What does a BIDEN Presidency look like?

[Jacob]

PPP was a massive handout to small and medium sized businesses. Not large and wealthy ones - they were specifically scoped out.

It seems there's evidence that a good number of the "small and medium sized businesses" were wealthy individuals who just pocketed the cash?

[OttoVonBismarck]

PPP was a massive handout to small and medium sized businesses. Not large and wealthy ones - they were specifically scoped out.

It seems there's evidence that a good number of the "small and medium sized businesses" were wealthy individuals who just pocketed the cash?

He's simply repeating the same lies that people have repeated around these terms for decades in the United States. In the United States small business has a legal definition under the SBA and laws that mimic its definition, that includes very large firms with high revenue. For example a typical American would not consider a chain of car dealerships with a few hundred employees, several hundred million in revenue, and an owner with a 8 figure net worth to be a "small business." The popular conception of your small business is the struggling local deli or barber shop. The government defines it quite differently, and what's worse is most small business incentive programs, while theoretically covering what the public imagines are small businesses, are layered in complex requirements that the true small sole proprietorships generally have trouble figuring out and successfully receiving.

The PPP has additional issues in that self-incorporated entities and various other LLC pass throughs were able to get checks as well, and sometimes those are private vehicles for wealthy individuals.

On top of all that, even a lot of the small businesses that might match a popular conception of a small business, still represent things controlled and owned by the wealthy. For example an engineering consultancy with 10 employees and an owner who makes $400k/yr is certainly a small business, but does someone whose income is in the top 1% of AGI actually need a government bailout? 

[alfred russel]

PPP was a massive handout to small and medium sized businesses. Not large and wealthy ones - they were specifically scoped out.

It seems there's evidence that a good number of the "small and medium sized businesses" were wealthy individuals who just pocketed the cash?

I agree there is a lot of evidence of that, and no one should be surprised. The idea at the time was to very rapidly get the program approved so there wasn't a massive depression when the whole economy shut down. It was broad legislation.

I started a post with the eligibility criteria, which have things like 500 employee caps and no more than $5 million of average income over a couple years. Probably not worth it. But your large and wealthy businesses were scoped out.

A wealthy individual with a small side business, would be eligibile, or a business with 400 employees or a business making $4 million a year could be. The former isn't a large and wealthy business, and the latter arguably is, but that was the cut off applied and in the grand scheme of the economy it is not especially large and wealthy.

[Admiral Yi]

Was PPP loan foregiveness built into the program or was that added later.

And were there criteria for foregiveness, or did everyone get it?

[Jacob]

I'm seeing a lot of things like this, for example:

If Mike Kelly, R-Pa, has net worth of  $145.2 million, why was his Personal Payroll protection loan for $974,000 forgiven?

[alfred russel]

He's simply repeating the same lies that people have repeated around these terms for decades in the United States.

Are you saying the Small Business Administration is a subsidy to large and wealthy businesses?

I agree the definitions used go beyond mom and pop shops and get into bigger businesses, but it is about smaller businesses. FWIW the passage of the PPP was not some republican plot: the democrats controlled the house and it was passed 96-0 in the senate.

[alfred russel]

I'm seeing a lot of things like this, for example:

If Mike Kelly, R-Pa, has net worth of  $145.2 million, why was his Personal Payroll protection loan for $974,000 forgiven?

I have never heard of Mike Kelly, and I won't research the details here.

However, the idea was that smaller businesses in the initial stages of covid that were getting shut down needed support to make payroll. The idea was to give businesses money to make payroll for a period of time. That however raised the risk that if Mike Kelly's business was given $947k to make payroll that he could pocket the $947k and still lay everyone off.

So they gave his business $947k as a loan, and if it didn't lay people off for a period of time then the loan would be forgiven. If he did lay people off the loan would need to be repaid.

Mike Kelly's net worth was not considered in the program. It was focused on businesses rather than the people owning the businesses.

[OttoVonBismarck]

Was PPP loan foregiveness built into the program or was that added later.

And were there criteria for foregiveness, or did everyone get it?

Are you asking very basic, easily Googled questions, or are you making a point?

[OttoVonBismarck]

I'm seeing a lot of things like this, for example:

If Mike Kelly, R-Pa, has net worth of  $145.2 million, why was his Personal Payroll protection loan for $974,000 forgiven?

Because he likely has some LLC or similar pass through. The PPP also is an entirely unaudited program, as in there were no real controls or safeguards on it. It isn't at all difficult to imagine checks were disbursed to people who did not meet the eligibility requirements.

Also keep in mind--the PPP was literally "sold" as "Paycheck Protection", 75% of all funds disbursed under the PPP did not go to paychecks.

Additionally: NBER found that about 75% of PPP funds went to the top 20% of households by income.

Like I said, this is pretty obviously a situation where the chattering classes (and the usual suspects on these forums) get really worked up over the horror of a lower income person getting money, but don't even care or investigate the facts on a massive, hundreds of billions of dollars handout to rich people.

[Sheilbh]

Yeah and I think with basically anything to do with business support in the early days of covid (or, say, getting PPE or orders of vaccines that didn't end up working) there's going to be a lot of fraud or perhaps undeserving recepients.

I always think of that project triangle - you can have it quick, cheap and good but you have to choose two. I think with a lot of government spending in covid the priority was speed which was right, but meant the normal due diligence and financial checks or means testing etc weren't happening. A lot of it bought PPE that worked or saved businesses that were really distressed by an uninsurable event etc - but there'll be a lot more fraud and a lot less value for money than we'd probably want from government in normal times. I think that trade-off was worth it.

[Admiral Yi]

Are you asking very basic, easily Googled questions, or are you making a point?

I thought the question mark on second sentence would make things clear but I see how the omission on the first sentence might confuse things.

Thanks Fredo.

[OttoVonBismarck]

I always think of that project triangle - you can have it quick, cheap and good but you have to choose two. I think with a lot of government spending in covid the priority was speed which was right, but meant the normal due diligence and financial checks or means testing etc weren't happening. A lot of it bought PPE that worked or saved businesses that were really distressed by an uninsurable event etc - but there'll be a lot more fraud and a lot less value for money than we'd probably want from government in normal times. I think that trade-off was worth it.

Absolutely, this was even said at the time--you can build out a huge administrative organization to check eligibility, guard against fraud, establish onerous procedures to mitigate waste, or you can implement a program that pumps money into the economy quickly. It is all but impossible to do both.

FWIW I'm not against the concept of economic stimulus, while I don't agree with everything Keynesian I do think a global pandemic caused recession is obviously a time for counter-cyclical stimulus spending.

I think the discussion about all the various stimulus programs of the past 14 years and how appropriate each was from some sort of macroeconomic perspective is a whole different thing.

What I'm more focused on here--given this is primarily being treated as a political issue, is the politics of it. From a political perspective I look at someone making $75,000 a year who got maybe $2000 in stimulus checks, and is now being villainized as a lazy layabout because he is getting $10,000 of his $50,000 in student debt forgiven when we shoveled much larger per-individual amounts out through programs like PPP to wealthy people.

If someone is a true hardcore fiscal conservative they could demonstrate that to me by criticizing deficit-raising tax cuts and business handouts as well as social welfare, someone who is fine with the former and against the latter is just a person who doesn't like poor people getting things, and is willing to make up stories to tell you why that is.

A lot of this goes back to the 80s and the myths around Reagan economic theory--that was a permission slip for many "fiscal conservatives" to approve of things like massive tax cuts not funded by offsetting spending cuts by saying "well it stimulates the economy so it washes out the deficit effect." There has never been good evidence for this at all, and without that evidence anytime someone supports a massive revenue reduction and does not push for and demand an offsetting spending reduction, they are not engaged in sound fiscal conservative policy.

[OttoVonBismarck]

Are you asking very basic, easily Googled questions, or are you making a point?

I thought the question mark on second sentence would make things clear but I see how the omission on the first sentence might confuse things.

Thanks Fredo.

And my point is if you're interested in a discussion you can make a point. If you're too lazy to Google I don't have time for you.

[Admiral Yi]

Yeah and I think with basically anything to do with business support in the early days of covid (or, say, getting PPE or orders of vaccines that didn't end up working) there's going to be a lot of fraud or perhaps undeserving recepients.

I always think of that project triangle - you can have it quick, cheap and good but you have to choose two. I think with a lot of government spending in covid the priority was speed which was right, but meant the normal due diligence and financial checks or means testing etc weren't happening. A lot of it bought PPE that worked or saved businesses that were really distressed by an uninsurable event etc - but there'll be a lot more fraud and a lot less value for money than we'd probably want from government in normal times. I think that trade-off was worth it.

With perfect hindsight would means testing have worked?  Honest question.

A high net worth owner can lay off staff due to covid-induced lack of business just as easily as a lower net worth individual can.

[Admiral Yi]

And my point is if you're interested in a discussion you can make a point. If you're too lazy to Google I don't have time for you.

I can live with that.