Waste, Fraud, and Abuse—PPP Style

In a report that should surprise precisely no one, NBC News reports that there was likely waste and fraud in the Payroll Protection Program, part of the $2 trillion CARES Act enacted in panicked haste by the Congress earlier this year:

Over $1 billion in emergency coronavirus aid relief went to companies that “double dipped” and received multiple Paycheck Protection Program loans in violation of the program’s rules, according to a preliminary analysis released Tuesday by the House Select Subcommittee on the Coronavirus Crisis.

Congressional investigators identified multiple areas of potential waste and fraud in the program, often referred to as PPP, which was part of the $2 trillion CARES Act. The program offered qualifying small businesses up to $10 million in emergency and forgivable loans to shore up their payrolls and meet basic expenses due to business impacts from the coronavirus and lockdown periods. The program gave loans to nearly 4.9 million small businesses for a total of $521 billion. As designed, the program still has $133 million in untapped funds.

The latest analysis “suggests a high risk that PPP loans may have been diverted from small businesses truly in need to ineligible businesses or even to criminals,” according to the report, which was released as part of a subcommittee hearing with Treasury Secretary Steven Mnuchin on Tuesday afternoon.

When the final reckoning is done (if a final reckoning is ever done), I’m sure that the amount of waste, fraud, and abuse in the program will be considerably greater than what’s being reported. I would guess in the area of $100 billion or 20% of the total.

Who’s to blame? Predictably, a lot of blame is placed on the Trump Administration:

“Secretary Mnuchin has previously testified that, given the need to get relief money out quickly, it was inevitable that Treasury, and I quote, ‘ran into a lot of issues,'” Rep. James Clyburn, D-S.C., chairman of the subcommittee, wrote in his opening statement. “That is a false dichotomy: Taxpayers should not have to choose between quickly getting aid to those who need it and wasting federal funds, and there are simple steps that could have been taken to improve oversight and reduce fraud.”

The subcommittee found over 10,000 loans in which the borrowers obtained more than one loan. Under the administration’s rules to audit only loans over $2 million, only 65 of the loans would otherwise have been subject to additional review.

but I suspect that we’ll find that Congress bears some of the responsibility as well. Legislate in haste, repent at leisure. Was money appropriated to bring on additional staff to administer the program? Declaiming that was the responsibility of the administration is no answer. The Trump Administration could have been sued had it diverted funds from the PPP or other programs to staff. It’s the job of the Congress to spell out how money should be used, not allow it up to the discretion of the administration.

And how, exactly, will you bring in additional staff during a lockdown?

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Farewell, Minneapolis

It is becoming increasingly unlikely that Minneapolis will be able to recover from the rioting of May and June. The reason? They won’t be able to afford to rebuild because companies’ insurance won’t cover the damages. From the Star-Tribune:

Private insurance won’t come close to paying the cost of rebuilding what was lost in the riots following George Floyd’s death.

Though Gov. Tim Walz has estimated that total losses will exceed $500 million, insurance companies have informed the Minnesota Department of Commerce that they will be covering a maximum of $240 million in riot-related damage. In the 5-mile stretch of Minneapolis that sustained the heaviest destruction, uninsured losses among local small-business owners are at least $200 million, according to the Lake Street Council.

2020 has been sort of a perfect storm for insurance companies. When you add people letting their policies lapse during the lockdowns, business interruption claims, claims from the rioting, claims from California’s fires, and, now, claims for hurricane damage, it comes to a heckuva lot of claims and lost revenue. I won’t be surprised if we start hearing pleas to bail out the insurance industry.

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Why We Did It

If you’ve been pining for another rehash of how the U. S. came to invade Iraq, you probably should read this book review by Joseph Stieb at War on the Rocks:

In order to write this book, Draper conducted 300 interviews with policymakers, politicians, intellectuals, and high and mid-level personnel throughout the relevant departments and agencies of government. The most prominent interviewees included Colin Powell, Paul Wolfowitz, Condoleezza Rice, George Tenet, and Douglas Feith. The fruits of these interviews allow Draper to shed new light on certain individuals and events, although not the causes of the war itself.

Even experienced national security hands will find Draper’s account of intelligence on weapons of mass destruction illuminating. He interviewed 70 CIA personnel, who recall that top policymakers consistently welcomed intelligence that bolstered the case for war and dismissed contradictory evidence. His interviewees also recall staffers of then-Vice President Dick Cheney and Secretary of Defense Donald Rumsfeld using unvetted intelligence that supported their unshakeable belief in a connection between the Iraqi state and al-Qaeda no matter how many times the intelligence agencies refuted these claims. One CIA official described the spurious intelligence presentations of Feith’s staff as “It was moons away. It was six degrees of Kevin Bacon’s mom.”

I don’t have much to say about it that I haven’t already said 1,000 times other than

  1. We have been poorly served by our intelligence apparatus over the period of the last 70 years. The routinely bad information, first about the Soviet Union, then Al Qaeda, now who knows? was bad enough. But the routine way in which our intelligence officers are suborned, first by the Soviet Union and now by China. Maybe we should start offshoring our intelligence. We could hardly do worse than we already are.
  2. In 2000 every sitting senator with presidential aspirations voted in favor of the invasion. That includes Joe Biden. Neither Bernie Sanders, Elizabeth Warren, Amy Klobuchar, nor Kamala Harris had been elected to the Senate in 2000. If they had been I believe with all my heart they would have voted for it, too.
  3. It was an error. I said so in 2003 and I still say it.
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Pritzker’s and Lightfoot’s Plan Is Working

Crain’s Chicago Business is reporting a glut of homes on the market in Chicago’s Loop and adjacent areas, on the Gold Coast, and River North neighborhoods of Chicago:

In the 60601 ZIP code, covering Lakeshore East and the northern part of the Loop, there are enough homes on the market to fuel 15 months of sales, according to Crain’s research using Midwest Real Estate Data’s listings. Immediately across the Chicago River in 60611, Streeterville up to Oak Street Beach, there’s 11.5 months worth of inventory on the market.

That’s compared to 3.1 months of inventory on the market now citywide, and to less than three months in, among others, ZIP codes in Logan Square, Bucktown, Andersonville, Rogers Park and Albany Park. In Lincoln Park and Lakeview ZIP codes, inventory is around three and a half months.

Four to six months of inventory is generally considered a balanced, healthy market.

Matt Laricy, managing partner with Americorp Real Estate, said that in recent weeks, he’s been meeting with five new sellers a day, while he’d usually be seeing one a day in late summer.

“Since the second round of looting, it’s been like the Hoover Dam broke and the water is gushing through,” Laricy said. “My phone does not stop ringing with people who say they love Chicago but they’ve had enough.”

There’s a little more than eight months’ inventory on the market in 60610 (Near North, Gold Coast) and 60654 (River North).

In the neighborhoods immediately west and south of the Loop, the excess of inventory is less pronounced: roughly five months in ZIPs in the West and South Loop.

As noted the rule of thumb is that four to six months of inventory is healthy. 15 months is a disaster.

The clock is ticking. Here’s another rule of thumb: a third of sellers reduce their asking prices after three months (it probably should be after two) while by six months on the market nearly 85% of sellers have, shall we say, improved their asking prices.

That’s important to the city. Those neighborhoods are some of the priciest in town. When selling prices tumble assessments won’t be far behind and property taxes are based on assessments. The city is heavily dependent on property taxes for revenue. And you can only raise taxes so far before that itself starts depressing prices. Since we purchased this home our taxes have multiplied tenfold while its reasonable asking price has only risen fourfold (it’s the same now as it would have been twenty years ago).

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Dream No Small Dreams

I had to chuckle when I saw this item at LinkedIn:

My career goal for September 2020 is to still be employed. That would put me in better shape than a lot of people.

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Signal to Noise

Here’s another instance of my disagreeing with the editors of the Chicago Tribune:

Through Sunday the Chicago Police Department reported 505 homicides this year, a 66% increase over last year. The number of shooting victims increased 56% to 2,703 from 1,734. Recent Monday morning tallies of weekend violence have made for brutal reading. There were 10 people killed, more than 40 wounded this past weekend. The Tribune identified 10 separate shootings, including three homicides, in just three hours or so starting Sunday at 2 a.m. In one incident, officers making a traffic stop were hit by gunfire and hospitalized. Ten Chicago police officers have been shot this year, 41 have been fired upon.

What is happening in Chicago? Superintendent David Brown’s answer Monday was vague, because there is no simple explanation, and chilling. “Violent offenders have acted with impunity, much more than we’ve seen in the past,” said Brown, describing his first summer on the job. “There’s this sense of lawlessness among violent offenders.”

Chicago is not lawless, but mayhem feels like it’s spiraling out of control. The police chief and Mayor Lori Lightfoot aren’t running away from the problem. They know the city’s in the grip of something frightening and frustrating. Brown has reconstituted the department’s roving anti-gang task force and says he sees progress. Killings have decreased 50% and shootings have decreased 15% over the past six weeks. So this is … progress.

That’s nonsense. By the end of the month of July the number of homicides in Chicago had exceeded the number by the end of July 2016 (the year with the most homicides of recent memory and by my calculation the most homicides ever recorded adjusted for population) and by the end of the month of August we had exceed the number of the end of August 2016. During July and August we had also had multiple episodes of mass looting, something that had not happened in 2016.

A decrease in shootings of 15% is not progress, especially when shootings are running at the hottest rate in Chicago history. It’s noise in the data. Progress would be a 50% reduction or a 100% reduction. We’ll never be able to reduce the number of killings or shootings to zero. I don’t expect that. I do expect the numbers not to increase year-on-year. And for goodness sake there should not be one incident of mass looting.

Until then you’re not making progress. Conditions are merely deteriorating more slowly. They can be right back where they were next week.

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The Last We Should Protect

I respectfully disagree with the view of the editors of the Chicago Tribune in their full-throated defense of Chicago Mayor Lori Lightfoot’s banning of protesters from the environs of her home while failing to protect the shopowners on the Magnificent Mile:

Mayor Lori Lightfoot has been the object of voluminous criticism for her handling of the protests and violence that erupted in the wake of George Floyd’s killing. Activists have rallied at City Hall shouting demands for change. All that is part of what any mayor signs up for.

But when protesters began showing up in her Logan Square neighborhood, trying to reach her home, the Chicago Police Department had every justification for blocking them out. There’s a difference between legitimate expression and targeted personal harassment aimed at the mayor and her family.

The homes of elected officials are fair game for protesters. It sucks to be in the family of such an official. It’s much more so than, say, jewelry shops on Michigan Avenue.

If you’re going to take the position held by the editors, the only practical way of doing it that doesn’t create a protected class is to establish “free speech zones”. I doubt that will satisfy the protesters.

I do agree with them on this point:

Developments like these raise the specter of even greater and more lethal violence around political demonstrations. Some people seem eager to get in someone’s face — or to smash someone’s face. The prospect of bloodshed hangs over every demonstration.

“We are sort of at the stage of polarization where there are more and more people who are seeking confrontation, where they are not simply satisfied with disagreeing with the other side or yelling at the other side, but they want to confront,” Mark Pitcavage, a senior research fellow at the Anti-Defamation League’s Center on Extremism, told The Washington Post. “We are not just a polarized society — we are increasingly a confrontational society now. ”

That trend badly undermines the entire debate over how to deal with racial inequities and other social ills. It deters reasonable people from participating in such events, giving more power to a small minority of bullies and vandals. It makes it harder for people to find areas of agreement and devise remedies that both sides can accept. It encourages people to see each other as irredeemable enemies. It fosters bitterness and despair. As a political weapon, violence and intimidation are nonsensical strategies. How many voters are likely to be persuaded to change their views by being shouted down or threatened?

The right to privacy of elected officials is the last thing we should protect not the first. If you can’t stand the heat, get out of the kitchen.

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It Didn’t Start Two Months Ago

At the Wall Street Journal Oregon native Mark Hemingway provides a backgrounder on Portland city government you might find enlightening:

Violent radicalism had been flourishing in the city for years before the rest of the country paid attention, and Mayor Ted Wheeler’s feckless leadership is no anomaly. The situation in Portland has been enabled by 50 years of political leadership that has been as corrupt and depraved as it has been “progressive.”

Danielson’s killing was a culmination of more than 90 days of unruly protests in Portland. It occurred the day after Mr. Wheeler sent President Trump a letter belligerently rejecting federal help to restore order. “When you sent the Feds to Portland” in July, Mr. Wheeler wrote, “you made the situation far worse.”

In truth, the increased federal police presence around the Mark O. Hatfield U.S. Courthouse was justified. The city had stood by when rioters burned the Multnomah County Justice Center jail and the Portland Police Bureau headquarters a few blocks away. Violence has accelerated since the federal government secured a protection agreement with the city and withdrew its increased security presence on July 31. In August, Portland police declared at least 14 riots, more than in June and July combined.

The day after the shooting, Mr. Wheeler blamed Portland’s violence on Mr. Trump, saying the president “created the hate” that led to violence. He blamed the riots on Mr. Trump’s rhetoric, asserting that the president had praised white supremacists after the ugly “Unite the Right” rally in Charlottesville, Va., three years ago. In fact, Mr. Trump said “they should be condemned totally.”

It’s one thing to attack Mr. Trump, but Mr. Wheeler can’t even guarantee the right of ordinary Republicans to walk down the street. In April 2017, four months after becoming mayor, Mr. Wheeler canceled the city’s annual rose parade after “antifascists” threatened violence because among the many civic groups marching in the parade was the Multnomah County GOP. “You have seen how much power we have downtown and that the police cannot stop us from shutting down roads so please consider your decision wisely,” read the threat sent to the city.

In 2018 Mr. Wheeler, who in his capacity as mayor also serves as police commissioner, ordered officers to take a hands-off approach to protesters who had set up a camp in front of the city’s Immigration and Customs Enforcement building, trapped federal employees inside, and vandalized their cars. Though the protest camp generated nearly 60 calls to police over 39 days, Mr. Wheeler publicly supported the protesters.

Incredibly, Mr. Wheeler may not be the Portland’s worst recent mayor. In 2008 the city elected Sam Adams, who, shortly after he was elected, admitted to having been romantically involved with an underage boy—though Mr. Adams asserted the relationship didn’t turn sexual until after the boy turned 18. Not only did Mr. Adams survive the scandal; criticism of his behavior was routinely branded homophobic and he survived two recall attempts.

Mr. Adams’s agenda was so environmentally progressive that he approved a city budget that did no major road paving for five years. He set the precedent for Mr. Wheeler by allowing Portland’s massive Occupy Wall Street camps to take over city parks for weeks after it was obvious they were a threat to public health and safety. Mostly, Mr. Adams will be known for presiding over Portland’s burst into national consciousness when it became the cultural mecca known as “Portlandia.” He was a regular guest star on the TV comedy of the same name.

The most influential modern mayor of Portland was Neil Goldschmidt, who held the office from 1973 to 1979. Mayor Goldschmidt earned notoriety for redirecting federal highway funds to a new and exorbitantly expensive form of public transportation that became known as light rail. He later became Jimmy Carter’s transportation secretary.

Elected governor in 1986, Mr. Goldschmidt shocked the state by announcing he wouldn’t seek re-election in 1990. He quickly became the biggest lobbyist in the state. As mayor and governor, he was the architect of the state’s celebrated “smart growth,” which became a model for urban planning around the country—and which has been criticized for dramatically raising the cost of housing.

As a result of his connections and expertise, Mr. Goldschmidt had a hand in many of the state’s biggest development projects. But in 2004 Portland newspapers reported that the state’s integrated land use and transportation planning regulations were being manipulated to award Mr. Goldschmidt’s lobbying clients hundreds of millions of dollars of state contracts. Portland regulators dubbed Mr. Goldschmidt, his developer clients and state regulators “the light-rail mafia.”

Soon after, the Willamette Week newspaper reported that when Mr. Goldschmidt was mayor, he raped his children’s babysitter over the course of three years starting when she was 14. His surprising exit from public life in 1990 was part of a private settlement he’d negotiated with the victim. Mr. Goldschmidt had taken the girl to parties, and his relationship was known to many of the state’s power brokers, many of whom are still active in Oregon politics. No one said anything for decades. In a May 2004 statement to the Oregonian, Mr. Goldschmidt acknowledged having had what he called “an affair with a high school student for nearly a year.”

By 2004 the statute of limitations had expired, so Mr. Goldschmidt faced no criminal charges. “I predict he’ll be back,” Vera Katz, another former Portland mayor, told reporters. Michael Schrunk, then Multnomah County’s district attorney, said: “Outrage over the affair will fade with time. I think he still has something to offer.”

In the years after the scandal, Mr. Goldschmidt retreated to his estate in the South of France. His victim, Elizabeth Lynn Dunham, lived a life of tragedy and addiction and died in hospice in 2011 at 49. Her only consolation was the removal of Mr. Goldschmidt’s official portrait from the Capitol.

I don’t believe that the transition from committed cause to personal enrichment is rare in government or reserved for one political party. The general who retires from the military to take a job with a defense contractor lobbying his former colleagues for the same weapons system he promoted while serving is as guilty of that particular form of corruption as is Al Gore. And it didn’t just begin recently. Eric Hoffer identified it when he wrote “What starts out here as a mass movement ends up as a racket, a cult, or a corporation.” I think that officeholders view it as a perk of the job.

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The Right Thing

I also materially agree with the editors of the Wall Street Journal:

As he often does, however, Mr. Trump took the bait and fired off tweets that CNN and Democrats spun as incitement. “The big backlash going on in Portland cannot be unexpected after 95 days of watching and incompetent Mayor admit that he has no idea what he is doing. The people of Portland won’t put up with no safety any longer. The Mayor is a FOOL. Bring in the National Guard!” he tweeted.

He’s right about the National Guard, but Mr. Trump would help Portland and his own political cause more if he called for calm on all sides. That includes his supporters who rolled into Portland for a counter-protest on Saturday. According to news reports, the man who was killed in the streets was wearing a hat for “Patriot Prayer,” the right-wing group that sometimes clashes with Antifa.

Mr. Trump should tell his supporters to stay away from Portland, Kenosha, Wis., and other cities where rioters reign. Democrats and Mr. Trump’s media opponents will take any opening they can to make alleged vigilantism the story rather than the failure of progressive Democratic governance.

The President can continue to offer local officials federal help if they want it. And he should offer sympathy for the people of Portland, Kenosha and other violent cities who have been let down by state and local leaders.

Vigilantism isn’t the cause of the current urban violence, but it could become one result of the failure to control violence. Americans have watched for weeks as rioters burned and looted businesses that people spent a lifetime building. Yet mayors like Ted Wheeler have let it happen. Inevitably, average citizens will move to defend themselves if elected officials won’t protect them. The proper place to do that is at the ballot box, however, not in the streets with guns.

That would be the statesmanlike thing, the presidential thing to do. I hope he takes their advice.

There are other things he could do as well including directing the Department of Justice to open an investigation into whether the civil rights of the people of Portland are being violated by their mayor’s and governor’s failure to live up to their oaths of office.

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The Scope of the Problem

I think I materially agree with the positions staked out by the editors of the Washington Post, about the sad incidents in Kenosha and Portland. Kyle Rittenhouse should not have been in Kenosha at all, let alone armed with a semiautomatic weapon. And the riots that have broken out in so many cities in the U. S. must be condemned:

There is no excuse and no justification for the kind of bedlam that has followed peaceful protests in Kenosha with street skirmishes, looting, burning and other destruction to businesses and buildings. Such needless violence — which unfortunately has accompanied some protests in other cities this summer as the country was racked by the killing of George Floyd — undermines instead of advances any cause. It must be unambiguously condemned.

They’re understating the scope of the problem. Since the end of May there have been riots frequently accompanied by destruction, burning, and looting, in the following cities:

  • Minneapolis
  • Atlanta
  • Bakersfield
  • Chicago
  • Cleveland
  • Columbus
  • Dallas/Fort Worth
  • Des Moines
  • Denver
  • Detroit
  • District of Columbia
  • Houston
  • Kenosha
  • Los Angeles
  • Louisville
  • Milwaukee
  • New York City
  • Philadelphia
  • Portland
  • Sacramento
  • San Francisco
  • San Jose
  • St. Louis
  • Seattle

I’ve probably missed some. That’s more than “other cities”. That’s most of the largest cities in the U. S. What these riots have in common are rejection of liberal values and the rule of law.

I honestly don’t know if there’s anything that President Trump could do about the situation. His presence inflames the situation and his absence inflames the situation. It might help if political leaders on both sides of the aisle condemned the situation unambiguously. I doubt that will be forthcoming as long as one or both sides think they benefit from it.

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