Federal Pandemic Aid Oversight Adequate?

By SETH SANDRONSKY

A recent report on recipients of federal pandemic aid, the $2 trillion CARES Act, asks if congressional oversight was adequate before our tax dollars went out the door as the US economy shut down to slow the spread of COVID-19 in March.

“The revelation that tens of thousands of CARES Act recipients have records of misconduct—including some cases of a criminal nature—raises the question of whether the eligibility criteria for the grant and loan programs were strict enough,” according to Philip Mattera, research director at Good Jobs First, a Washington, D.C.-based government watchdog group. “Policymakers also need to consider whether these recipients should be subjected to additional scrutiny to ensure their misbehavior does not continue while on this new kind of federal dole.”

According to Mattera and his co-author, Mellissa Chang, 43,000 recipients received from the CARES Act $57 billion in grants and $91 million in loans after committing fraud, wage theft and health and safety violations over the past decade. These 43,000 businesses and nonprofit groups represent 4.3% of the one million recipients of the historic $2 trillion federal CARES Act in 2020.

The Good Jobs First report’s findings are bracing.

“6,087 healthcare providers received $85 billion in grants and loans despite having paid $9 billion in penalties, most related to accusations of defrauding Medicare and Medicaid programs.” The players in the medical-industrial complex made out.

• “38,362 small businesses received $37 billion in loans though they have paid penalties of $3 billion, mostly for wage theft and jeopardizing worker health and safety.” Small businesses ate smaller pieces of the taxpayer pie. For example, they did not receive grants. Health care providers got $39 billion in grants.

• “147 colleges and universities received $503 million in grants and paid $900 million in penalties, mostly for-profit institutions that have used deceptive marketing practices to attract students and then saddling them with sky-high debt.” This bait-and-switch tactic snaring adults looking to further their higher education is nothing new. This is a business model that has been a part of the landscape for decades.

• “32 aviation-sector companies received $25 billion in grants and loans despite having paid $600 million in penalties related to worker safety, to settle discrimination cases and, in one case, for allegedly bribing foreign officials.” The domestic air carriers included American Airlines, Delta Air Lines and United Airlines.

Two of the main CARES Act aid vehicles were the Paycheck Protection Program and Economic Disaster Injury Loan program. Uncle Sam also provided relief via the Federal Reserve, the US central bank, buying corporate bonds to backstop the commercial credit market. The Fed made over 1,300 purchases totaling about $3.6 billion for bonds that Fortune 500 and Global 500 corporations issued. We see the role of the government in the so-called “free market” here. Instead, we have a managed market with the hand of Uncle Sam helping the corporate sector stay solvent.

Mattera and Chang’s report, “The Corporate Culprits Receiving COVID Bailouts,” is at www.goodjobsfirst.org/corporateculprits.

Seth Sandronsky lives and works in Sacramento. He is a journalist and member of the Pacific Media Workers.

From The Progressive Populist, October 15, 2020


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