The federal government is swamped with reports of potential fraud in the Paycheck Protection Program, according to government officials and public data, casting a shadow on one of Washington’s signature responses to the coronavirus pandemic.
As The Wall Street Journal reports, evidence is growing that many businesses took advantage of the program’s open-door design. Banks and the government allowed companies to self-certify that they needed the funds, with little vetting.
The Small Business Administration’s inspector general said in October there were indications of widespread abuse and fraud within the program. Hundreds of PPP-related investigations have since been opened, and the Justice Department has charged 73 defendants so far, but the SBA doesn’t have a solid plan for continued auditing of the program.
Prosecutors are probing some of the fraud cases but are finding it difficult to bring charges, in part because Congress set such a low bar for obtaining the funds.
Researchers at the Massachusetts Institute of Technology in July compared payroll data at PPP-eligible companies to ineligible ones and estimated the program had boosted employment by about 2.3 million jobs. At that rate, the PPP would have cost about $224,000 per job supported.
“It seems that a lot of that cash went to businesses that would have otherwise maintained relatively similar employment levels,” says David Autor, an MIT economics professor and one of the study’s authors. Read the full story.