All told, Congress has authorized about $5.9 trillion in spending to address the social and economic fallout from the pandemic, of which $4.32 trillion has been disbursed or committed already. By now, more than a year into this unprecedented burst of spending, there’s sufficient hindsight to assess the federal pandemic response, and the early results bode poorly for proponents of “big government.”
In a new Cato Institute Legal Policy Bulletin, I describe the Small Business Administration’s (SBA) shambolic implementation of two marquee pandemic policies. The first is the $813 billion Paycheck Protection Program (PPP), involving federal loan guarantees, set at a low interest rate (1 percent), which could be forgiven if the borrower spent a certain percentage (about two-thirds) on payroll. The second is the $367 billion Economic Injury Disaster Loan (EIDL) program, which entails loans on favorable terms that are disbursed directly by the government.
Both of those pandemic programs reflect gross expansions of troubled frameworks. The PPP is an extension of the SBA’s “section 7(a)” loan guarantee program, which, in the years prior to the pandemic, was an annual presence on the Office of Management and Budget’s list of “high priority” programs that warrant greater scrutiny due to their poor stewardship of taxpayer dollars.