This notion of people just balling because their stimulus checks is increasingly tiresome, has always been disconnected from reality, needs to die. How far do you think those things went? You know, for normal people? I only ever see this comment from folks (mostly Republican politicians until now) with zero understanding of the subject. Boggling.
This is an anecdote, but I feel like it holds true for many small businesses. I personally know a person whose business received $160k in PPP loans and after it became clear that this was not a "loan" but a "cash payout", he went out and bought two new cars and a nice new house. His business was never really at risk due to COVID, since most of his workers work solo in the field where they never have to interact with others (I used to work for him).
The whole PPP process was a shame. There was very little oversight and it's becoming clear now that it was designed up front to be a giveaway to business owners. Businesses should have been forced to pay those loans back.
For reference, the documentation requirements that I see talk about demonstrating your expenses, but I don't see anything about demonstrating you actually needed that money and couldn't pay those expenses yourself. Was that a requirement?
https://www.sba.gov/funding-programs/loans/covid-19-relief-o...
The loans should have been loans -- not payoffs. If a business took a loan and still could not pay it back, they should have declared bankruptcy.
It was entirely a corrupt endeavor and everyone knew it. The subsequent write-offs of the loans was also predictable.
The plan was to get the money out the door as fast as possible to stem the pandemic recession, which is important for stimuluses to work right, based on history. If you add all kinds of paper-work to reduce fraud, it slows down the process.
It was a hybrid in terms of "just send out a check" and a business loan. Perhaps in the future they should just send out a check to all businesses having a threshold # of employees.
There were programs aimed at individuals, though, such as ERAP for rent payment relief.
I am sure similar scenario would have happened for a lot of people and at the same time some businesses would have taken undue advantage of this as well.
But as you acknowledge, I'm sure there was abuse. I'll bet there was a lot of it. Gov't needed to get the money out the door fast, and it did, at the cost of some oversight. Hopefully next time we'll do it smarter.
I'm not sure how much smarter you can get. Fighting fraud and security in general is a cat-and-mouse game with a fundamental trade-off of convenience/expeditiousness vs. preventing fraud. When you need to get large amount of money out to a nation in a very small span of time, there might just be an unavoidably high floor on the amount of fraud that will happen.
Because otherwise you get flooded with all sorts of heart-breaking stories of people who were denied money due to some bureaucratic inconvenience put in place to fight fraud.
Heart-breaking stories aside, it would have taken far more time and money to roll out a new government bureaucracy merely to duplicate a vetting service banks already provide.
More importantly, embedded in your claim is the assumption that comparing two different states with multiple order-of-magnitude differences in size and complexity should be accepted without question. Imagine deploying a solution for a class of 32 students in two weeks. Now imagine you have to do that for an entire university community of 8,000 people including all faculty, staff, and administration. You must account for on-campus and off-campus students; part-time, full-time, and remote employees; labor-oriented staff who do never use computers at work, multiple languages, bureaucratic restrictions to account for, politicking within different departments, and so on. Here's the kicker: you still have the same two weeks you had for the classroom project.
It's an absurd comparison that should never be made without clear disclaimers, caveats and careful specificity about the point.
Imagine if every state issued their own digital ID that was part of a national federated system of PKE. That is, each state trusts the certificate authority in each other state, and the fed trusts the states. There's some mechanism to sign into a federal website and to transfer money to a bank account, or perhaps a mechanism involving showing up to a postal office, who knows. Compare this to dispersing funds quickly but without any verification of identity.
By doing the work up front to be able to quickly verify identities it means that the fraud prevention happens before the fact.
Do you think the $76 billion would have been better spent on digital infrastructure or written off as fraud? And what about the next time there's a need for helicopter money?
You know the DoD is fazing out CAC and there's a lot of very cheap tooling around PKE digital IDs...
1. https://www.politico.com/news/2020/04/07/trump-removes-indep...
Yes. The goal was to put money into the economy to help absorb the shock caused by short-term COVID restrictions that would otherwise have caused businesses to fail permanently. The point was to allow more businesses to "weather the storm" than otherwise. You can argue about the extent to which businesses should invest in "pandemic insurance" (however you want to define that), but the government does have an interest in stability and preventing a vicious cycle leading to economic collapse.
The obvious point was to leverage the resources already available at banks to vet loan applicants and to reduce the total number of applicants in the first place. It's not perfect, but it's a reasonably good idea given the urgency. Sometimes it's reasonable to accept that some people are going to get away with cheating the system. Do the best you can and move on.
Can you imagine how much MORE it would have cost and how much more money would have gone to waste, had the government just said up-front that it was free money for businesses? How much would it have cost the government to arrange for approving applicant businesses? Was it even feasible given the desired timeline?
Not everyone lives on the coasts and makes SWE money.
Those stimulus checks ALONE were a TON of money for most people. For the average American just the checks were an entire extra month of net income (avg household = $71K and has two earners). Over 24 months it's $75 of additional spending per consumer per month, which when I was making $30K would have doubled my disposable income per month. Double spending. For two years.
AND stimulus checks weren't even half the of the amount that went out. AND the other half was even more disproportionately allocated to marginal consumers.
Enhanced UI, in particular, played a huge role. Combine that with stimulus checks and a lot of under the table untaxed work (done under the table to keep EUI eligibility), and people were doubling or tripling their net income for a year or more. The general asset bubble and explosion of retail investing didn't help.
It all adds up to a shitload of money in many parts of the country.
I know a good number of people in rural WV who are still living off of savings accrued during 52 or so weeks from 2021 to 2022. I'm willing to bet a much much larger number of people spent the last 2 years returning to the labor force but spending beyond their going-forward means.
I don't understand how you think it's reasonable to compare "a ton", as a large amount of weight, to checks that did not cover a month of living expenses.
PPP loans were a nontrivial amount for businesses.
> a lot of under the table untaxed work (done under the table to keep EUI eligibility), and people were doubling or tripling their net income for a year or more
Which could be done before and after. Suggesting that no new conditions somehow tripled income makes no sense.
> I know a good number of people in rural WV who are still living off of savings accrued during 52 or so weeks from 2021 to 2022.
Probably not.
Literally impossible.
US median individual income is $44,000, net $30K, monthly net $2.8K; stimulus checks were $3.2K. For the Average American, your assertion is mathematically impossible, which means that for a third of America your claim is outrageous.
If you're making $30K/yr, and depending on how you define "living expenses" vs "other expenses", the stimulus checks covered several months of living expenses. (eg: I now consider a car loan a "living expense" but when I made $30K the paid-off beater car was definitely a luxury expense and there were months when I left it parked and relied on a bad bus system because I couldn't afford the registration fees or an oil change.)
> PPP loans were a nontrivial amount for businesses.
Agreed. Nothing about Stimulus and EUI should detract from the massive handout that was PPP. Particularly because Stimulus and EUI at least went to people who weren't already doing very well.
> Which could be done before and after. Suggesting that no new conditions somehow tripled income makes no sense.
No. This totally misunderstands a few really important changes.
1. UI is hard to get, TEMPORARY, and not a lot of money. The additional $ and time from EUI changes the calculus pretty substantially.
2. lots of people already lost their job; picking up under-the-table work when you're already unemployed is different from making the choice to leave a job for UI and under-the-table work.
3. there was a definite social contagion effect.
4. huge parts of the economy shut down but a lot of that economic activity didn't stop. The government shutdowns created a huge black market for entertainment-related services.
>> I know a good number of people in rural WV who are still living off of savings accrued during 52 or so weeks from 2021 to 2022.
> Probably not.
EUI + continuing to work + some gambling wins = you can double your income for a year.
If you own a home and a car in good condition in rural WV, you can keep living expenses below $10K. So if you were making $50K and double that for a year, you're in a place where you can take a year or three off. Or blow a shitload of cash on Amazon or whatever.
Or $0 if you're a SWE living on the coasts.
I realize we make a lot, but we pay a lot in taxes. Just send the $3,000 check to millionaires and don't worry about it. I'm getting frustrated with the government telling me I'm rich while I can't afford an upper middle class home.
I hear ya, brother :)
The idea that pumping ~$800 billion into the economy wouldn't affect inflation and the economy in general seems unlikely.
https://files.stlouisfed.org/files/htdocs/publications/revie...
Not $800 Billion, rather $8000 Billion
What did that do to the economy/prices/inflation and why isn't that headline news every day for 20 years?
It seems likely the blood and treasure squandered on those unnecessary wars held back growth by misdirecting investment money into war rather than being traditionally inflationary (as it was, say, in Viet Nam or WWII).
Now the US is spending on the order of $0 on the UKR war for an enormous IRR, and that's controversial.
You build a bomb, you blow up the bomb, that’s money that’s just gone for good.
You give people money, along with negative interest rates so they don’t just hold on to the money, and that money spread out into the whole economy causing the price of goods to increase because of more competition for a finite amount of resources needed to produce said goods.
That being said, that 8 trillion dollars could have undoubtedly been spent in a more productive manner but that’s not the world we currently find ourselves in.
The bomb is gone, the money isn't. It's still circulating, because the people working for the defense contractors who built the bomb got paid.
The money was also created by the government borrowing it (As the war was financed by deficits). In our current financial system, loans expand the money supply.
There's no significant difference in the impact on the economy between paying defense contractors money to build a bomb that you then explode, and paying them to sit around and pick their nose.
[0] https://www.stlouisfed.org/publications/regional-economist/2...
Their link does not create a bright line, instead it commingled both programs (and any other increased governmental spending).
I kind of feel this way, but about the free money given to corporations that didn't really need it -- not individuals.
But it has.
The net result was that between 2016 and 2021, my compensation increased a whopping 460%. I know I'm far from alone in that as well. If anyone was ballin', it was (IMHO) far more related to the bull market than anything else.
What's mind mindbogglingly disconnected from reality not understanding that people will absolutely spend a $1k (or whatever) stimmy payment the just like they would a tax return or bonus.
That said, the stimulus bucks disbursed to individuals were absolutely not enough to matter to the macroeconomic picture. It was basically like having a year with two tax return seasons.
The PPP loans, the changes in unemployment benefits, the people using home equity to buy garbage they don't need, all had a much bigger impact.
I'm pretty sure that has stopped by now too, though.
Edit: https://www.investopedia.com/federal-pandemic-unemployment-p... - ended Sept 2021
There were plenty of posts about small businesses being unable to compete with unemployment because of this back when it was active. In past experience, this is usually what they're referring to.
What is the answer to these questions from people who have understanding of the subject?