It’s not shocking that several boatloads of taxpayers’ money were stolen or squandered during the COVID-19 health crisis, when the U.S. government shoveled out trillions of dollars to try to keep the national economy from going off a cliff.
It was a foregone conclusion that the speed with which Congress and two presidents felt compelled to act would produce a lot of fraud and waste. The only question was how bad it would be.
The numbers are coming in, and it’s not pretty. The Associated Press reported this week that the fraud and waste could wind up totaling more than $400 billion — or about 10% of the $4 trillion that has been paid out so far. (Another $1.2 trillion in relief funding has been authorized and is still to be spent.)
The assumption was this amount of grift was an unfortunate but acceptable consequence of the crisis, as waves of people started to die from the worst global pandemic in a century and the country mostly shut down to try to contain the virus.
The Associated Press’ story, however, challenges that assumption. It found, based on interviews it did with government officials responsible for measuring the fraud and trying to recover the money, that a chunk of the theft could have been avoided by implementing a few commonsense measures.
For example, the Small Business Administration, which managed two of the largest relief programs for struggling businesses and their employees, allowed beneficiaries in the early months of the pandemic to self-certificate that their applications were legitimate. That’s in part because of a congressional action, later reversed, that barred SBA from looking at tax return transcripts. But also the SBA opted not to cross-check applicants against a “Do Not Pay” Treasury Department database, specifically designed to keep government money from going to debarred contractors, fugitives, felons or people convicted of tax fraud.
Those reviews, according to the Justice Department’s inspector general, could have been done quickly, delaying payouts for a week at most.
Certainly, everyone in the government was wading through uncharted waters at a very stressful time. The agencies responsible for disbursing the money were overwhelmed.
But it didn’t take a genius — just a basic understanding of human nature — to know that an honor system was not going to work. A lot of people are not honorable, and if the government makes it easy for them to steal, they’re going to do it.
There was a middle ground between getting the money out right away and onerous safeguards. But two administrations, both Donald Trump’s and Joe Biden’s, failed to find it.
