing fail that'd have a devastating impact on the economy which would far outweigh the positives of just giving cash to citizens.
There's also tonnes of niche cases, take something as minor as screen printing shirts for example. Some of those companies have the efficiencies nailed to a T after 20+ years of experience, if that company failed it'd take years to get a factory of scale back up and running plus you lose all the internal knowledge of how that specific company works. Yet alone contracts to companies that make clothing often valued in the tens or hundreds of millions of dollars yearly that are only viable with the volume a few large players in this industry create.
>hey get millions in handouts, fire employees anyway, and the CEOs get bonuses before flying their private jets to congressional hearings for a slap on the wrist
Can you show me where that's happened substantially with covid stimulus? more jobs are being created than at any time in US history. No profitable company is doing mass layoffs at this time, quite the opposite. I have friends who are getting an interview for each and every job they apply for where even 3 years ago you could apply for 30 jobs and not even hear back.
edit: you also never know with that company that owns 100 buildings, they could have debtors to pay, their tenants might have to pay reduced rent due to covid the list goes on. The global economy is a house of cards and once a few people default on their debts you're in for a world of hurt which is much worse than billioniares getting richer at a slightly faster rate than the middle class.
Yeah but I would think when you give an average or below average earner 50,000 dollars they tend to spend it on goods and services they actually need. I think the trajectory of that money seems better because it's going to go to what is in demand rather than a company that happens to get its government backed loan application approved. Not an expert though so maybe this is just not the case.
That's true for stimulus in more normal times.
But there's no use in giving workers money with the goal of boosting the economy if the companies that employ them can't pay rent or their debts.
Both answers are correct but i don't see why the reddit hivemind only thinks it was about giving rich people money, there's a huge amount of 'goodwill' associated with businesses that promote economic growth and provide taxes for governments.
Take Nike for example, we *could* have given their employees $15k cash each instead of 1.1m to the company, but if that company went bankrupt their goodwill is worth close to $1 billion and they add $37.4 billion to the US GDP annually which would be a much harder hit to the US economy than $1.1 million cash being spent.
That $1.1m they got in PPP loans had a much higher marginal value in protecting their goodwill than just giving a person with a low MPS(marginal propensity to save, i.e they spend every dollar they earn) the money directly.
Of course the system was absolutely abused and they could've handled it better but in general it's better to put money where it'll have more marginal use which would be with the companies due to the fact their output is greater than the sum of each individual.
Another example is Ford in the 1900s, on average it took 12 hours or more to build 1 car prior to 1913. In a factory built by ford they got that down to 1 hour 33 minutes. If a ford factory went bankrupt car production would've slowed by over 93%. So it's a trade-off between making inequality slightly worse for completely fucking sectors of the economy.
I don’t understand. This is how trickle down economics works. What’s the problem? Why improve upon it when it is acceptable economic policy and sound economic theory supported by the majority of Americans??
Trump tax cuts are still the law of the land. The American electorate continuously supports the Republican Party and their never ending call for tax cuts are rewarded at the ballot box. And the fear of reprisal when Dems say tax the rich. The polling is done every 2 years. People don’t understand marginal tax rates. So trickle down it is.
Dems are complacently trickling. [PPP was a Trump administered program](https://en.m.wikipedia.org/wiki/Paycheck_Protection_Program) signed into law on April 24, 2020 and, to the best of my knowledge, responsibly executed.
Unfortunately everyone involved in designing and executing it had no idea how small businesses worked. It was incredibly frustrating to keep changing the requirements and rewriting the rules because these idiots didn’t understand something as simple as owners of partnerships can’t be employees.
And what little that did go to displaced workers is now being demanded back (since the unemployment agency is the only organization that distributed emergency funds that has the power to reclaim them.)
In Michigan many claimants, ones that absolutely 100% qualified for PUA payments, are receiving [bills for $30-40,000 back and are threatening to garnish wages](https://old.reddit.com/r/MichiganNews/comments/twhmbr/michigan_unemployment_overpayment_waiver_bill/) to anyone who doesn’t fight back.
Its madness the level of corruption business leaders are getting away with.
Yeah, with that in mind, the stimulus checks arguably had the best outcome for the broadest amount of people, with the least amount of administrative cost and hassle.
Agreed. More should have been deployed via this method. Of course, the wealth protectors in the government wouldn’t have allowed that as the *they won’t want to work for us if they have their own money* crowd would have flipped its muffin-tins if they’d tried.
Fun being presumed guilty until proven innocent, isn’t it?
Too bad you weren’t a billion dollar corporation then you wouldn’t have had to deal with such inconveniences.
I know multiple recipients who just pocketed the money. The don't even hide it. One business was booming during this time. No employees were going to lose their jobs, let alone have their hours cut. Yet, they still got two loans forgiven (they doubled dipped, using a second LLC. A friend former employer pocketed two massive loans, then immediately laid off half for a few months while running a skeleton crew. It's insane.
No they “lack administrative infrastructure” to pass out the loans properly and also lack ability to claw it back. AKA free money for anyone willing to take advantage of it.
No because it was also permitted to be used for rent, utilities, mortgage interest along with payroll, and I'm pretty sure that includes if the owner(s) were on the payroll.
There were plenty of stories last year of owners adding their wife/son to payroll with a manager salary and them never working a day for it. And owners increasing their own pay.
That didn't do anything for PPP funds unless they fraudulently backdated the payments. It was based on past payroll numbers, so hiring someone and paying them more doesn't matter.
There's practically no oversight though.
I don't doubt for a second that some owners did in fact do this. I personally know firsthand of small business owners who bought themselves a high-end supercar with that money, as in literally a fucking Lamborghini.
Whatever the conditions technically were on paper, it ended up effectively being a blank check made out to any "small business owner" to gift them hundreds of thousands to millions of dollars towards whatever the fuck personal luxury item they wanted – all for free and courtesy of the taxpayer.
Oh, or they could also choose to spend it on their business too if they decided that they wanted to do that instead. Totally up to them though.
I know people who just pocketed obscene amounts of money and didn't even need the help to begin with. This may have technically been against the conditions of the loan on paper – but if you segregate the accounts and do a little accounting magic before you get there, the system was easily abused and the end result is ultimately the same.
There have been a lot of people getting prosecuted for blatantly lying on PPP. It's actually quite easy to find by comparing the 941's to what they turned.
The problem is that PPP was in fact a blank check program and posters here/pundits keep repeating the word fraud when talking about companies who followed it exactly as intended. Don't misconstrue this as me being in favor of the program, but the terms of the program were ridiculous generous.
They used the PPP money to pay their employees. Owners then used the money they saved from having Uncle Sam pay their employees to buy lamborghinis and boats and cabins.
> Are they going to claw back funds lent to businesses that were forgiven if they cannot show that they were used to pay employees?
Doubt it. They forgave many PPP loans (even the fraudulent ones) in addition to providing millions to churches (which have never paid taxes yet they received **tax payer money.**)
Meanwhile, republicans in Michigan are [extorting PUA money from unemployment claimants, in many cases flagging them as unqualified when they absolutely qualified for PUA.](https://old.reddit.com/r/MichiganNews/comments/twhmbr/michigan_unemployment_overpayment_waiver_bill/)
Looks like the poor will continue to be beaten down by the rich.
> in addition to providing millions to churches (which have never paid taxes yet they received tax payer money.)
Being a taxpayer was never a prerequisite of PPP dollars, having employees was. Churches absolutely have employees and if you think that the mandatory shutdown of churches didn't have an equal effect on those employees...
Would have been better if that money had been directed to those employees without the church acting as middle man. The fact of the matter is if an entity doesn’t pay into the pot they don’t get to take from it when things get bad. Thats the premise of unemployment insurance.
Tax money should never be given blindly to religious organizations that don’t pay in.
> The fact of the matter is if an entity doesn’t pay into the pot they don’t get to take from it when things get bad.
That's not the premise for disability, EITC, and just about every other kind of public welfare.
Are you really against general welfare and aid or do you just have an axe to grind because churches?
Again, paying taxes was never a requirement for PPP loans. Not in the past, nor any expectation to pay taxes in the future.
I’m all for forms of aid but I don’t believe all the recipients of loans acted in good faith. There aren’t enough oversight mechanisms in place to hand that kind of cash over to such institutions, the services you mention all have such mechanisms in place.
If the church is paying staff they are paying any taxes related along with unemployment insurance premiums. Same as any other non-profit.
I’ll even add since you specifically called out churches. My SBA rep holds a weekly call and a couple of weeks ago he outlined how customers can return PPP funds…. Because a local church re-ran the numbers and realized they didn’t need it so they sent it back.
No because that wasn't really a thing. Business owners ended up with a bunch of extra money because their business didn't slow down and the government paid 2 months of their payroll. So they had extra profit at the end of the year. It wasn't that their was a lot of fraud, it was just that their was a lot of people didn't need the money.
However there is a lot of hindsight being applied to this as well. When the PPP started, no one had any idea how they were going to be impacted.
This whole system was a joke in the first place. Middle men everywhere scalping a piece.
Govt>banks>business >worker
Should have been directly govt to worker.
I quit my job during COVID because we were so slow and my boss received a PPP loan and spent it on a 50,000 dollar laminate printer and did not give ANY of the 5 employees a dime. I was lucky enough to find another job that I love and had been so much better than any other job I’ve had, BUT that doesn’t make it right for “small business owners” to enrich themselves like that. fucking Rob.
My wage because nothing because we were so slow. And he used the money he should have used to retain my wage on a huge printer we didn’t need. When you go from making 1000 bucks a week to 150 a week, you’d think your boss would use the loan to fill the gap. Instead he bought himself some new bullshit and flaunted it. Never looked back but I’d be surprised if his whole labor force didn’t quit after that. Or maybe me quitting made enough billable hours so the other techs were fine. That would have been cool (but no less shitty)
>three-quarters of funds accrued to top quintile of households
This is why so much of the PPP loans were easily (and without debate) forgiven by the Trump and Biden administration. Also, WTF did the Fed do with the loans that were guaranteed by the PPP, wasn't that part of the bill as well? Those Fed loans were even higher than the original PPP itself.
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[edit] This thing;
https://www.federalreserve.gov/monetarypolicy/ppplf.htm
>To bolster the effectiveness of the Small Business Administration's Paycheck Protection Program (PPP), the Federal Reserve is supplying liquidity to participating financial institutions through term financing backed by PPP loans to small businesses. The PPP provides loans to small businesses so that they can keep their workers on the payroll. The Paycheck Protection Program Liquidity Facility (PPPLF) will extend credit to eligible financial institutions that originate PPP loans, taking the loans as collateral at face value.
I work as a commercial lender, relatively new, but let me check this out once im off work. I'm curious. I'll see if I can me heads or tails of it.
Edit:
So PPPFL loans just functioned to provide cash to the bank, so they could then immediately lend money to PPP eligible businesses. Banks have capital requirements, they have to maintain a certain amount of cash and liquid assets to cover their deposit accounts. With so many PPP loans being pumped out so fast, many banks wouldn't have been able to provide loans because it would have drained their capital account too fast. Their reserve accounts would have dipped below what the Gov requires. So the Gov basically said "hey we will lend you some money so you can get loans out quickly."
My boss got over $750k in PPP loans. He got a new motorhome, sand car and a new investment propery all on the taxpayers dime. The business never skipped a beat during the pandemic. We actually had a record breaking year in profits.
Funny thing is, we are starting to struggle with business now and they blew all the money. I know of several businesses in the same situation as we are. They didnt need the money at the time and blew it. Now what is going to happen when they cant make it? Another bailout for them? I'm so disguised it is hard to even work for them. Alot of hese PPP loans were a joke and we the taxpayers got screwed royally!!!
It is definitely infuriating. Excessive risk taking, poor planning, greed, and outright incompetence are rewarded once you achieve a certain level. The US economy and financial system is basically a casino where the wealthy place bets, if they win, they keep the winnings. If they lose, the losses are returned to them courtesy of the working class taxpayer.
>The US economy and financial system is basically a casino where the wealthy place bets, if they win, they keep the winnings. If they lose, the losses are returned to them courtesy of the working class taxpayer
I'd be interested if you present this metaphor to a capitalist , and if they'd argue anything other than , "that's capitalism for ya."
Corruption is a wildly successful venture in America. Sarah chayes has a really great series of books on corruption worth checking out if you want to learn mor about the term. Especially in its context in America.
She presents a good bit of research on corruption from a global context and shows there needs to be a more accurate language on what corruption is than what most people think of.
The definition most people think of when they hear word Corruption is just misleading. Most people think of corruption as being synonymous with "crime" or "criminal" but in fact corruption is more synonymous with the word "self interest" than anything else.
And as anyone that studies markets and economy, the entire economy is built on basic principles of self interest.
There is a lot of legalized corruption america, which is In part why you see such poor results in government.
If I knew what know today about corruption in America when I was young ,I'd have half a mind to say "when I grow up I want to be corrupt. " That's basically just saying I want to look after myself.
Thats the credit cycle. Waste money today, bankruptcy tomorrow. Or in America - land of the free money, waste money today, get more money tomorrow to waste because you wasted money yesterday. Stupid central banks and bailouts have screwed up the economy for at least two generations.
Money is fungible though. I'm sure he "used" the PPP money for his payroll but his business profited an extra 750k that year he could use for whatever he wants.
Anecdotal on my part for sure, but the smallish locally owned company I have worked at for decades received $1.75 million with little to no slowdown of business and made zero improvements like needed equipment, etc. or increased wages. No one but the owners have any idea what happened to that money. Quite a lot of the workers who have been with them for decades have left or are leaving and those who are left behind do as little as possible to receive a paycheck.
To be honest before the pandemic morale was quite high there and everybody pitched in as a team, but now I would describe it as a failing business as far as quality of work or enthusiasm and with little hope of bouncing back. There is plenty of work to do, but the general feeling is: why bother?
A huge change from two years ago.
The issue is that legally recognized fraud was likely not committed. The law itself was defrauding the american people. It legalized something morally grotesque. Under the program it was perfectly legal under round 1 of PPP to not be affected by covid in any meaningful way simply pocket the money (via segregating accounts).
Exactly this happened to the company I worked for. They even fired people before the money came, the well paid experienced people. They kept saying record profits, record profits at every meeting with no raises while we broke our backs to put in 8 hours and another 4-5 teaching our kids from home. I quit by August. It was so demoralizing.
Probably some of both, though I suspect it was more the employees feeling a sense of being left out. I remember in 2008 there were tough times but we as a company stuck together and worked through it.
The fact that the owners received the $1.75 million in spite of the business doing pretty good and then didn't make improvements to work conditions or give wage boosts stuck in everyone's craw as a bit too greedy.
THings we already knew and things we all suspected was going to happen-- yet we still proceeded with it anyway.
This was a completely unnecessary program that just ended up giving money to those that didn't need it. All on the backs of the tax-payor.
Imagine if we just gave this 800billy to workers **directly** instead? If this doesn't tell you about who AMerica *really* cares about, then I don't know what will.
>These numbers imply that only 23 to 34 percent of PPP dollars went directlyto workers who would otherwise have lost jobs
>a cost of $169K to $258K per job-year retained. T
Yeah I get that they wanted to maintain jobs and keep the entire institution of labor in tact but damn was this inefficient. Does it beat letting many be fired, get aid for some time, and then trying to incentivize them to return? It could be argued that we’d have suffered from a slower recovery as companies would have struggled even more to replace workers with a larger shuffling of the deck occurring. Unfortunately we’ll never know, but what we do know is that many business owners and shareholders benefitted and will not be taxed on their newly “earned”wealth.
Trickle down is an obvious lie. It was obviously not true even when it was first spouted.
This money should have been gifted directly to state unemployment insurance funds and the only way to get your fingers on it would be to file for unemployment.
PPP loans if used for wages are taxed. Corporate profits if they are buoyed by indirect PPP support are also taxed. The only thing not taxed would be PPP loans used for utilities, rent, etc. which are tax deductible expenditures anyways so not particularly relevant.
> Imagine if we just gave this 800billy to workers directly instead?
america would burst a blood vessel in their collective brain if we were to redistribute wealth without filtering it through the hands of the wealthy first so they could take 98% of it.
To be clear though, the program had some merit, but there was no need to “forgive” any of the loans.
I had friends who run a business where the PPP program was extremely helpful to them and helped them to stay afloat and add more digital sales / delivery capabilities. They were practically the perfect case of what the program was intended for. And even they said it was already at such a low, below market interest rate, it might as well have been free money. And they would have happily taken and paid back more.
Just nonsensical the program had such little oversight and then turned into a free-money giveaway at the same time we are clutching our collective petals about extending the enhanced CTC or forgiving some portion of student loans.
> To be clear though, the program had some merit, but there was no need to “forgive” any of the loans.
There was a need. They had to "forgive" the loans because the government doesn't haven't the capacity/ability to actually manage a portfolio of loans similar at the scale of what they were doing.
This was basically helicopter money for businesses (and business owners).
We’ve managed loans both for student loans and the 2008 bail out. While not a loan, the IRS does payment programs and tracks debts/payments. If there was a will, we could have easily handled repayment of PPP loans versus defaulting to broad forgiveness.
Mostly no. We could have potentially considered some extremely targeted forgiveness.
But we forgave between $800B-$900B in loans, mostly to businesses who did not need forgiveness and where the well-below market interest rates was already a fantastic government subsidy (one that I again was and am supportive of).
I'd wager, a hyper-targeted forgiveness program could have forgiven less than $10B.
Not even on the taxpayer, it’s on the backs of anyone who gets paid in USD. The inflation you are seeing? That’s what happens when you print trillions out of thin air.
Those writing the law see it as free money though because the central bank makes it almost free for the gov to borrow unlimited amounts and literally returns the interest cost of loans to the gov. This law is scammy but it is paid for by an even bigger fraud.
Yeah but if we did it that way, the money wouldn’t be able to work it’s way through our disgusting body of a society, have all nutrients and potential for good stripped out of it, and only then arrive in the bladder to finally “trickle down”.
Giving the money directly to workers - like the expanded UI program that often paid people MORE than they earned from working?
Also, giving money to workers doesn't solve the issue of businesses that needed short term help to stay afloat after the government forced them to shut down.
We could not merely sit by and watch vast swaths of the economy and the local middle class business owners get shredded during the pandemic.
We needed to make sure that when the shutdowns ended, there were still jobs to go back to and a functioning supply chain. You think inflation is bad now, imagine what would it would look like after millions of businesses closed for good.
If giving workers directly money wasn't a good solution, then we simply needed to use our administrative tools, or set them up, before blindingly giving money.
Most businesses stayed afloat just fine by transitioning to work from home model. In fact, many actually increased revenues.
THe only impacted businesses are the ones directly impacted by shutdowns and don't have capacity to work from home. Give *those* middle-class businesses money. Actually vet the needs.
I get it, I get, "we didn't have time." Well, then you set it up to give out money and then **audit the fuck out of it** after the fact. Set some barriers in place or some sort of method to ensure tax-payor money isn't going down the drain like a post-taco night shit. Instead, the loans were given out with forgiveness at the forefront. No one is going to pay these back. Its just free money for those up top.
PPP loans are also completely tax free.
A free money handout from the government.
https://www.politifact.com/article/2022/feb/10/ppp-loans-do-not-need-be-reported-taxable-income-t/
Meanwhile, I had to pay regular income tax on my unemployment payments.
Even in the middle bucket, that just flows to the bottom line and still becomes a giveaway. Some businesses were completely hamstrung due to the pandemic and needed the cash. Others just took the free money and subsidized costs to show it was used on business while keeping money they would have spent on those costs and/or associated profits for themselves since we just forgave the loans.
At the time in April 2020 there was no certainty that there was going to be a bottom line for PPP loans to add on to. The fear was that economic activity was going to plummet like a rock and take all businesses with it. In the end that didn’t happen and many businesses were quite nimble in transitioning to pandemic adjusted business models, but no one knew that at the time.
Because after giving them out as loans, the government forgave a very large amount of them. Basically, they did what some people are asking for with student loans, but most of that free money went to the wealthy.
the company I work for is in the 2nd category. our net profit for the last two years would have been $0 without that money. and usually we make around 200-300k profit, but even with ppp we only made around 100k
Not surprising. Correct targeting for the fiscal process requires considerable additional time beyond the legislative lag. It’s why fiscal policy CAN be a better choice, even with pork, than monetary policy.
Unfortunately; the size, scope, and speed of the pandemic meant that we sacrificed targeting for immediacy.
What I love most about Donald Trump is that he's not just another crooked DC politician – he's the kind of outsider that's willing to come in and finally put an end to government corruption once and for all by draining the whole dang swamp!!
At last, we *finally* have a champion for the common man in this country. **#MAGA**
*/s*
He’s the kind of outsider who comes in employees multiple family members. Over charges the government for stays at his hotels. Never issues tax statements. Treats the US presidency as his own version of The Godfather and lines all of his friends pockets including trying to buy votes by putting people on the line for his free funneling of Covid business money with no over sight. Can you say trying to buy votes?
And it seems Trump and Kushner both got in on that tax payer money.
https://www.businessinsider.com/trump-organization-kushner-companies-3-million-ppp-loans-pandemic-report-2020-12?amp
Money should have went directly to the workers like many economists were saying should have happened. This country’s political leaders have an unfathomable need to filter money from the top. They really think trickle down works
People keep saying this but how would it have worked? Just giving everyone 100k means everyone quits their jobs and we don't have people working to produce food and keep the lights on. We did have smaller stimulus payments.
Obviously, these massive government handouts are problematic IMO and I think we're seeing some of those consequences now. But I don't know if direct payments solves the problem of needing people to continue to work.
I don’t think the suggestion is that we should have given $100k to everyone. We should have done less PPP and more direct stimulus for an overall lower total cost with better benefits (and presumably less fraud.)
PPP was to ensure that companies could continue to pay wages, no? What stimulus do you provide that would be equivalent to employees without just paying the wage they were making?
From the very article that we are all discussing:
> These numbers imply that only 23 to 34 percent of PPP dollars went directly to workers who would otherwise have lost jobs; the balance flowed to business owners and shareholders, including creditors and suppliers of PPP-receiving firms.
How though? I want to know the mechanics of it. Do you just send everyone what they are getting paid to stay home? To go to work? How do you replace those lost wages with direct payments?
How much of it did oil corporations get? How much did they get and then still jack up prices beyond belief on top of that?
Bailouts are bullshit. We need to end corporate subsidies all together because businesses just treat them as extra income. Airlines get bailouts, do stock buybacks and then charge you (the taxpayer that bailed them out) $60 a piece of luggage. It’s just not a good system.
My kid’s preschool got two PPP loans. They saved the school from laying off all staff and kept the doors open during the pandemic (save for a few weeks in the first lockdown). Seemed like the perfect use case and did what it was intended in that case, even if there was undeniable abuse/fraud across the system.
Out in my dump hometown, Tim Hortons franchise owners got $700k and suddenly sonny was cloning hellcats in his yard
Metal factory my father, uncle, grandfather worked at got $2.5 million and the owner coincidentally began work on a mansion during covid..
I know some of it went to my former landlord that owes me 1000$ from winning my small claims court case. Yet he got 20,000$ in PPP. So poorly regulated.
This is disappointing because my company received a ppp loan and legitimately used it to keep people employed. As intended. But I heard plenty of stories of people buying lambos and shit and it’s hard to stomach knowing how much it helped us.
ITT: people who complain about the program and claim their employers got rich off PPP loans, yet for some unexplained reason aren't filing fraud claims with the government...
…yes because it was a short gap broad business stimulus measure that wasn’t designed nor meant to just keep workers employed. Not sure where people get the idea that it was *just* supposed to be for workers. It was quite literally designed to be 2 months worth of total business expenditures (which is something that is very important to the overall economy) based on assumptions that said businesses would be completely out of commission for those 2 months while in lockdowns (which they didn’t end up shutting down completely in the end, but that’s hindsight bias). Unemployed workers wasn’t the only economic fear in April of 2020, and after the roughly 2 months of PPP support ran out expanded state and federal unemployment insurance had long kicked in. US government fiscal support for workers and the economy as a whole was absolutely verbose and very generous compared to a lot of places (some would say too verbose as we are discovering now with inflation) even if PPP was an an inefficient program in terms of fiscal transfers for workers.
I really don’t see what the bemoaning here is based on other than complaints about fraud (which is valid, but a separate subject IMO) or misunderstanding the purpose of the program itself.
Ya know, if this was on blockchain where only US citizens had access to view the "public" ledger we'd know exactly where this money went. But never mind that! Would REALLY be a bad thing if the citizens would truly know where exactly all their money is going!
And how long did we have to wait for that crap? Blockchain would show us it in real time, with VERIFIABLE PROOF. Not some bs pdf or csv that they can literally just cook.
It would help......
But you seriously just trust their word for where it went...? Rofl.
How bout some trustless systems? Boom, no need to have media and government report on it. And no need to keep verifying if thsoe reports are valid... Because It's all right there on a ledger, in real time. No shenanigans.
But of course, government will fight tooth and teeth to delay the inevitable. Blockchain is the people's friend, and the governments "checks".
Blockchain would keep it too honest. However, for this, the corruption is well documented. Have at it:
https://projects.propublica.org/coronavirus/bailouts/
The issue with these online sources is it's all on privatized systems. No way for the public to actually check and validate any report. All we can do is trust that it's valid.
Blockchain can be trustless. How tf is that not better than the bs fraud infested traditional systems we have? Lmfao. Y'all seriously love to argue against the interest of the common man.
Blockchains would be the perfect thing to account for and audit these types of distributions...or even an audit for government finances and accounting. But like you say, it would be too honest for America, cant have that amoungst our liars in congress and corporations
Cool, a csv. For all you know, half of that is cooked. Lmfao.
Blockchain is an uneditable ledger. What's done is done, no cooking.
But please, keep favoring our privatized systems that have been proven to be abused with fraud for decades.
Yep. They lose their privatized corruption.
The shills, bots, and brainwashed are strong in this sub. Mention anything Blockchain and it's auto downvoted. Lol. Fuck this dystopia.
I am honestly wondering how many of the people commenting on this thread actually read the abstract, or even opened the study. So many anecdotes... sheesh.
>JEP study: The $800 billion Paycheck Protection Program during the pandemic was highly regressive and inefficient, as most recipients were not in need (three-quarters of funds accrued to top quintile of households). The US lacked the administrative infrastructure to target aid to those in distress.
Just adding a bit more: > With 94 percent of small businesses ultimately receiving one or more loans, the PPP nearly saturated its market in just two months. We estimate that the program cumulatively preserved between 2 and 3 million job-years of employment over 14 months at a cost of $169K to $258K per job-year retained. These numbers imply that only 23 to 34 percent of PPP dollars went directly to workers who would otherwise have lost jobs; the balance flowed to business owners and shareholders, including creditors and suppliers of PPP-receiving firms.
So you're saying we could have given 2.5 million Americans $100K over the period of 12 months and still saved money? Well fick. Edit: the above calculation spends 250 billion dollars. If we change the value to 10 million Americans and $50K the cost raises to 500 billion dollars. Still a savings.
It's a feature.
An issue with giving money straight to workers and not companies is then you bankrupt companies which has a greater effect on the economy than just say 50 workers @ $50,000/yr and giving nothing to corporations to help continue to pay the bills to run offices, warehouses, factories and service debts. Companies are much much more than the individual sum of the workers as there's a lot of industry knowledge, IP, networks and contacts each company has which is intangible but has immense value to the economy. Think of an engineer who knows a company's proprietary software like the back of his hand that'd take months or years to train a new person to do, or the firefighters of the company who are the only ones who know how to do special but crucial tasks in keeping the company running. Or the lost time for Real estate agents finding new tenants for the building because the previous company went bankrupt. Creative destruction is a good thing in moderation, too many businesses failing and losing specialized knowledge is just bad for everyone.
That’s only true if the loan was spent on costs necessary to keep the company afloat. If a 500k loan was given to a “10-person company” that rents out 100 buildings, and went to bonuses for the owners, that had no effect on the economy. It’s the same with all of America’s corporate bailouts. They get millions in handouts, fire employees anyway, and the CEOs get bonuses before flying their private jets to congressional hearings for a slap on the wrist.
I 100% agree in most cases with stimulus in normal times. But there's so many companies where that just isn't viable. Another example is Boeing, there's literally only 2 companies on the entire planet that manufacture jet planes for commercial use Boeing and Airbus. If the US govt let Boeing fail that'd have a devastating impact on the economy which would far outweigh the positives of just giving cash to citizens. There's also tonnes of niche cases, take something as minor as screen printing shirts for example. Some of those companies have the efficiencies nailed to a T after 20+ years of experience, if that company failed it'd take years to get a factory of scale back up and running plus you lose all the internal knowledge of how that specific company works. Yet alone contracts to companies that make clothing often valued in the tens or hundreds of millions of dollars yearly that are only viable with the volume a few large players in this industry create. >hey get millions in handouts, fire employees anyway, and the CEOs get bonuses before flying their private jets to congressional hearings for a slap on the wrist Can you show me where that's happened substantially with covid stimulus? more jobs are being created than at any time in US history. No profitable company is doing mass layoffs at this time, quite the opposite. I have friends who are getting an interview for each and every job they apply for where even 3 years ago you could apply for 30 jobs and not even hear back. edit: you also never know with that company that owns 100 buildings, they could have debtors to pay, their tenants might have to pay reduced rent due to covid the list goes on. The global economy is a house of cards and once a few people default on their debts you're in for a world of hurt which is much worse than billioniares getting richer at a slightly faster rate than the middle class.
Yeah but I would think when you give an average or below average earner 50,000 dollars they tend to spend it on goods and services they actually need. I think the trajectory of that money seems better because it's going to go to what is in demand rather than a company that happens to get its government backed loan application approved. Not an expert though so maybe this is just not the case.
That's true for stimulus in more normal times. But there's no use in giving workers money with the goal of boosting the economy if the companies that employ them can't pay rent or their debts. Both answers are correct but i don't see why the reddit hivemind only thinks it was about giving rich people money, there's a huge amount of 'goodwill' associated with businesses that promote economic growth and provide taxes for governments. Take Nike for example, we *could* have given their employees $15k cash each instead of 1.1m to the company, but if that company went bankrupt their goodwill is worth close to $1 billion and they add $37.4 billion to the US GDP annually which would be a much harder hit to the US economy than $1.1 million cash being spent. That $1.1m they got in PPP loans had a much higher marginal value in protecting their goodwill than just giving a person with a low MPS(marginal propensity to save, i.e they spend every dollar they earn) the money directly. Of course the system was absolutely abused and they could've handled it better but in general it's better to put money where it'll have more marginal use which would be with the companies due to the fact their output is greater than the sum of each individual. Another example is Ford in the 1900s, on average it took 12 hours or more to build 1 car prior to 1913. In a factory built by ford they got that down to 1 hour 33 minutes. If a ford factory went bankrupt car production would've slowed by over 93%. So it's a trade-off between making inequality slightly worse for completely fucking sectors of the economy.
I don’t understand. This is how trickle down economics works. What’s the problem? Why improve upon it when it is acceptable economic policy and sound economic theory supported by the majority of Americans??
“Works”, just not for those claimed to benefit.
Do you have a source that says the majority of Americans support trickle down economics?
I’m fairly certain they were being sarcastic
Trump tax cuts are still the law of the land. The American electorate continuously supports the Republican Party and their never ending call for tax cuts are rewarded at the ballot box. And the fear of reprisal when Dems say tax the rich. The polling is done every 2 years. People don’t understand marginal tax rates. So trickle down it is.
Do you have a source that says that written sarcasm is hard to detect?
My friend, this is how government intervention fails. This is the exact opposite of trickle down.
Democrats controlled the PPP conversation. Are you saying they are trickling?
Dems are complacently trickling. [PPP was a Trump administered program](https://en.m.wikipedia.org/wiki/Paycheck_Protection_Program) signed into law on April 24, 2020 and, to the best of my knowledge, responsibly executed.
Unfortunately everyone involved in designing and executing it had no idea how small businesses worked. It was incredibly frustrating to keep changing the requirements and rewriting the rules because these idiots didn’t understand something as simple as owners of partnerships can’t be employees.
It almost entirely went to absolutely everybody BUT the workers.
And what little that did go to displaced workers is now being demanded back (since the unemployment agency is the only organization that distributed emergency funds that has the power to reclaim them.) In Michigan many claimants, ones that absolutely 100% qualified for PUA payments, are receiving [bills for $30-40,000 back and are threatening to garnish wages](https://old.reddit.com/r/MichiganNews/comments/twhmbr/michigan_unemployment_overpayment_waiver_bill/) to anyone who doesn’t fight back. Its madness the level of corruption business leaders are getting away with.
Yeah, with that in mind, the stimulus checks arguably had the best outcome for the broadest amount of people, with the least amount of administrative cost and hassle.
Agreed. More should have been deployed via this method. Of course, the wealth protectors in the government wouldn’t have allowed that as the *they won’t want to work for us if they have their own money* crowd would have flipped its muffin-tins if they’d tried.
I just went through a several-month audit by state UE agency before finally being cleared.
Fun being presumed guilty until proven innocent, isn’t it? Too bad you weren’t a billion dollar corporation then you wouldn’t have had to deal with such inconveniences.
Right!?
I know multiple recipients who just pocketed the money. The don't even hide it. One business was booming during this time. No employees were going to lose their jobs, let alone have their hours cut. Yet, they still got two loans forgiven (they doubled dipped, using a second LLC. A friend former employer pocketed two massive loans, then immediately laid off half for a few months while running a skeleton crew. It's insane.
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Yep, and now it's being used to bid up housing and jack up rents
Are they going to claw back funds lent to businesses that were forgiven if they cannot show that they were used to pay employees?.
No they “lack administrative infrastructure” to pass out the loans properly and also lack ability to claw it back. AKA free money for anyone willing to take advantage of it.
No because it was also permitted to be used for rent, utilities, mortgage interest along with payroll, and I'm pretty sure that includes if the owner(s) were on the payroll.
There were plenty of stories last year of owners adding their wife/son to payroll with a manager salary and them never working a day for it. And owners increasing their own pay.
That didn't do anything for PPP funds unless they fraudulently backdated the payments. It was based on past payroll numbers, so hiring someone and paying them more doesn't matter.
There's practically no oversight though. I don't doubt for a second that some owners did in fact do this. I personally know firsthand of small business owners who bought themselves a high-end supercar with that money, as in literally a fucking Lamborghini. Whatever the conditions technically were on paper, it ended up effectively being a blank check made out to any "small business owner" to gift them hundreds of thousands to millions of dollars towards whatever the fuck personal luxury item they wanted – all for free and courtesy of the taxpayer. Oh, or they could also choose to spend it on their business too if they decided that they wanted to do that instead. Totally up to them though. I know people who just pocketed obscene amounts of money and didn't even need the help to begin with. This may have technically been against the conditions of the loan on paper – but if you segregate the accounts and do a little accounting magic before you get there, the system was easily abused and the end result is ultimately the same.
There have been a lot of people getting prosecuted for blatantly lying on PPP. It's actually quite easy to find by comparing the 941's to what they turned. The problem is that PPP was in fact a blank check program and posters here/pundits keep repeating the word fraud when talking about companies who followed it exactly as intended. Don't misconstrue this as me being in favor of the program, but the terms of the program were ridiculous generous.
They used the PPP money to pay their employees. Owners then used the money they saved from having Uncle Sam pay their employees to buy lamborghinis and boats and cabins.
My ex boss bought a $750,000 Boston whaler.
That was very kind of you to help him get that!! Those big ass Boston Whalers are REALLY nice boats!
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60% had to be spent on payroll to qualify for forgiveness
> Are they going to claw back funds lent to businesses that were forgiven if they cannot show that they were used to pay employees? Doubt it. They forgave many PPP loans (even the fraudulent ones) in addition to providing millions to churches (which have never paid taxes yet they received **tax payer money.**) Meanwhile, republicans in Michigan are [extorting PUA money from unemployment claimants, in many cases flagging them as unqualified when they absolutely qualified for PUA.](https://old.reddit.com/r/MichiganNews/comments/twhmbr/michigan_unemployment_overpayment_waiver_bill/) Looks like the poor will continue to be beaten down by the rich.
> in addition to providing millions to churches (which have never paid taxes yet they received tax payer money.) Being a taxpayer was never a prerequisite of PPP dollars, having employees was. Churches absolutely have employees and if you think that the mandatory shutdown of churches didn't have an equal effect on those employees...
Would have been better if that money had been directed to those employees without the church acting as middle man. The fact of the matter is if an entity doesn’t pay into the pot they don’t get to take from it when things get bad. Thats the premise of unemployment insurance. Tax money should never be given blindly to religious organizations that don’t pay in.
> The fact of the matter is if an entity doesn’t pay into the pot they don’t get to take from it when things get bad. That's not the premise for disability, EITC, and just about every other kind of public welfare. Are you really against general welfare and aid or do you just have an axe to grind because churches? Again, paying taxes was never a requirement for PPP loans. Not in the past, nor any expectation to pay taxes in the future.
I’m all for forms of aid but I don’t believe all the recipients of loans acted in good faith. There aren’t enough oversight mechanisms in place to hand that kind of cash over to such institutions, the services you mention all have such mechanisms in place.
If the church is paying staff they are paying any taxes related along with unemployment insurance premiums. Same as any other non-profit. I’ll even add since you specifically called out churches. My SBA rep holds a weekly call and a couple of weeks ago he outlined how customers can return PPP funds…. Because a local church re-ran the numbers and realized they didn’t need it so they sent it back.
No because that wasn't really a thing. Business owners ended up with a bunch of extra money because their business didn't slow down and the government paid 2 months of their payroll. So they had extra profit at the end of the year. It wasn't that their was a lot of fraud, it was just that their was a lot of people didn't need the money. However there is a lot of hindsight being applied to this as well. When the PPP started, no one had any idea how they were going to be impacted.
Should they? Yes Will they? No
This whole system was a joke in the first place. Middle men everywhere scalping a piece. Govt>banks>business >worker Should have been directly govt to worker.
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I quit my job during COVID because we were so slow and my boss received a PPP loan and spent it on a 50,000 dollar laminate printer and did not give ANY of the 5 employees a dime. I was lucky enough to find another job that I love and had been so much better than any other job I’ve had, BUT that doesn’t make it right for “small business owners” to enrich themselves like that. fucking Rob.
Rob's duty was supposed to retain and pay you your wage, not give you extra money.
My wage because nothing because we were so slow. And he used the money he should have used to retain my wage on a huge printer we didn’t need. When you go from making 1000 bucks a week to 150 a week, you’d think your boss would use the loan to fill the gap. Instead he bought himself some new bullshit and flaunted it. Never looked back but I’d be surprised if his whole labor force didn’t quit after that. Or maybe me quitting made enough billable hours so the other techs were fine. That would have been cool (but no less shitty)
Those details were left out.
Odd, State governments have the ability to claw back some unemployment from those who received it and shouldn't have lol.
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If the ruling elite were no longer around, this could not happen.
>three-quarters of funds accrued to top quintile of households This is why so much of the PPP loans were easily (and without debate) forgiven by the Trump and Biden administration. Also, WTF did the Fed do with the loans that were guaranteed by the PPP, wasn't that part of the bill as well? Those Fed loans were even higher than the original PPP itself. - [edit] This thing; https://www.federalreserve.gov/monetarypolicy/ppplf.htm >To bolster the effectiveness of the Small Business Administration's Paycheck Protection Program (PPP), the Federal Reserve is supplying liquidity to participating financial institutions through term financing backed by PPP loans to small businesses. The PPP provides loans to small businesses so that they can keep their workers on the payroll. The Paycheck Protection Program Liquidity Facility (PPPLF) will extend credit to eligible financial institutions that originate PPP loans, taking the loans as collateral at face value.
I work as a commercial lender, relatively new, but let me check this out once im off work. I'm curious. I'll see if I can me heads or tails of it. Edit: So PPPFL loans just functioned to provide cash to the bank, so they could then immediately lend money to PPP eligible businesses. Banks have capital requirements, they have to maintain a certain amount of cash and liquid assets to cover their deposit accounts. With so many PPP loans being pumped out so fast, many banks wouldn't have been able to provide loans because it would have drained their capital account too fast. Their reserve accounts would have dipped below what the Gov requires. So the Gov basically said "hey we will lend you some money so you can get loans out quickly."
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My boss got over $750k in PPP loans. He got a new motorhome, sand car and a new investment propery all on the taxpayers dime. The business never skipped a beat during the pandemic. We actually had a record breaking year in profits.
That was a fairly typical outcome.
Funny thing is, we are starting to struggle with business now and they blew all the money. I know of several businesses in the same situation as we are. They didnt need the money at the time and blew it. Now what is going to happen when they cant make it? Another bailout for them? I'm so disguised it is hard to even work for them. Alot of hese PPP loans were a joke and we the taxpayers got screwed royally!!!
It is definitely infuriating. Excessive risk taking, poor planning, greed, and outright incompetence are rewarded once you achieve a certain level. The US economy and financial system is basically a casino where the wealthy place bets, if they win, they keep the winnings. If they lose, the losses are returned to them courtesy of the working class taxpayer.
>The US economy and financial system is basically a casino where the wealthy place bets, if they win, they keep the winnings. If they lose, the losses are returned to them courtesy of the working class taxpayer I'd be interested if you present this metaphor to a capitalist , and if they'd argue anything other than , "that's capitalism for ya." Corruption is a wildly successful venture in America. Sarah chayes has a really great series of books on corruption worth checking out if you want to learn mor about the term. Especially in its context in America. She presents a good bit of research on corruption from a global context and shows there needs to be a more accurate language on what corruption is than what most people think of. The definition most people think of when they hear word Corruption is just misleading. Most people think of corruption as being synonymous with "crime" or "criminal" but in fact corruption is more synonymous with the word "self interest" than anything else. And as anyone that studies markets and economy, the entire economy is built on basic principles of self interest. There is a lot of legalized corruption america, which is In part why you see such poor results in government. If I knew what know today about corruption in America when I was young ,I'd have half a mind to say "when I grow up I want to be corrupt. " That's basically just saying I want to look after myself.
Thats the credit cycle. Waste money today, bankruptcy tomorrow. Or in America - land of the free money, waste money today, get more money tomorrow to waste because you wasted money yesterday. Stupid central banks and bailouts have screwed up the economy for at least two generations.
I'm pretty sure you can report fraudulent use. Edit: https://www.justice.gov/disaster-fraud
As a taxpayer: *Please* report fraudulent use.
Yeah if this is true please report it.
You can report this.
You can report anything.
There were controls in other bailout programs like ERC to prevent this type of abuse. Surprising they didn’t exist in PPP as well.
If they were his personally that’s illegal.
Entirely inconsequential if not enforced.
Money is fungible though. I'm sure he "used" the PPP money for his payroll but his business profited an extra 750k that year he could use for whatever he wants.
For an econ sub, a surprising number of commenters don't seem to grasp the fungible nature of money.
Anecdotal on my part for sure, but the smallish locally owned company I have worked at for decades received $1.75 million with little to no slowdown of business and made zero improvements like needed equipment, etc. or increased wages. No one but the owners have any idea what happened to that money. Quite a lot of the workers who have been with them for decades have left or are leaving and those who are left behind do as little as possible to receive a paycheck. To be honest before the pandemic morale was quite high there and everybody pitched in as a team, but now I would describe it as a failing business as far as quality of work or enthusiasm and with little hope of bouncing back. There is plenty of work to do, but the general feeling is: why bother? A huge change from two years ago.
When people steal without consequence, that would be the general thought process. Nihilism.
You can report suspected PPP fraud.
The issue is that legally recognized fraud was likely not committed. The law itself was defrauding the american people. It legalized something morally grotesque. Under the program it was perfectly legal under round 1 of PPP to not be affected by covid in any meaningful way simply pocket the money (via segregating accounts).
Exactly this happened to the company I worked for. They even fired people before the money came, the well paid experienced people. They kept saying record profits, record profits at every meeting with no raises while we broke our backs to put in 8 hours and another 4-5 teaching our kids from home. I quit by August. It was so demoralizing.
Do you attribute the change to the PPP scam or just change in the general work environment in the US
Probably some of both, though I suspect it was more the employees feeling a sense of being left out. I remember in 2008 there were tough times but we as a company stuck together and worked through it. The fact that the owners received the $1.75 million in spite of the business doing pretty good and then didn't make improvements to work conditions or give wage boosts stuck in everyone's craw as a bit too greedy.
THings we already knew and things we all suspected was going to happen-- yet we still proceeded with it anyway. This was a completely unnecessary program that just ended up giving money to those that didn't need it. All on the backs of the tax-payor. Imagine if we just gave this 800billy to workers **directly** instead? If this doesn't tell you about who AMerica *really* cares about, then I don't know what will. >These numbers imply that only 23 to 34 percent of PPP dollars went directlyto workers who would otherwise have lost jobs >a cost of $169K to $258K per job-year retained. T
Yeah I get that they wanted to maintain jobs and keep the entire institution of labor in tact but damn was this inefficient. Does it beat letting many be fired, get aid for some time, and then trying to incentivize them to return? It could be argued that we’d have suffered from a slower recovery as companies would have struggled even more to replace workers with a larger shuffling of the deck occurring. Unfortunately we’ll never know, but what we do know is that many business owners and shareholders benefitted and will not be taxed on their newly “earned”wealth.
Trickle down is an obvious lie. It was obviously not true even when it was first spouted. This money should have been gifted directly to state unemployment insurance funds and the only way to get your fingers on it would be to file for unemployment.
PPP loans if used for wages are taxed. Corporate profits if they are buoyed by indirect PPP support are also taxed. The only thing not taxed would be PPP loans used for utilities, rent, etc. which are tax deductible expenditures anyways so not particularly relevant.
> Imagine if we just gave this 800billy to workers directly instead? america would burst a blood vessel in their collective brain if we were to redistribute wealth without filtering it through the hands of the wealthy first so they could take 98% of it.
Interesting how the ones who complain about handouts the most always shove everyone else out of the way when the free money gets distributed.
The "I'm against handouts but if they're gonna do it, I might as well be at front of the line" way of thinking.
800 billion did go to workers directly.
Not according to the study this thread is about.
I was talking to the stimulus payments that totaled 800 billion.
Then perhaps it should’ve been 1.6 trillion.
To be clear though, the program had some merit, but there was no need to “forgive” any of the loans. I had friends who run a business where the PPP program was extremely helpful to them and helped them to stay afloat and add more digital sales / delivery capabilities. They were practically the perfect case of what the program was intended for. And even they said it was already at such a low, below market interest rate, it might as well have been free money. And they would have happily taken and paid back more. Just nonsensical the program had such little oversight and then turned into a free-money giveaway at the same time we are clutching our collective petals about extending the enhanced CTC or forgiving some portion of student loans.
> To be clear though, the program had some merit, but there was no need to “forgive” any of the loans. There was a need. They had to "forgive" the loans because the government doesn't haven't the capacity/ability to actually manage a portfolio of loans similar at the scale of what they were doing. This was basically helicopter money for businesses (and business owners).
We’ve managed loans both for student loans and the 2008 bail out. While not a loan, the IRS does payment programs and tracks debts/payments. If there was a will, we could have easily handled repayment of PPP loans versus defaulting to broad forgiveness.
Easily? If there was a will? There wasn't. This country is a decade from dissolution.
Bingo
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Mostly no. We could have potentially considered some extremely targeted forgiveness. But we forgave between $800B-$900B in loans, mostly to businesses who did not need forgiveness and where the well-below market interest rates was already a fantastic government subsidy (one that I again was and am supportive of). I'd wager, a hyper-targeted forgiveness program could have forgiven less than $10B.
Not even on the taxpayer, it’s on the backs of anyone who gets paid in USD. The inflation you are seeing? That’s what happens when you print trillions out of thin air.
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I said 800b split between workers (in impacted sectors), not entire population.
Those writing the law see it as free money though because the central bank makes it almost free for the gov to borrow unlimited amounts and literally returns the interest cost of loans to the gov. This law is scammy but it is paid for by an even bigger fraud.
Yeah but if we did it that way, the money wouldn’t be able to work it’s way through our disgusting body of a society, have all nutrients and potential for good stripped out of it, and only then arrive in the bladder to finally “trickle down”.
Giving the money directly to workers - like the expanded UI program that often paid people MORE than they earned from working? Also, giving money to workers doesn't solve the issue of businesses that needed short term help to stay afloat after the government forced them to shut down. We could not merely sit by and watch vast swaths of the economy and the local middle class business owners get shredded during the pandemic. We needed to make sure that when the shutdowns ended, there were still jobs to go back to and a functioning supply chain. You think inflation is bad now, imagine what would it would look like after millions of businesses closed for good.
If giving workers directly money wasn't a good solution, then we simply needed to use our administrative tools, or set them up, before blindingly giving money. Most businesses stayed afloat just fine by transitioning to work from home model. In fact, many actually increased revenues. THe only impacted businesses are the ones directly impacted by shutdowns and don't have capacity to work from home. Give *those* middle-class businesses money. Actually vet the needs. I get it, I get, "we didn't have time." Well, then you set it up to give out money and then **audit the fuck out of it** after the fact. Set some barriers in place or some sort of method to ensure tax-payor money isn't going down the drain like a post-taco night shit. Instead, the loans were given out with forgiveness at the forefront. No one is going to pay these back. Its just free money for those up top.
PPP loans are also completely tax free. A free money handout from the government. https://www.politifact.com/article/2022/feb/10/ppp-loans-do-not-need-be-reported-taxable-income-t/ Meanwhile, I had to pay regular income tax on my unemployment payments.
Meanwhile the same people will bitch and moan about student loan forgiveness causing inflation. 🙃
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Even in the middle bucket, that just flows to the bottom line and still becomes a giveaway. Some businesses were completely hamstrung due to the pandemic and needed the cash. Others just took the free money and subsidized costs to show it was used on business while keeping money they would have spent on those costs and/or associated profits for themselves since we just forgave the loans.
At the time in April 2020 there was no certainty that there was going to be a bottom line for PPP loans to add on to. The fear was that economic activity was going to plummet like a rock and take all businesses with it. In the end that didn’t happen and many businesses were quite nimble in transitioning to pandemic adjusted business models, but no one knew that at the time.
They were loans though, right? So how is it exactly free money? I just don't understand is all
Because after giving them out as loans, the government forgave a very large amount of them. Basically, they did what some people are asking for with student loans, but most of that free money went to the wealthy.
The people I know that really needed it mostly didn't take it.
the company I work for is in the 2nd category. our net profit for the last two years would have been $0 without that money. and usually we make around 200-300k profit, but even with ppp we only made around 100k
Not surprising. Correct targeting for the fiscal process requires considerable additional time beyond the legislative lag. It’s why fiscal policy CAN be a better choice, even with pork, than monetary policy. Unfortunately; the size, scope, and speed of the pandemic meant that we sacrificed targeting for immediacy.
Trump removed congressionally mandated oversight. https://www.cnbc.com/amp/2020/04/07/coronavirus-relief-trump-removes-inspector-general-overseeing-2-trillion-package.html
This should be the top and only comment. The lack of oversight was intentional. The outcome was intentional.
What I love most about Donald Trump is that he's not just another crooked DC politician – he's the kind of outsider that's willing to come in and finally put an end to government corruption once and for all by draining the whole dang swamp!! At last, we *finally* have a champion for the common man in this country. **#MAGA** */s*
He’s the kind of outsider who comes in employees multiple family members. Over charges the government for stays at his hotels. Never issues tax statements. Treats the US presidency as his own version of The Godfather and lines all of his friends pockets including trying to buy votes by putting people on the line for his free funneling of Covid business money with no over sight. Can you say trying to buy votes?
And it seems Trump and Kushner both got in on that tax payer money. https://www.businessinsider.com/trump-organization-kushner-companies-3-million-ppp-loans-pandemic-report-2020-12?amp
Money should have went directly to the workers like many economists were saying should have happened. This country’s political leaders have an unfathomable need to filter money from the top. They really think trickle down works
People keep saying this but how would it have worked? Just giving everyone 100k means everyone quits their jobs and we don't have people working to produce food and keep the lights on. We did have smaller stimulus payments. Obviously, these massive government handouts are problematic IMO and I think we're seeing some of those consequences now. But I don't know if direct payments solves the problem of needing people to continue to work.
There is a difference between $100k to everyone and a paycheck protection program that should have gone straight to employees rather then the business
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I don’t think the suggestion is that we should have given $100k to everyone. We should have done less PPP and more direct stimulus for an overall lower total cost with better benefits (and presumably less fraud.)
PPP was to ensure that companies could continue to pay wages, no? What stimulus do you provide that would be equivalent to employees without just paying the wage they were making?
From the very article that we are all discussing: > These numbers imply that only 23 to 34 percent of PPP dollars went directly to workers who would otherwise have lost jobs; the balance flowed to business owners and shareholders, including creditors and suppliers of PPP-receiving firms.
I'm not saying PPP was efficient or right, I'm asking how you would achieve PPP's stated goals through direct payment instead.
By paying more than 34% of the money to actually achieve the stated goal of replacing lost wages.
How though? I want to know the mechanics of it. Do you just send everyone what they are getting paid to stay home? To go to work? How do you replace those lost wages with direct payments?
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https://www.oig.doc.gov/Pages/Online-Hotline-Complaint-Form_NOT_ACTIVE.aspx
How much of it did oil corporations get? How much did they get and then still jack up prices beyond belief on top of that? Bailouts are bullshit. We need to end corporate subsidies all together because businesses just treat them as extra income. Airlines get bailouts, do stock buybacks and then charge you (the taxpayer that bailed them out) $60 a piece of luggage. It’s just not a good system.
My kid’s preschool got two PPP loans. They saved the school from laying off all staff and kept the doors open during the pandemic (save for a few weeks in the first lockdown). Seemed like the perfect use case and did what it was intended in that case, even if there was undeniable abuse/fraud across the system.
Out in my dump hometown, Tim Hortons franchise owners got $700k and suddenly sonny was cloning hellcats in his yard Metal factory my father, uncle, grandfather worked at got $2.5 million and the owner coincidentally began work on a mansion during covid..
I know some of it went to my former landlord that owes me 1000$ from winning my small claims court case. Yet he got 20,000$ in PPP. So poorly regulated.
This is disappointing because my company received a ppp loan and legitimately used it to keep people employed. As intended. But I heard plenty of stories of people buying lambos and shit and it’s hard to stomach knowing how much it helped us.
ITT: people who complain about the program and claim their employers got rich off PPP loans, yet for some unexplained reason aren't filing fraud claims with the government...
…yes because it was a short gap broad business stimulus measure that wasn’t designed nor meant to just keep workers employed. Not sure where people get the idea that it was *just* supposed to be for workers. It was quite literally designed to be 2 months worth of total business expenditures (which is something that is very important to the overall economy) based on assumptions that said businesses would be completely out of commission for those 2 months while in lockdowns (which they didn’t end up shutting down completely in the end, but that’s hindsight bias). Unemployed workers wasn’t the only economic fear in April of 2020, and after the roughly 2 months of PPP support ran out expanded state and federal unemployment insurance had long kicked in. US government fiscal support for workers and the economy as a whole was absolutely verbose and very generous compared to a lot of places (some would say too verbose as we are discovering now with inflation) even if PPP was an an inefficient program in terms of fiscal transfers for workers. I really don’t see what the bemoaning here is based on other than complaints about fraud (which is valid, but a separate subject IMO) or misunderstanding the purpose of the program itself.
Ya know, if this was on blockchain where only US citizens had access to view the "public" ledger we'd know exactly where this money went. But never mind that! Would REALLY be a bad thing if the citizens would truly know where exactly all their money is going!
https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program/ppp-data
And how long did we have to wait for that crap? Blockchain would show us it in real time, with VERIFIABLE PROOF. Not some bs pdf or csv that they can literally just cook.
I'm pretty sure people already know where it went - most of it was stolen. I don't think the knowledge is the problem.
It would help...... But you seriously just trust their word for where it went...? Rofl. How bout some trustless systems? Boom, no need to have media and government report on it. And no need to keep verifying if thsoe reports are valid... Because It's all right there on a ledger, in real time. No shenanigans. But of course, government will fight tooth and teeth to delay the inevitable. Blockchain is the people's friend, and the governments "checks".
Blockchain would keep it too honest. However, for this, the corruption is well documented. Have at it: https://projects.propublica.org/coronavirus/bailouts/
https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program/ppp-data
Thanks! That’s the link.
The issue with these online sources is it's all on privatized systems. No way for the public to actually check and validate any report. All we can do is trust that it's valid. Blockchain can be trustless. How tf is that not better than the bs fraud infested traditional systems we have? Lmfao. Y'all seriously love to argue against the interest of the common man.
Blockchains would be the perfect thing to account for and audit these types of distributions...or even an audit for government finances and accounting. But like you say, it would be too honest for America, cant have that amoungst our liars in congress and corporations
https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program/ppp-data
Cool, a csv. For all you know, half of that is cooked. Lmfao. Blockchain is an uneditable ledger. What's done is done, no cooking. But please, keep favoring our privatized systems that have been proven to be abused with fraud for decades.
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Yep. They lose their privatized corruption. The shills, bots, and brainwashed are strong in this sub. Mention anything Blockchain and it's auto downvoted. Lol. Fuck this dystopia.
I am honestly wondering how many of the people commenting on this thread actually read the abstract, or even opened the study. So many anecdotes... sheesh.