Inherently Political

Maybe this post should have been titled “Cognitive Dissonance Watch”. I’m seeing two conflicting pleas, frequently from the same people. On the one hand I’m seeing pleas for more and larger “stimulus” from the federal government but on the other I’m seeing complaints at how much of the last round of stimulus went to the politically-connected and the powerful.

To my eye that is a dangerous level of naïveté. Government programs are inherently political. If you want them to be less political, the plans will need to be much less direct. For example, providing aid by reducing or eliminating the employer side, employee side, or both of FICA is less political than the PPP was because it’s so broadly based and the rules are so simple. As soon as you start making rules to direct aid to specific groups or individuals or grant discretion to the regulating agencies, you introduce political judgments. That is the nature of government. It is inescapable.

FICA itself is highly political. FICA max is presently $137,700. That’s a political judgment.

2 comments… add one
  • steve Link

    I think the goal was to get some money into the economy, quickly. I suspect there were probably some places the money went where it did not meet the rules, but some of this is just silly. Say a billionaire owns 50 companies. Some of those companies are small businesses that were going to have workers unemployed and receiving no income. They shouldn’t be eligible because their owner has lots of money? Makes more sense to me to evaluate each individual business and its needs. I don’t see anyway to have done this quickly and not have some of the money go places that will offend a few people.

    I guess my caveat here is that I think this was intended for small businesses. If it went to some very large or very wealthy businesses (say over 1000 employees or over $1 billion in revenue, choose your numbers) then that needs looking at.

    Steve

  • Guarneri Link

    “Say a billionaire owns 50 companies. Some of those companies are small businesses that were going to have workers unemployed and receiving no income. They shouldn’t be eligible because their owner has lots of money? Makes more sense to me to evaluate each individual business and its needs.”

    I’m not sure you are fully aware of how insightful that comment is, steve. Replace billionaire with PE Fund. PE Firms are not exactly political darlings. But we have a couple companies smoking hot, even benefitting, from this, a couple treading water, and a couple on the balls of their ass.

    The issue became “affiliation” in a legal sense. Every company had its own reality, but the PE firm had the potential to bind them together under common “control.” Again, in a legal sense. (It’s a little more complicated, but for this purpose) So we set about the task. Some companies didn’t apply. One got ahead of itself and we had to return it’s PPP funds. Others desperately need it; we got funded. The control provisions are ham fisted. As Dave notes, it’s the nature of government.

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