A look at the latest economic stimulus package, proposed by the Biden Administration and being shepherded through a divided Congress, with John Rosen, adjunct professor and director of The Liberty Initiative in the Pompea College of Business Economics Department at the University of New Haven.
The latest stimulus package — or bailout, depending on one’s opinion of the measure — will likely pass “at the high end of expectations,” providing some $1.9 trillion in aid to struggling businesses during the pandemic-induced recession, Rosen says. The plan includes another round of the Paycheck Protection Program, although this version contains different strictures than its predecessor. To be eligible for the original PPP, a business had only to be up and running as of February 15, 2020. This time around, it must have suffered a drop in revenues of 25% from pre-pandemic times. That won’t help companies that are hurting but can’t quote reach that benchmark, Rosen notes, “but you always have to pick a number.”
Most of the “loans” authorized by PPP are in fact grants, in that they don’t have to be paid back if the receiver of the money can prove that it was spent for certain specific purposes, such as salaries, benefits and rent. For loans under $150,000, companies need only fill out a short form to assert that the money was spent properly; above that amount the expenditures must be documented more thoroughly.
Arguments continue among legislators as to whether the latest package is necessary, with Republicans claiming that the economy is already on the mend and that it will incur huge deficits that must be paid for by higher taxes. While Democrats don’t contest that latter point, they argue that the aid is crucial to the survival of many small businesses.
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