Government Spending

The Federal Government Spent Nearly $3 Trillion on Coronavirus Relief. Oversight Has Been a Mess.

Members of Congress may have benefited from small business funds, and government watchdogs are warning that the program appears susceptible to fraud.

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When President Donald Trump was asked in April if it was appropriate for large companies and institutions like Harvard to receive funds from coronavirus relief bills, he responded by insisting that he, at least, hadn't benefited. "Well, I know one thing: I didn't get any. That's for sure. I didn't get any," he said.

Members of Congress appear to be a different story.

At least four representatives—two Republicans and two Democrats—have what Politico describes as "close ties" to businesses that have received federal relief funds, meaning that the companies are run by or employ members of their families. As Politico notes, there are likely more beneficiaries in Congress, but a lack of transparency in how the funds are being disbursed makes it impossible to know for sure.

The package of coronavirus relief bills passed earlier this year calls for nearly $3 trillion in federal spending, hundreds of billions of it in the form of loans to businesses harmed by the virus and the lockdowns. Those loans, which can amount to millions of dollars per beneficiary, are better understood as grants: They are fully forgivable provided they are used according to federal directives. But despite the administration's promises to identify grantees, many of the details remain shrouded in secrecy.

The federal government is spending vast sums of money on propping up businesses affected by the pandemic, but it isn't being forthcoming about who or what it's being spent on. On nearly every front, oversight of coronavirus relief spending has been a mess.

Treasury Secretary Steve Mnuchin has defended the lack of transparency, saying that releasing the loans' amounts and beneficiaries would reveal proprietary business information. The loan amounts are based on payroll spending, meaning they could theoretically reveal private financial data about small business operations to competitors. But there are ways around this. As John Cassidy writes at The New Yorker, the administration could list recipients along with funding ranges rather than exact loan amounts. 

Many Republicans have resisted efforts to require disclosure for larger recipients as well. A House bill would have required disclosures for all loans over $2 million; although some Republicans voted in favor, 146 GOP representatives voted against it, causing the bill to narrowly fail.  

Meanwhile, as Bloomberg reports, the oversight efforts that were put in place are still struggling to come together. There are at least three oversight bodies, each facing staff and managerial issues. Brian Miller, a White House lawyer who the president picked to be special inspector general for pandemic recovery, wasn't sworn in until June 5. The Congressional Oversight Commission, meanwhile, requires bipartisan support for its leadership position; so far, no chairman has been announced. And in April, Trump kept Pentagon inspector general Glenn Fine from leading the Pandemic Response Accountability Committee, a multi-agency group of inspectors general who were also tasked with keeping tabs on federal spending. 

That group released an initial report this week warning that loan efforts were subject to fraud and abuse. Some of that may already be happening: In May, the Department of Justice charged an Atlanta-area reality star with fraudulently using a $2 million loan, backed by federal relief funds, to buy jewelry and pay child support. The loan was intended to support jobs at a trucking firm. 

It's sadly predictable that the largest emergency spending program in modern U.S. history would be difficult to track and would prove susceptible to fraud and abuse. Just as predictable: The Trump administration appears poised to ask for even more. 

Peter Navarro, a top White House economic adviser, recently said the administration is looking to hand out another $2 trillion. Although it's not clear whether the rest of the administration agrees with Navarro's precise ask, it seems reasonably likely that at least one more massive spending bill will come down the line this summer. Before the federal government ponies up another trillion or two, it would be nice to have a better idea about the first $3 trillion was spent.

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  1. Every member of congress needs to be tried for criminal negligence. Actually, I wish it was negligence, but it sure seems like they know what they’re doing. If this debacle of a bill hasn’t shown everyone that our entire monetary system has been hijacked to be used like a piggy bank for the whims our oligarchs and they’re well connected friends, I don’t know what will.

    I do find it funny that Suderman feels the need to point out that specifically that the Trump admin is likely going to ask for more. Is there a single contingent in Washington that isn’t going to try and get in on the free monopoly money train? Please cite the article where Schumer says “we need to slow down and think about the long term financial implications of bailing everyone out.”

    1. Of course Democrats spend too much bet Republicans are worse (see Dubya and Trump).

      The reason is that Democrats are a lousy opposition party while the GOP opposes spending only when a Dem is in the White House.

  2. Treasury Secretary Steve Mnuchin has defended the lack of transparency, saying that releasing the loans’ amounts and beneficiaries would reveal proprietary business information.

    Then don’t take my tax money. Simple solution.

    1. “That’s just crazy talk. We’re trying to create more government jobs with these loan programs!”

  3. the Department of Justice charged an Atlanta-area reality star with fraudulently using a $2 million loan, backed by federal relief funds, to buy jewelry and pay child support.

    Just a doggone minute! A *reality star* should have been working through this whole episode!

    1. We are talking about a reality star. Buying jewelry and paying child support is working.

  4. When you work for Bill and Bill pays you with stimulus money that Bill did absolutely NOTHING in return to get – you become the SLAVE.

  5. Really? Imagine that! If you throw a few trillion dollars in the air, the wind takes it away.

    I would suspect the real intent was to generate several new federal monitoring agencies.

    If they really wanted to help the employees, they could have not shut down the economy, or added unemployment funds to do it with an existing bureaucracy.
    If they really wanted to help businesses, they could have not shut down the economy, or offered to guarantee loans.
    It’s just a virus. We have hundreds of them floating around all the time. Some years are better, some are worse.
    So far the deaths are about a third of the annual abortion deaths.

    If the shutdown was really necessary, why did EVERY STATE keep selling lottery tickets? A cash only transaction that requires passing items from person to person at an arms length distance twice. Clearly NOT essential.

  6. Trump was very clear that there would be no oversight, so why are we surprised?

  7. Trillions of deficit and debt dollars, premised on the fallacy of stimulus to an already dead pre-pandemic economy, is nothing but the world’s biggest government class cronyism con job; and we American citizens are, as always, their marks.

  8. Shocked face.

  9. Government spending with no oversight?
    SHOCKER!

  10. The only comment this article deserves: Duh!

  11. I personally wish every single member of Congress got money from the small business payoff, because it would mean they had a business to take care of, and just might be a little more knowledgeable about real life.

  12. While Mnuchin comes across as credible as a Treasury Secretary, he has been excessively willing to bleed the treasury over the recent COVID-19 crisis. Attempts to mitigate for the loss of cash flow by business and employees have seemed rash and ill-considered. No one has offered to apprise the public on the rationale for making the spending decisions that were made. All we can conclude is POTUS made the decisions and there is no room for discussion.

    This could easily result in financial catastrophe and the reason Trump loses the forthcoming election.

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