I have said that before there is nothing like a temporary emergency to cause a permanent expansion of government largesse in our lives. The pandemic was a great example of this phenomenon. Such legislation as the CARES Act and the American Rescue Plan ended up costing the American government over $4 trillion. It goes beyond the fact that someone (i.e., the taxpayers) has to pay for such a monstrosity. What makes this such a jaw-dropper is how poorly government money was spent during the pandemic.
The Paycheck Protection Program (PPP) was supposed to help keep businesses afloat during the lockdowns. What did PPP end up funding? The Small Business Administration (SBA) found that it funded $4.6 billion in "potentially fraudulent loans," although an independent audit put the figure of potentially improper payments at $189 billion.
Then there was the pandemic unemployment insurance that was part of the CARES Act. How much fraud did that program generate? The Government Accountability Office (GAO) estimates that the fraud was was $60 billion out of the $878 billion allocated, or 6.8 percent. The Department of Labor calculated that pre-pandemic fraud rates were 10 percent. Given the lack of oversight of the pandemic unemployment insurance, it stands to reason that the GAO figure is an underestimation.
Then there is an Associated Press analysis released earlier this month. According to AP's analysis, $280 billion was fraudulently stolen and another $123 billion was wasted or misspent. That brings the total to over $400 billion, or about 10 percent of what was spent by the government. AP laments that "that number is certain to grow as investigators dig deeper into thousands of potential schemes." How could this have happened? To quote AP:
"Investigators and outside experts say the government, in seeking to quickly spend trillions in relief aid, conducted too little oversight during the pandemic's early stages and instituted too few restrictions on applications on applicants. In short, they say, the grift was just way too easy."
If that were not enough, look at a report from the SBA Office of Inspector General released this week. This report looked at how the SBA handled the PPP and the Economic Injury Disaster Loan (EIDL). There was $134 billion in EIDL fraud and $68 billion in PPP fraud, or a total of $200 billion of EIDL and PPP money fraudulently stolen. Similar to AP's findings, SBA concluded that the SBA "weakened or removed the controls necessary to prevent fraudsters from easily gaining access to these programs" and that "the allure of 'easy money' in this pay and chase environment attracted an overwhelming number of fraudsters to the programs." I understand that there is bound to be at least some fraud. Any program managed by humans will have at least some imperfection. However, the lack of oversight makes the amounts lost to fraud and waste inexcusable.
I will echo what I wrote last December: we should not let an emergency scare us into faulty public policy or to expand government overreach. Investigators have been overwhelmed and taking action to prevent fraud on such a scale seems elusive. It was bad enough that we had to put up with harmful lockdowns, ineffective face mask mandates, deleterious school closures, and futile travel bans, not to mention such stupid policy as Title 42 and the student loan repayment pause. Now we can add having taxpayers funding billions in payments to conmen (I'm sorry, con-people, it is 2023 after all), hucksters, and scam artists.
No comments:
Post a Comment