PPP seems like a bust
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https://www.aeaweb.org/articles?id=10.1257/jep.36.2.55
The Paycheck Protection Program (PPP) provided small businesses with roughly $800 billion dollars in uncollateralized, low-interest loans during the pandemic, almost all of which will be forgiven. 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. Program incidence was ultimately highly regressive, with about three-quarters of PPP funds accruing to the top quintile of households. PPP's breakneck scale-up, its high cost per job saved, and its regressive incidence have a common origin: PPP was essentially untargeted because the United States lacked the administrative infrastructure to do otherwise. Harnessing modern administrative systems, other high-income countries were able to better target pandemic business aid to firms in financial distress. Building similar capacity in the U.S. would enable improved targeting when the next pandemic or other large-scale economic emergency inevitably arises.
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"uncollateralized"
"forgiven"
"cost of $169 to $258K per job-year"
"23-34 % to workers"
"highly regressive"
"untargeted"Yeah, government at its best.
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"uncollateralized"
"forgiven"
"cost of $169 to $258K per job-year"
"23-34 % to workers"
"highly regressive"
"untargeted"Yeah, government at its best.
@George-K said in PPP seems like a bust:
Yeah,
governmentthe Trump administration at its best.Old article from Vox discussing the various shortcomings of and misunderstandings about the PPP:
It was widely recognized that the PPP had many shortcomings. There was a lot of urgency to rush money into people's hands, and many institutions were short staffed at the time due to the pandemic. So, yeah, lots of inefficiencies and even outright wastes. But like fighting a war, some treasure will be burnt unnecessarily and some questionable profiteers will benefit undeservedly.
Next time another pandemic comes around that require the entire country to "lock down" for 3+ weeks to prevent massive fatalities -- how should we do things differently? Hopefully we have collectively learnt something from this experience.
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@George-K said in PPP seems like a bust:
Yeah,
governmentthe Trump administration at its best.Old article from Vox discussing the various shortcomings of and misunderstandings about the PPP:
It was widely recognized that the PPP had many shortcomings. There was a lot of urgency to rush money into people's hands, and many institutions were short staffed at the time due to the pandemic. So, yeah, lots of inefficiencies and even outright wastes. But like fighting a war, some treasure will be burnt unnecessarily and some questionable profiteers will benefit undeservedly.
Next time another pandemic comes around that require the entire country to "lock down" for 3+ weeks to prevent massive fatalities -- how should we do things differently? Hopefully we have collectively learnt something from this experience.
@Axtremus said in PPP seems like a bust:
Yeah,
governmentthe Trump administration at its best.Remind me who "controlled the purse" in 2020,
See how easy that was? It's facile to point to any administration to point out failings of budget, spending, etc.
The reality is much more complex, as you know - or at least I hope you do.
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@Axtremus said in PPP seems like a bust:
Yeah,
governmentthe Trump administration at its best.Remind me who "controlled the purse" in 2020,
See how easy that was? It's facile to point to any administration to point out failings of budget, spending, etc.
The reality is much more complex, as you know - or at least I hope you do.
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The PPP was known at the time to be an overreaction (I remember listening to podcasts about it in mid-2020) but the PPP was meant to avoid the 2007/2008 mistake of waiting way too long to provide financial relief. Better to overreact early than to react correctly, but late.
BTW, Ax is right-ish... if this were on Biden's watch you'd see any inefficiencies or failings of the PPP blamed on him non-stop by many folks here in TNCR. To me, it was a bipartisan reaction and, overall, a correct one...at least at first when things were really, really shut down.
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If we can't point fingers at Presidents, what purpose do they serve?
Incidentally, Bidenflation is a very poor use of the English language.
I was only joking
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The PPP was known at the time to be an overreaction (I remember listening to podcasts about it in mid-2020) but the PPP was meant to avoid the 2007/2008 mistake of waiting way too long to provide financial relief. Better to overreact early than to react correctly, but late.
BTW, Ax is right-ish... if this were on Biden's watch you'd see any inefficiencies or failings of the PPP blamed on him non-stop by many folks here in TNCR. To me, it was a bipartisan reaction and, overall, a correct one...at least at first when things were really, really shut down.
@89th said in PPP seems like a bust:
The PPP was known at the time to be an overreaction (I remember listening to podcasts about it in mid-2020) but the PPP was meant to avoid the 2007/2008 mistake of waiting way too long to provide financial relief. Better to overreact early than to react correctly, but late.
BTW, Ax is right-ish... if this were on Biden's watch you'd see any inefficiencies or failings of the PPP blamed on him non-stop by many folks here in TNCR. To me, it was a bipartisan reaction and, overall, a correct one...at least at first when things were really, really shut down.
Be careful 89, you are starting to sound like me. 555
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If we can't point fingers at Presidents, what purpose do they serve?
Incidentally, Bidenflation is a very poor use of the English language.
@Doctor-Phibes said in PPP seems like a bust:
Incidentally, Bidenflation is a very poor use of the English language.
Thanks for covering for me while I've been out.
