The Coronavirus Aid, Relief, and Economic Security (CARES) Act, a.k.a., the stimulus bill, which passed March 27th, 2020, and the subsequent Paycheck Protection Program and Health Care Enhancement Act, which passed April 24th, are intended to provide trillions of dollars of economic relief to millions of Americans in the wake of the COVID-19 pandemic. COVID-19, a respiratory illness that spreads from person to person, resulting in mild to severe respiratory illness with fever, cough, and shortness of breath sometimes resulting in pneumonia, multi-organ failure, or death, has devastated the economy. This is primarily because of the extraordinary, albeit necessary, measures governors have taken to slow the spread. Governors around the country closed non-essential businesses and other places where people congregate, including restaurants, movies, schools, churchs, synagogues, and mosques. Citizens have been ordered to stay at home unless they do essential work, such as health care, public safety, and food preparation. As a result, not only did the stock market begin a roller coaster ride, small businesses lost revenue, and people who could not work from home lost jobs. Families’ incomes dropped, and unemployment rates increased, pushing the entire economy towards recession.
The stimulus legislation is intended to provide over $2 trillion to small business owners, hospitals, non-profits, and more. The bill also includes policy changes to student loan payments and early retirement withdrawals. Further, many Americans who make under $99,000 are looking forward to receiving individual stimulus checks. Although there continue to be debates about whether payments are comprehensive and whether portions of the population are being left behind, the current goal is to distribute the aid as rapidly as possible. The Department of Treasury is leading this effort; however, many agencies will assist.
These pieces of legislation represent the largest economic package that Congress has ever provided. They dwarf the recent efforts made under the Troubled Asset Relief Program (TARP), a $700 billion government bailout passed in 2010. The purpose of TARP was to help reinvigorate the U.S. economy while assisting those most devastated by the 2008 financial crisis and subsequent recession. Unfortunately, implementation of TARP was accompanied by significant fraud. The Special Inspector General of TARP (SIGTARP), whose position was created in the TARP legislation, reports having recovered $11 billion and achieved 384 convictions as a result of their office’s investigations. Likely the amount of fraud in the program amounted to much more. In his book Bailed Out, the first SIGTARP, Neil Barovsy, documented his frustrations related to his slow appointment, difficulties staffing his office, and the pushback he encountered when he made attempts to contribute to the implementation of various bailout programs. Meanwhile, dollars were distributed largely without oversight, while the SIGTARP’s activities were largely relegated to post factum investigations.
Like the TARP, the CARES Act established an oversight structure. That structure includes (1) the Special Inspector General for Pandemic Relief (SIGPR); (2) the Pandemic Response Accountability Committee (PRAC) made up of federal inspectors general (IGs); and (3) the Congressional Oversight Commission. Yet, there are already barriers to this approach. Not only did President Trump push back against these provisions in his CARES Act signing statement, claiming unconstitutionality, but a close read of the legislation suggests that these oversight bodies are again tasked primarily with identifying fraud, waste and abuse after funds have been disbursed. Although the PRAC has been charged “to mitigat[e] major risks that cut across agencies,” checks have already been issued.
The key to preventing fraud, waste, and abuse in the implementation of the CARES is to allow the members of PRAC and the SIGPR, when appointed, to consult with administrators as the program is being implemented. IGs are experts in processes that are meant to reduce the likelihood of fraud, waste, and abuse pre factum, i.e., before the fact. In fact, the IG Act of 1978 gives IGs the role of “provid[ing] leadership and coordination and recommend[ing] policies for activities designed (A) to promote economy, efficiency, and effectiveness in the administration of, and (B) to prevent and detect fraud and abuse in, such programs and operations.” Preventing fraud before it happens is less costly than identifying fraud after the fact, which requires the cost and hours of investigating and prosecuting wrongdoers. Of course, prevention does not do away with the detection. Nevertheless, Inspectors General who are members of the PRAC should pursue this preventative role immediately and protect CARES Act funds from fraud, waste and abuse, from the beginning ‑‑ which will help get money into the pockets of those who are legitimately beneficiaries of the Act.