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?
Seems like this would mostly just be stuff you could do online anyway. Have a few in person meetings if you needed for training then do it all online. Could probably do it all online for that matter. I would think they could go after the obvious cases w/o much effort and have a good ROI of time. Those who took out 2 loans sounds like an easy place to start.
Steve
On the contrary, Dave, there wasn’t nearly enough corruption. Why else would Pelosi & Co want to pass even more blowout bills?
I thought this was part of the design. The concept was to get the money into the economy as fast as possible. Congress could design a proper system of verification, oversight, but by the time it was ready; like maybe 5 months from now; all the businesses would be dead. It was a conscious decision to have some amount of fraud to get the money injected into those businesses quickly.
Not defending the decision; but I read multiple articles back in March explaining this very point.
Yeah, I agree with Curious – I think this was baked-in from the beginning – at least among those who have even a basic understanding of how the federal government actually works.
And, to get back on my soapbox, I’m quite sure, just like all the other historical examples, this will not prompt elites or partisans to promote federal reforms.