Government grapples with results of dumb COVID-19 relief decisions and the billions lost to fraud

Government grapples with results of dumb COVID-19 relief decisions and the billions lost to fraud

More than two years into society and the economy being upended by a global pandemic, there are a lot of lessons to be learned if our government and specifically Congress is willing to pay attention. Just about every other economically advantaged country in the world gave everybody money to live off of, to keep people from falling through the cracks. Business owners got money to live on. Their employees got money to live on. Their landlords got money to live on. Basic needs were covered. It was still hell and an existential threat, but a whole level of jeopardy was removed in those countries.

While House progressives and some Democratic senators were arguing for direct payments as the most effective means of answering the crisis, the Trump administration and Congress did it the convoluted and confusing way—basically ensuring that there were still going to be plenty of opportunities for the corrupt to benefit. They even knew that would happen: They created the Pandemic Response Accountability Committee in the CARES Act, the first huge relief program, as an independent oversight committee to combat fraud.

Just weeks after the bill creating the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan Program (EIDL) passed, federal prosecutors were set to investigate and prosecute fraud. (Disclosure: Kos Media received a Paycheck Protection Program loan.)

Nearly two and a half years into the pandemic, the inspectors general in that accountability committee are asking for more authority to go after the rampant fraud. As created by Congress, the watchdog can only go after the small fry—those who fraudulently got $150,000 or less. The Justice Department only has the scope to go after cases with more than $1 million—everyone else is falling through the cracks. Michael Horowitz, head of the committee and the inspector general of the Department of Justice, is asking Congress to give his organization more scope.

“It can’t be the case that people come away from this thinking there’s a certain level of fraud that’s just okay, or a certain level of improper payments that’s just okay,” Horowitz told the AP. “We don’t believe that as IGs, and we want to get to the bottom of that. So it’s a very important tool and every dollar matters.”

Now it’s a matter of spending time and energy and people’s salaries—money—on hunting up the fraud that occurred because Congress wasn’t willing to just give people money to begin with.

The Justice Department is already dealing with what prosecutors have called the “biggest fraud in a generation,” the looting of the PPP intended for small businesses. As much as $80 billion in what was supposed to have been critical small business loans was obtained by fraud. That’s about 10% of the total spent.

Meanwhile, real needy businesses, especially the countless owned by people of color, weren’t able to access the system to get help. That wasn’t a problem for Trump family businesses, of course.

It’s not just the small business loan programs—there was rampant unemployment fraud as well. The Department of Labor estimates that more than $163 billion in pandemic unemployment benefits was spent in error, either in administrative errors or by fraud. Probably largely by fraud.

But lots of states had huge problems getting their creaky old systems geared up to handle the billions and billions they were responsible for distributing during the worst of the pandemic. “The unprecedented infusion of federal funds into the [unemployment insurance] program gave individuals and organized criminal groups a high-value target to exploit,” Labor reported. They exploited the fact that the states didn’t have adequate systems.

Now the IGs in the accountability committee are finding out just how convoluted—and corrupt—the process got. The report it has just issued says that something as simple as the Small Business Administration (SBA) failing to check a “do not pay” list held by the Treasury Department meant that billions were sent to fraudsters, including to applicants with foreign IP addresses. In one instance, there were “hundreds” of applications that all used the same phone number, which they eventually traced to a gas station in Texas. That wasn’t immediately flagged as a problem.

“That shouldn’t be the case, right? An agency should be able to figure that out,” Horowitz told AP. “That’s not sophisticated data analytics.” No, it is not.

Now the federal government is having to spend who knows how many millions to claw back all the fraudulent billions that went out because just sending everybody money until we got out of this thing was “socialism” or something. Meanwhile, millions are struggling to regain economic and social security from having had their lives totally upended.

Next time, we really should follow the example of our peer countries and just try to take care of everyone.


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