Protection file

The post-mortem on America’s $800 billion Paycheck Protection Program is damning

A common refrain heard by those who lament inflation is that the government gave workers too much money during the pandemic and that “no one wants to work anymore.”

Well, workers weren’t the only ones to benefit from government largesse. The massive $800 billion Paycheck Protection Program — Washington’s largest and fastest bailout — was a complete joke. It was presented as a “loan” program and the media devoured this obvious lie. In truth, it was a “forgivable loan” program, which is just another way of saying “free money”. All companies had to do was say the money was for payroll, benefits, utilities, rent, or mortgage payments.

A study this week from the St. Louis Fed delivered the predictable results:

  • The cost per job saved for a year was $169,000 to $258,000, which was much higher than the average amount – $58,200 – paid in wages and benefits to small business employees in 2020
  • Only about a quarter of PPP funds supported jobs that would otherwise have disappeared
  • PPP benefits disproportionately went to wealthier households rather than the rank-and-file workers its funds were meant to reach
  • The authors concluded that the PPP cost taxpayers about $4 for every $1 of wages and benefits received by workers in “saved” jobs. The “Leak” — $3 out of every $4 distributed through the program —went to small business owners
  • 72% of PPP funds were captured by households with incomes in the top 20% of the national distribution

The “small” business warning was also suspect, as it included companies with up to 500 employees.

I called this scam from the start. The work of the media that covered it was shameful. It’s a shame that this new study had so little success.