I've been really surprised that this hasn't been a political issue. These loans were a good deal larger than the student loans that've been forgiven, and a dream come true to anyone who's ever made money from fraud.
I would prefer the counterfactual where nobody was forced to close (any longer than maybe the first couple of weeks) and therefore nobody got helicopter money; but since that isn't what happened, the next best thing would be aggressive prosecution of fraud. One can dream.
>it was to compensate businesses for being forced to close
More specifically, it was to "protect paychecks", to keep workers on the payroll who otherwise would have been let go. Sometimes, but not always, one of those workers was the business owner. In theory it was a pass-through benefit aimed at workers, but the employers not only had the loans forgiven, but also got a tax deduction for spending the government's money, and even sweeter in some cases, got increased tax basis in their business for the loan money they never repaid.
> PPP loans went to "job creators", always a favorite politically-protected class.
Both PPP and EIDL were to businesses. Not to individuals.
PPP was not a loan program. It was a grant. EIDL was a loan, and that was the program that had forgiveness. Being awarded PPP money required that you disclose payroll data before, during and after, and if you failed to meet terms, it would be converted to a loan. EIDL worked differently, if you met forgiveness, a percentage of your loan would be forgiven (I seem to recall 60% being the cap, but I could be wrong). In PPP there were caps on the amount a business owner could claim for their own compensation as a worker in the business.
> got increased tax basis in their business for the loan money they never repaid.
PPP was not a loan, it was a grant to cover payroll and unavoidable (i.e. rent) expenses during the initial lockdown. The IRS initially wanted to tax that (and for small businesses, that is at the personal rate of the owner) grant amount, which would have blunted the effect of PPP by 25-30%. The Trump adminstration stepped in and told the IRS to stand down, and changed the rules to prevent that. The purpose of PPP was really to ensure that businesses did not shut down permanently. The fact is that most small business only have sufficient cash to handle about 90 days of payroll and rent. Keeping the businesses alive would enable a faster rebound, because there was a study that estimated it would take eight years to re-grow that sector if those businesses were forced to shut down.
We chose not take a PPP loan because our industry saw record growth during Covid and it wasn't morally right to take advantage of a program meant for struggling businesses. Our competitors received money even though they also had record revenue growth. We were punished for doing the right thing because that capital could been have been used to invest in the business.
PPP had two goals: prevent business closures and layoffs, and stimulate the business economy (companies were cutting spending too). Yes, the capital could have been used to invest in the business, hire more people, etc, which all stimulate economic activity.
https://www.federalregister.gov/documents/2020/04/15/2020-07...
https://en.wikipedia.org/wiki/Paycheck_Protection_Program - scroll to purpose
This was absolutely a lifesaver for some businesses (hospitality industry, small biz retail.) But for the other parts of the economy which kept working, it was absolutely free money.
That is not always the case. Sometimes there is no profit to pay a dividend with. In a bad year, like 2020, that is usually the case.
> But for the other parts of the economy which kept working, it was absolutely free money.
Maybe, but I really think the image presented in a lot of articles like this is PPP was just 100% fat cats getting an extra serving of caviar. It was estimated at the time PPP went into effect that we were at risk of losing 71% of the small business economy, and that it would take eight years for the sector to recover... which would have been devastating to GDP, taxes and so on. The truth is probably between 0 and 71%, and the recovery time could have been less. I suspect PPP will be studied in the future as a starting point for dealing with other massive natural disasters that disrupt the national economy.
Also, this was actually authorized by Congress and not declared by fiat in an enormous executive overreach.
Which businesses? We're also looking with hindsight bias. There's no way to see what would have happened if businesses weren't bailed out.
A good example is the Covid lockdowns that benefited the likes of Amazon or Home Depot at the expense of Main Street businesses. Cui bono? Certainly the wealthy class did. But did they collude and whisper into the ears of the halls of power in federal, state, and local levels (which all played roles in lockdowns) to make sure that people were forced to lock down harder and longer? No -- it's just the incentive structure. Politicians and bureaucrats had the choice between being rewarded for taking "decisive action" against the spread of the virus or pilloried for doing nothing, even if in hindsight it appears that we would have been better off doing nothing.
Stuff like this is precisely why conservatives argue for limited government and more delegation of powers to lower levels of government. It's much easier for a wealthy person to have pull on a single US senator to make themselves more wealthy, than for that same person to have pull on twenty different state senators, or five hundred different city councilors.
I highly doubt the people engaging in PPP/Covid fraud are the typical power players in gov. Those people steal money through much more legal means like gov grants and contracts that end up costing 4x and taking 2x longer.
There are people who will swear up and down that welfare is the root of all evil. That bootstrap pulling is necessary, that there's opportunity for everyone regardless of their situation, and that all you need is hard work and dedication to succeed in the US. They will wring their hands about the federal deficit and will howl about the size of the national debt. Just look at the student loan forgiveness issue.
But if you dangle a $6K per head loan in front of them, with no consequences whatsoever, every one of these same people will take and say "what did you expect me to do? I've got a business to run." Because for the vast majority of them, complaining about welfare was never about their taxes, or even considering the plight of the individuals who need the money.
It's about the thing that they complain the "woke" masses of doing.
It's virtue signaling. It was never about the money. It was about self-justification.
I don't know about welfare being the root of all evil, but there are valid discussions to be had on that topic from people arguing in good faith, and I think it's perfectly justified for someone to feel that their taxes are too high or that welfare benefits provide too much.