American Rescue Plan - A true misallocation of resources.

https://www.whitehouse.gov/wp-content/uploads/2021/03/American-Rescue-Plan-Fact-Sheet.pdf

The Federal money appropriated by the the American Rescue Plan for small businesses will be administered by local governments and will tend to be spent trying to attract new firms to the area and to keep other firms from moving.

This makes the local government analogous to the rent seeking firm described by Public Choice economics. Local town A will offer business Alpha some amount of money so that it does not move to local town B. But local town B will do the same.

Neither local town A nor B's elected officials can know which town locating Alpha in would be most beneficial for the nation or world as a whole. Once government money flows in, it is more difficult for business to know where profits (as representative of satisfaction of consumer preferences) would be greatest.

There will be a tendency to allocate funds to incumbent firms rather than latent startups. This could slow innovation.

Most of the funds will be distributed based upon exaggerated local sympathies and affections between the committee members delegated with distribution and local firms.

The consequences are a dreadful misallocation of resources.