The Associated Press reports today on "The Great Grift," a combination of the plundering of COVID-19 aid programs by fraudsters and plain old mistakes in doling out the money:
All of it led to the greatest grift in U.S. history, with thieves plundering billions of dollars in federal COVID-19 relief aid intended to combat the worst pandemic in a century and to stabilize an economy in free fall.
An Associated Press analysis found that fraudsters potentially stole more than $280 billion in COVID-19 relief funding; another $123 billion was wasted or misspent.
....How could so much be stolen? Investigators and outside experts say the government, in seeking to quickly spend trillions in relief aid, conducted too little oversight during the pandemic’s early stages and instituted too few restrictions on applicants. In short, they say, the grift was just way too easy.
The story is long and a little hard to follow in places, so I simplified things with a summary chart:
Mistakes in handing out unemployment checks plus a small number of mistakes in mailing out stimulus checks add up to $123 billion. Total fraud depends on whose estimate of the Paycheck Protection Program you believe. The lower estimate produces a total of $182 billion in fraud. The higher estimate produces a total of $280 billion.
Add it all up and you get a grand total of $300-400 billion, or 7-10% of the pandemic money spent so far. A big part of the fraud came from the Economic Injury Disaster Loan and Paycheck Protection programs, both of which were administered by the Small Business Administration. SBA, which is a smallish agency, was overwhelmed by the vast scope of the programs and the need to get money out fast:
In the haste, guardrails to protect federal money were dropped. Prospective borrowers were allowed to “self-certify” that their loan applications were true. The CARES Act also barred SBA from looking at tax return transcripts that could have weeded out shady or undeserving applicants, a decision eventually reversed at the end of 2020.
Michael Horowitz, the pandemic watchdog chairman, criticized the government’s failure early on to use the “Do Not Pay” Treasury Department database, designed to keep government money from going to debarred contractors, fugitives, felons or people convicted of tax fraud. Those reviews, he said, could have been done quickly.
....In less than a few days, a week at most, Horowitz said, SBA might have discovered thousands of ineligible applicants. “24 hours? 48 hours? Would that really have upended the program?” Horowitz said. “I don’t think it would have. And it was data sitting there. It didn’t get checked.”
Unemployment fraud and mistakes were similar, but on a state level. Most states simply weren't prepared for a sudden, huge increase in unemployment payments, and their systems were often old and creaky. In Ohio, for example, State Auditor Keith Faber says nobody was prepared for what hit them:
The state’s unemployment agency “took controls down because on the one hand, they literally were drinking from a firehose,” Faber said. “They had a year’s worth of claims in a couple of weeks. The second part of the problem was the (federal government) directed them to get the money out the door as quickly as possible and worry less about security. They took that to heart. I think that was a mistake.”
There is, obviously, an inherent tension between getting aid out fast and getting it out right. They're both legitimate goals. Was a 7-10% penalty worth it in order to help lots of people quickly? I'm not sure I can confidently answer either way.
This was under the former guy, right? The grift opportunities were the point.
A small nonprofit that I was the executive of from 2018-2021 was the victim of identity fraud - somebody somewhere fraudulently took out a $50,000 Economic Injury Disaster Loan. I can't imagine that we were the only small corporation that was targeted. Nonprofits were probably especially vulnerable, given that their tax filings are made public by the IRS.
The first we learned of it was in spring 2021 when we received a repayment notice, where the repayment was supposed to begin that fall. It's kind of on the SBA if they didn't bother to confirm through our corporation's official registered address that the loan application was true and correct, but then that's where they sent the bill. Also not sure what proof/backup they demanded for justifying the loan amount, because the annual revenue and expenses for this organization were sub-$3000, which would've been reported to the IRS.
Is there any effort being made to recover the money obtained fraudulently and punish the criminals? Or is this just a blame the victim situation?
Domestically, yes. However a non-trivial number of the fraudsters were in foreign countries.
Speed took priority cause of pandemic. Even spending by crooks stimulate the struggling economy. ( at least the domestic crooks.) Those programs did their job. I’m more concerned about the fraud and waste in the regular budget.
Yep, I agree. We can quibble whether 7-10% is a bit too high, but erring on the side of getting money out was the better course.
True. The only major issue where the grift hurt others was when ID theft was involved.
One of the problems with relief programs is that those who have time to fill out applications are not those suffering the most. in the Covid case, when a program was running out of money, a new one would start up--so those late to the game still had a chance at getting some relief.
This exactly. The goal was to put money into the economy to prevent a recession and reduce overall hardship as much as possible in the face of the most significant global disaster since WW2. Considerations about how dollars were supposed to go to some people but not XYZ people were *secondary* goals.
Getting the primary goal right and the secondary goal 90+% right is good enough for me. Definitely we should learn lessons, and probably do some law enforcement to claw back funds and prosecute fraudsters where appropriate, but nobody should be up in arms about this.
Definitely not worth it. Don’t do it again.
Slightly OT:
Someone leaked further US intelligence (beyond what the Times UK's story on Saturday reported) that points to COVID-19's patient(s) zero as the lead researchers of the SARS gain of function program inside WIV. (I would link to it but it's not a mainstream source, so take this info with a bottle of salt.)
However, intelligence was previously leaked that there were WIV researchers who were sick in the fall of 2019 with symptoms matching COVID-19. Are they based on the same intelligence data? That is to say, were prior leaks made to avoid granular details, or is this separate, newer evidence?
We might find out soon. The COVID-19 Origin Act of 2023 deadline to declassify and release as much evidence as possible on this subject, is just a few weeks away.
Obviously, someone has an agenda to leak right now. What that agenda is, is unclear. Perhaps it's to obfuscate the quality of the intelligence by establishing the narrative ahead of the evidence officially being released.
Knowing patient "zero" is important. But without DNA data, it is just speculation. And a specific mode of transmission would help too.
When this outbreak was starting, it seems everyone was in CYA mode--which makes figuring out what went on very difficult. I'm wary of reports without proper data backing them up. Wasn't some of this old news--there was a report blaming the WIV already by one agency that was mostly dismissed. "Leaking" that not only did the virus start at WIV, but now it's a lead researcher who was patient zero! That has to be taken with a grain of salt until actual data backs it up.
The data we have now points to two variants of Covid starting to spread out from the Wuhan wet market. That doesn't mean patient "zero" lived near there--it could be that they, or friends they infected, visited the market and vendors or even animals there picked it up leading the outbreak that gave rise to the pandemic. Of course since most people had relatively mild symptoms and can spread the virus without showing symptoms, it, or close variants, might have been spreading for a while without people noticing.
You're not going to get RNA fingerprints of the virus from patient zero, on account that the virus is long gone from the patient. However, there may be reactive antibodies that could (theoretically, be tested against variants to) indirectly point the finger at D614G's nearest ancestor, though I doubt China would allow these researchers to give their blood for science, let alone test a theory.
The mode of transmission will not have changed; it's still a respiratory virus that attaches itself via the Spike protein, enabled by a mutation noted by the (addition of a) furin cleavage site.
With multiple variants detected by late December, therefore, the virus was widespread long before the Hunan wet market event. This tends to widen the possibilities of scenarios rather than tie down this market with the origination of SARS-CoV-2 as zoonotic spillover.
But like I stated initially, "take this info with a bottle of salt.". This is all just interesting stuff to whet the appetite for the impending declassification and release of the intelligence the US has. Maybe other countries will follow suit and we'll have a compendium for a solid circumstantial case.
This sounds like the old 'people are saying' BS stories that Trump floated out to his adoring fans and captive media to drive the narrative while he was in office.
The lack of oversight was not an oversight. It was the plan. There was intense lobbying to lighten up on disclosure requirements and pressure on Congress from the Trump admin to go easy to get a bill passed quickly.
Why was that?
Brookings:
The country is talking about the indictment of the former president, and we shouldn't forget the context. The guy was the most corrupt criminal ever to hold power in this country, and there was not a day that went by he wasn't breaking the law somewhere. The shame is not that he might get caught for 99% of them.
Last sentence: The news is not that he might have gotten caught for < 1% of his crimes but that he got away with > 99% of them.
This is all fine. The point was to get as much money out as quickly as possible, avoid economic disaster and personal suffering.
These programs were a massive success.
Completely worth it. Maybe you can make some improvements to cut it down some but the goal was more important.
And I say this from MN where 50 somalis and their 1 white woman ringleader stole about 250 million supposed to go to feeding school kids while schools were closed.
They shot a bunch of money out the door, and 90-93% of it hit the target? Honestly, I'm impressed.
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"they literally were drinking from a firehose"? I'd like to see a video of that.