Because bailouts (usually) make the government money in the long run. They're in the form of low-interest loans, they aren't just handing out money to corporations.
Not to say its impossible, or that we shouldn't try--we should. But when you have a bunch of senators arguing, it's easier to point to the easy numbers.
I think you said it yourself with your comment about senators arguing. The root cause is an overall lack of political will, not any technical or logistical impediments in modelling impact.
The U.S. Census, GAO, and various other bureaucratic organizations (USDR, EPA, etc), all seem to be quite competent when it comes to performing studies and gathering data.
So is the IRS, Department of Defense, etc.
Of course there are lots of problems, but the U.S. Federal Government has plenty of agencies able to competently perform some sort of study.
Basically, it doesn't matter how quickly we re-open if people don't have any money to spend, don't feel comfortable spending, and aren't leaving their homes.
[1] https://tradingeconomics.com/united-states/unemployment-rate
Clearly, the current administration puts corporate profits over the lives of Americans. Clearly, the current administration is allergic to hard work. Hopefully, Americans can send the message in November that there's no room in our government for people like that.
People realized that was idiotic? Don't celebrate that someone accidentally did something worthwhile for a terrible reason. Target your efforts at doing things that are worthwhile, not at doing things that are hard.
This
>Don't celebrate that someone accidentally did something worthwhile for a terrible reason.
Doesn't track with this.
>Target your efforts at doing things that are worthwhile, not at doing things that are hard.
I think you're missing nuance.
I say, condemn those who lazily do the easiest jobs that don't interrupt their sleep at night.
Rather, we should all be trying to make the greatest positive impact within 40 hours of work a week. Those who do more are being taken advantage of one way or a dozen. Those who do less are taking advantage.
By setting a floor and a ceiling we limit abuses on both sides and,hopefully,better distribute labor.
Also,doing things that are hard for the sheer sake of it is not idiotic. It can be a positive characteristic, just like avoiding difficulty is a negative one.
I don't think it would be especially controversial to say it was done for a terrible reason. We didn't do that specifically because it was hard; those are just words from JFK's speech. We did that because the Soviet Union had beaten us to putting a man (and a satellite) in orbit, and we thought it was crucially important to beat them to something related.
What is "terrible" about advancing science and putting humans in space?
Neither of those was a reason for the project.
Let's say the market rate for a loan like this is 4% and the government is loaning at .5%. Sure, the government has "made" .5% (less any defaults), but by any realistic understanding of what's going on, they lost 3.5%.
But don't muddy the waters by saying that they are making money on the program if they're giving below market loans. They might have good reasons to do it, but they're not making money on the deal.
The fact that a market coalesced around the asset isn't that significant because the Fed can't withdraw from the market now without watching prices for the asset collapse.
The recent airline loans/bailouts require maintaining the same staff until September 30th.[1]
I would imagine that there will be layoffs once that requirement expires.
[1] https://www.businessinsider.com/airlines-coronavirus-bailout...
Serious question. I fail to see how bailing out mismanaged companies is worth more than an equivalent sum straight to people. Companies can be nationalized if they're essential. Can't raise the dead. Can't squeeze blood from a stone.
"""But the challenging economic outlook means we have some tough decisions ahead as we plan for our airline, and our overall workforce, to be smaller than it is today, starting as early as October 1."""
-Oscar Munoz, Chief Executive Officer, and J. Scott Kirby, President,
https://hub.united.com/united-message-munoz-kirby-2645729257...
This is false as related to the PPP loans ($700B program, to put that in perspective during the 2008 financial crisis law makers passed an $800B stimulus to prevent total financial collapse). Its argued the banks paid that 2008 money back with interest (I won't touch that claim), but the PPP loans ($700B) are intended to be forgiven.
>> Because bailouts (usually) make the government money in the long run. They're in the form of low-interest loans, they aren't just handing out money to corporations.
> This is false as related to the PPP loans
GP was comparing unemployment to QE and "corporate bailouts". Forgiveness of PPP loans is contingent on keeping staff on payroll and salary levels constant. So it's very much targeted at helping main street. In this sense, the intended use of PPP loans was closer to augmenting unemployment than a corporate bailout.
To the extent that PPP loans have actually gone to small businesses, my impression is that that's mostly worked out -- it's basically unemployment without the lack of employment. To the extent that they haven't, the federal government should find a way to retroactively claw back abuse and/or exclude abusers from future rounds of assistance.
BTW, worth noting that the PPP loans aren't really a handout if they're not paid back; their interest rate of 1%. Rates of return on fixed income are super low right now.
Helps main street? Businesses just got free money from taxpayers. Sure for the forgiveness you have to spend 75% on payroll, in many instances what the amounts to is a business owner paying themselves 8 weeks of salary with taxpayer money and then that loan being forgiven. In the instance it actually goes to employees, again taxpayers basically just paid for 8 weeks of your payroll (these helps politicians by keeping unemployment numbers artificially low for 2 months, and keeping people off the temporary Covid unemployment benefits), the jury is still out if any of these employees will remain employed after 8 weeks (or we will see unemployment again be flooded with millions of applicants, only the extra $600/week won't be there).
>my impression is that that's mostly worked out
Its as much of a scam as the NINJA (no income no job applications) were leading to the financial crisis, people just formed businesses made up salaries and got a free 8 weeks of said salary (up to $100k salary). Or the fact that law makers and their families have specifically been exempt from any ethics review for conflict of interest, and in some cases law makers set up brand new companies just to obtain PPP loans.
Sorry, I don't really understand why this is a problem. The alternative would be laying those people off and paying them via unemployment anyways, right? The idea was to keep people tied to their employers and keep otherwise productive businesses in tact in order to enable a quicker recovery. Digging into today's jobs numbers confirms this was largely successful: the bounce in employment was mostly ended furloughs.
> people just formed businesses made up salaries and got a free 8 weeks of said salary
Now you're just making shit up. Businesses had to exist prior to February 15, 2020 and the amount received is computed based upon payrolls from Jan 1 to Feb 15 2020. If people are doing this, they are putting a lot of effort into intentional fraud and are 100% going to end up in jail.
If the alternative was laying people off, that is the free market at work. And there is no "keeping employee tied to their employers" as you claim, it is just free money to businesses for 8 weeks of payroll (+25% extra for non-payroll expenses like rent - so taxpayer paid rent for businesses, where is the taxpayer paid rent for taxpayers?). There is no promise or guarantee business will keep employees or even remain open beyond that 8 week period.
Finally, and most importantly, you touch on it:
>paying them via unemployment anyways, right?
Yes, this was about: 1) free money to businesses and 2) hiding the real unemployment numbers.
It was not about employees, if it was there are much better ways to go about it. At minimum law makers wouldn't have been allowed to pass the bill, create a brand new business, and obtain PPP loans for these new businesses (which would normally be prohibited, but both law makers and their family were excluded from these prohibitions against conflict of interest)
The economic shock was caused in part by a government-imposed shutdown of economic activity in response to a pandemic.
> There is no promise or guarantee business will keep employees or even remain open beyond that 8 week period.
Which is why another aid package will probably be passed in July. The initial aid package was not intended as a one-time fix. Even as the legislation was being drafted, its key sponsors were stating that a follow-up package would be required in the summer.
> At minimum law makers wouldn't have been allowed to pass the bill, create a brand new business, and obtain PPP loans for these new businesses
Again: businesses had to exist prior to February 15, 2020 and the amount received is computed based upon payrolls from Jan 1 to Feb 15 2020. If people are doing this, they are putting a lot of effort into intentional fraud and are 100% going to end up in jail.
No, the economic shock was caused by businesses being over leveraged and not having cash reserves. I keep hearing how this was the greatest economy the World has ever seen, how good could it really be if businesses are existing paycheck to paycheck?
>Which is why another aid package will probably be passed in July.
Exactly why taxpayers and not businesses should have received the lion share of the bailout funds.
>businesses had to exist prior to February 15, 2020
Look up shelf corps or ready corps. There is rampant fraud with respect to the PPP loans, including by law makers, none of them will end up in jail.
A lot of these businesses didn't have much cash reserve because they were launched by ordinary folks and operate in industries where the profit margins are razor thin. If you're running the local pub, there's simply no opportunity to build up capital reserves that can survive a several-month-long shutdown. Even cutting payroll down to a minimum, rent, utilities and minimal maintenance is expensive.
I don't think there's a reasonable argument to be made that wiping out the current owners of bars, coffeeshops, garages, gyms, etc. is going to result in more resilient or more competent locally owned businesses in the long term. I just don't buy that there's a massive amount of well-capitalized individuals ready to run bars/coffeeshops/garages/etc. better than the current owners.
That said, there is a critical mass of super well-capitalized and competent restaurant/bar/coffeeshop management machines, which can take over if all those local businesses fail.
The effect of the policy you're suggesting would be the walmartification of the last remaining outposts of local ownership in most economies.
The airline bailout was apparently complex and not all of the info seems to be public [2].
[1]: https://www.paulhastings.com/publications-items/details /?id=7b8f1b6f-2334-6428-811c-ff00004cbded
[2]: https://www.nytimes.com/2020/04/14/business/coronavirus-airl...
On the whole the fed's balance sheet actually went up by 4 trillion dollars during the 2008 recovery [1] even though the loan program was less than 1 trillion. There is a trillion dollars of mortgage backed security purchases there that are a less visible bailout. The fed has already added 2 trillion this time with more to come.
[1] https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
Let me make that clear. Whenever people say "Wall St was bailed out by the taxpayers", they don't understand finance well enough to know that the taxpayers actually earned a significant PROFIT from that bailout.
...and naturally the media doesn't report on that important detail.
"socialize the losses, privatize the gains" is a slogan based on complete ignorance.
She's done research and cites evidence. You CAPITALISE basic terminology to patronise people out of wanting to challenge you.