In 2009, as the federal government was rolling out the $700 billion Troubled Asset Relief Program and preparing to spend another $787 billion in President Obama’s “stimulus” package — both with little serious examination by Congress, I wrote a blog post titled “How to Spend a Trillion Dollars without Waste and Fraud.”
The first line of my post was “You can’t.” And I noted that the federal government knew that, because both Neil Barofsky, the special inspector general for TARP, and Gene Dodaro, the acting comptroller general, had told a House subcommittee — after the passage of both bills — that the government’s experiences in the reconstruction of Iraq, hurricane‐relief programs, and the 1990s savings‐and‐loan bailout, along with the lack of written policies in the new programs, did not bode well.
Now we are embarked on a much larger government spending program. Tony Romm of the Washington Post points out, “Totaling nearly $6 trillion [over two years], the loans, grants, direct checks and other emergency assistance summed to more than the entire federal budget in the fiscal year before the coronavirus arrived.” How’s it going? Well …
In Stamford, Conn., a 46‐year‐old resident pleaded guilty after putting a portion of $4 million in coronavirus aid toward the purchase of a Porsche. And a Mercedes. And a BMW.
In Somerset, N.J., a 51‐year‐old woman allegedly invented employees, inflated wages and fabricated entire tax filings to collect $1 million in loans.
And in St. Petersburg, Fla., a federal judge sentenced to prison a 63‐year‐old man who obtained $800,000 on behalf of businesses that did not exist.
Hundreds of such cases have been reported. “And the aid continues to be a ripe target for criminals nationwide, the full extent of which is only beginning to come to light.” Gene Sperling, President Biden’s chief coordinator for stimulus spending, says that “immense fraud” is the administration’s biggest oversight challenge. The Post continues:
The troubles are laid bare in stinging federal oversight reports issued over the past year. Across the SBA’s two key emergency initiatives, investigators have questioned nearly every aspect of its spending, flagging billions of dollars in suspect loans and grants, overpayments to those who should not have received them and in some cases outright fraud. One effort meant to help businesses in economic distress may even be rife with identity theft, as watchdogs said they had received more than 845,000 applications for aid that are now suspected of having come from individuals using stolen identities, some of which were funded anyway.
Understandably, federal agencies moved “with lightning speed” in 2020 to get this aid out to businesses and individuals affected by the pandemic, without putting into place “a wide array of policies that might have prevented significant waste, fraud and abuse.”
Maybe it was worth it. If you believe that checks written on empty bank accounts kept the economy from collapsing, then you may just accept a high incidence of waste, fraud, and abuse as part of the cost. “It’s inevitable,” says the Brookings Institution. And after all, the fellow who bought the luxury cars was putting a lot of money into car dealerships, and the woman who collected a cool million probably spent it. That’s stimulus!
Linda Bilmes, coauthor with Nobel laureate Joseph Stiglitz of The Three Trillion Dollar War: The True Cost of the Iraq Conflict, analyzed the massive problems in three somewhat smaller government projects — the Iraqi reconstruction effort, Hurricane Katrina reconstruction, and the Big Dig artery construction in Boston — and found that “in any organization that starts to increase spending very rapidly there are risks of waste, fraud and inefficiency.”
President Obama assured us in 2009 that Vice President Biden would be in charge of monitoring the spending in the stimulus bill and that “nobody messes with Joe.” But that is not in fact a solution to the inevitability of waste and fraud when an unaccountable bureaucracy is spending trillions of other people’s dollars.
There’s much more in Tony Romm’s article. And no doubt many more stories for other reporters to pursue. And continuing questions about the net costs and benefits of massive government spending programs, funded by debt and rife with, yes, waste, fraud, and abuse.
