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.
You can lookup how much businesses received in PPP "loans." It's staggering.
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.
I believed the same as well but then last year when I went back to my family doctor after more than 1.5 years, I got to hear another version. My doctor belongs to a group of doctors who have 4-5 offices around San Francisco bayarea. They have been in business for 25+ years and I have been with them for 15+ years. I asked him how did they do during the covid. His response shocked me - he said they came very close to closing their practice and PPP was what saved them. Of course no one was visiting them during pandemic but even when things started opening up they had staff shortages.
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.
Similar experience on the lower end of the economic spectrum. A local restaurant I love and have frequented for years was saved by PPP. As you can imagine, their employees were among the most economically vulnerable. With PPP they were able to send their people home and keep paying them during the downtime. Without that they'd have been finished.
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.
Exactly. It was a best effort move to reduce fraud and exploitation while still providing the desired benefits. You had to wager that the loan would be forgiven and you had to be approved for the loan by an established lender.
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.
You didn't make an argument. You just made an unsupported claim. You did not compare fraud rates, you did not measure costs or benefits, you did not account for the urgency of the established by the context or make any attempt to assess relative feasibility. You made no argument.
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.
So is this an argument? You're not comparing any real data either, just making a hypothetical comparison. Can I do that too?
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...
As long as that person had eligible expenses to have the "loan" forgiven, it doesn't look like fraud to me. It looks like the program doesn't care that you would have spent that money on payroll anyway, so by paying part of your expenses, the money you would've spent becomes pure profit.
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?
I'm not sure you understand how PPP worked. It was a forgivable loan in exchange for keeping people on payroll. What the company did with the loaned funds was not part of the agreement, as long as they met the payroll/expense requirements.
You're correct - the legislation had fraud baked into it since it didn't have any provisions for oversight other than delegating that to a specific office (and the Sec. Treasury at the time - Trump admin appointee Steven Mnuchin - didn't do any oversight).
It was entirely a corrupt endeavor and everyone knew it. The subsequent write-offs of the loans was also predictable.
Lemme share still another perspective that hasn't gotten any media time... my accountant at the time recommended we apply for EIDL instead of PPP, for various reasons. So here we sit now several years later with PPP as free money, having to start paying on our EIDL loans, all because we legit needed the money but chose the wrong option. So yeah - very, very frustrating to see the ways that so many people who clearly didn't need the money got a free government handout while those that did need the money just ended up with debt.
> The whole PPP process was a sham [...] it was designed up front to be a giveaway to business owners.
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?
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.
You hear a lot about these employees who quit and haven't been working since 2 years ago when they got $1800, but not so much about companies that are still hiring because they got millions of dollars of free money from forgiven PPP loans. Funny how that works.
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.
> Those stimulus checks ALONE were a TON of money for most people
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.
> 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.
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.
> Those stimulus checks ALONE were a TON of money for most people
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.
> Or $0 if you're a SWE living on the coasts... I'm getting frustrated with the government telling me I'm rich while I can't afford an <strike>upper middle class</strike> home.
No they specifically don't say that. They say that fiscal support caused the 2.3 percentage point inflation. Fiscal support is defined by divergence in all governmental spending. The PPP program for instance is included in that, which has been widely proven to have not been used as direct employee support [0]. The PPP program was almost a trillion dollars that flowed to business owners, yet never seems to get mentioned in talk of inflation. Weird that.
The poster I was responding to used $800 billion which is the number attached to the direct EIP payment in the US that went to people on an income adjusted basis. Colloquially that is usually referred to as “stimulus checks”. In addition to that the US had a ~950 billion program for businesses, PPP. I assumed from context that the poster was describing the former.
Their link does not create a bright line, instead it commingled both programs (and any other increased governmental spending).
That's because when people refer to "stimulus checks" they're exclusively referring to the ~$1800 everyone received while actively ignoring PPP "loans".
Moreover those wars add to the count of people unable to work as a consequence of injuries from being sent off to war. The people in Washington don’t blink at sending the military out to fight their ideology for them.
Probably because that money wasn’t pumped directly into the US economy for the purpose of keeping the economic engine moving.
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.
> You build a bomb, you blow up the bomb, that’s money that’s just gone for good.
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.
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.
So very this. Anyone making this argument is secretly moralizing about economics. They can't stand the fact that "the government just gave away money to a bunch freeloaders."
The only people secretly moralizing about economics is this chain of comments. The article never claimed that people were "bailing" or "freeloading" because of stimulus checks. It said that they were increasing consumer spending, which is objectively true and literally the entire point of them.
Yeah it's about 1-2 months rent for most people, at a time when many of them were laid off. That's just break-even shit. No one is flush with cash from that certainly
I can only speak for myself, but as an employee of "big tech" from 2016-2021, my own personal inflation resulted from the massive pay those companies offered. My startup was acquired in 2016. Net result of my 1% of stock was $0, but the comp package at the new company, while below average for that role, still represented a 130% pay increase. Over the next two years, stock appreciation alone added another 30% on top of that. Moving to a FAANG ended up being a lateral move, but that companies stock doubled.
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.
I think it was the bull market combined with specifically a "hiring bubble" caused by aggressive, competitive hiring and acquisition practices as a risk-mitigation strategy to prevent disruptive competition
I agree with your broader message (stimulus checks were important to a lot of people's survival and they weren't just "free money" for people to play with) but consider that the American population is huge and even a minority of stimulus check receivers could have had an influence on certain aspects of the economy if their behaviour was similar. For every person struggling (and for whom the stimulus was necessary to their survival) there's a person who was getting by just fine and thousands of dollars is a windfall that could radically change their short-term financial behaviour.
And for some reason you don't see those same people complaining about the stock market skyrocketing and creating a much larger feeling of wealth (and actual wealth).
>This notion of people just balling because their stimulus checks is increasingly tiresome, has always been disconnected from reality
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.
Its one of those cockroach ideas that is just too good of a story in some circles for it to ever die. We'll be hearing it for decades, along with the "fact" that people don't want to work due to "enhanced unemployment benefits" (which expired long ago).
This (and OP) is confusing two different things. There were individual stimulus checks, but there was also a separate boost to unemployment such that around 20% of people who ended up on unemployment were making more than they had with the job they lost.
I'm pretty sure that has stopped by now too, though.
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.
Pandemic unemployment was $2400 a month plus whatever you would normally get from your state. Combined with student loan forbearance and the stimulus checks, this could add up to a lot.
It was a little bit more than that depending on circumstances. First check was $1200 per adult, $500 per kid. Second one was $600 per adult/kid. So for a family of four that's $3400+$2400 = $5800 in freebies. There's more people than you would think who see that as a pretty sizeable windfall, and start leveraging up accordingly (new car, lots of consumer goods).
Maybe they put it poorly, but COVID was a huge windfall for many people. Aside from the stimulus checks (which for many people totaled more than $1800) you had people taking advantage of PPP "loans", extended and expansive unemployment benefits, eviction moratoriums, student loan forbearance, etc. I personally know people that got laid off due to COVID and made more money sitting on the couch for a year than they ever made in their day job. This glut of money takes time to cycle through the economy, and now the party is over.
the lower-middle class job loss in retail and hospitality from COVID are massive. People who depend on that kind of job, have no backup systems generally.
Hopefully most of them moved on to better sectors. All jobs that require less skill than retail and hospitality pay better and have better career opportunities.
> 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
What is the answer to these questions from people who have understanding of the subject?
Normal people didn't do stupid things with the stimulus check, but there's always a few morons who live hand-to-mouth who got them and immediately blew that money on something stupid.
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.