Taxpayers may never know how many jobs the $ 1,000 billion P3 program has saved. The government did not count | Government


WASHINGTON – A year after Congress created the Paycheck Protection Program, taxpayers don’t know how many jobs have been saved by the nearly $ 1 trillion in forgivable loans given to businesses during the pandemic .

And economists and government watch groups say they probably never will – because government didn’t count.

The PPP has been touted as a way to save millions of jobs threatened during the COVID-19 recession. But the Small Business Administration under Trump – and now under Biden – has not kept track of the numbers on the jobs that have been saved, despite a legal obligation to do so.

“No one will really know, except the beneficiaries, what happened with the loan and the jobs,” said Sean Moulton, senior policy analyst at the government watch group Project on Government Oversight.

The SBA’s initial estimate of 50 million jobs “supported” by the PPP was quickly dismissed as grossly inaccurate. Economists from the Treasury Department put the number closer to 19 million, while economists studying the program estimate between 2 million and 5 million.

Over 8.7 million forgivable loans worth $ 961 billion have been made to date. And President Joe Biden just signed a two-month extension, allowing the SBA to accept requests for $ 79 billion in loans until May 31. SBA officials told Congress they expected the money to run out by the end of April. (The Los Angeles Times reported last week that it had received a $ 10 million PPP loan.)

But now, a program that was originally promoted as a way to save millions of American jobs appears to have done a lot more to help businesses and their owners, early economic studies suggest.

Thousands of businesses, including some that received PPP loans of $ 10 million, said they had not kept any jobs thanks to the aid, according to the SBA. In other cases, PPP recipients have used the two or three months of payroll support to simply postpone layoffs. And smaller businesses – those that need help paying their employees the most – have often missed the program altogether.

Almost 19 million Americans currently collect unemployment insurance benefits. Because nearly half of American workers are employed by a small business, knowing whether the program was successful could be key to understanding how long the country’s economic recovery will take.

When it launched in 2020, the PPP exhausted $ 349 billion in just 13 days. It was quickly named one of the most successful pandemic relief programs – until questions arose as to whether all the recipients really needed the money and some prominent names, like hamburger chain Shake Shack and the Los Angeles Lakers, have paid off their loans.

By law, Congress required the SBA to collect and release quarterly data from all companies that received more than $ 150,000, including the number of jobs affected by the loan and estimated economic growth. of the company.

In April 2020, just days after the program began making loans, the Trump administration’s Office of Management and Budget asked the agency not to ask loan recipients to report on the number. estimate of jobs created or retained.

OMB said “centrally available economic data” would provide sufficient information to produce the report. Her memo didn’t say where that data would come from, how it would be verified, or why she didn’t want companies to provide the information.

The result was a mishmash of data. Some companies voluntarily listed the employees who would be supported with the money, others refused. Dozens of people said the data released by the SBA does not accurately reflect their employee count or what they put in their applications.

In January, the agency’s inspector general pointed out in a report that reliable information on the number of jobs saved was not available because the SBA had not collected it.

“SBA officials and national leaders do not have enough information to make informed decisions or to determine how well the PPP has met the goals of the national program. Also, the SBA cannot accurately report jobs retained by PPP borrowers, ”the watchdog said.

On Thursday, an OMB spokesperson did not say whether the Biden administration intended to reverse Trump’s policies and start collecting the data as directed by Congress.

SBA officials have told Congress several times over the past year that clearer jobs figures will be available once companies request a loan forgiveness, an ongoing process. This application asks for the number of jobs supported by the loan. But he’s unlikely to provide the answer.

Moulton said the forgiveness requests would only provide a snapshot of current conditions, not the five years of employment data that Congress specifically requested in the CARES Act to check whether the loans kept people in their jobs. long-term. The employees who were paid with the loan could have been made redundant as soon as the money ran out, he said.

The PPP’s focus on employment shifted over the course of the year as companies worried that there was no point in paying employees if they weren’t able to to pay rent and stay afloat. This led to changes that made it possible to spend more money on non-salary expenses.

Initially, borrowers had to allocate at least 75% of their loans to payroll in order to be fully canceled. But in June, Congress lowered that threshold to 60%, giving businesses more money to spend on expenses like rent, and more time to spend it.

No one disputes that the program has probably helped thousands of small businesses to survive. The scope of the number of closings and those that remain open will become more evident as tax returns and bankruptcy data become available on time, economists say.

Senator Jeanne Shaheen, DN.H., said the change made by Congress was an attempt to give small businesses more flexibility to keep their doors open, which in turn would preserve jobs.

“If they close, these people have no place to go to work,” Shaheen said. “Keeping small businesses open is all about jobs. “

The program was designed to help as many businesses as possible, with little evidence needed to know if they actually suffered a loss of income due to the pandemic.

Especially at the start of the program, much of the money went to businesses that had not lost income, had other resources like lines of credit to tap into, or were at low risk of laying off workers without it. ready.

Microenterprises, those with fewer than 10 employees, which would have benefited the most from the money, were sidelined in the first round by the larger firms that had existing lending relationships with the big banks.

Eric Zwick, an economist at the University of Chicago School of Business who studied the program, said Congress could have changed the program in the early months of the pandemic after seeing how much money was going to companies that were not in regions or industries facing economic peril due to the closures. Congress waited until December to prioritize loans to businesses with fewer employees and with significant drops in revenue.

“You could have had the same program, just as (beneficial), maybe for half the price,” Zwick said.

Berkeley law professor Robert Bartlett, who surveyed Oakland businesses during the pandemic, found that the loan’s contribution to a company’s survival expectations depended largely on the number of people it employed.

Microenterprises with fewer than five employees needed their employees to keep working in order to stay open and thus benefited the most from payroll support, Bartlett said. They were 20% more likely to say they expected to be open in six months because of the loan.

But for companies with more than five employees, layoffs were the best way to manage cash flow, and they needed government help with rent more than payroll help, Bartlett said. While the PPP delayed layoffs for a few months, it signaled that the loans did not have a lasting effect on companies’ ability to survive over the next six months.

“Universal programs can be politically expedient, but they may not be what all small businesses … need,” Bartlett said.

The program expired in August, but Congress approved a second round of loans in December, tightening eligibility requirements to focus support on the smallest, hardest-hit businesses and those with the biggest declines in cash. income. Only businesses with fewer than 300 employees could apply for a second loan, and money was set aside for particularly small and minority-owned businesses. It also created direct grants for performance venues and restaurants, which the SBA plans to make available in April.

Companies applying for PPP loans still do not have to report the number of jobs saved. Moulton, of the watchdog group, is urging the Biden administration to start collecting such data and retroactively requiring former recipients to report their numbers, in order to measure the success of the program.

“We’re spending money right now on this program,” Moulton said. “It’s never too late to start getting this information.

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