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Congress Demands Treasury Department Monitor Coronavirus Bailout Money Better

September 1, 2020 by Tom Ramstack
Congress Demands Treasury Department Monitor Coronavirus Bailout Money Better

WASHINGTON — Members of Congress directed tough questions at the U.S. Treasury secretary Tuesday about fraud and abuse in the Trump administration’s coronavirus relief program.

They said billions of dollars intended to protect jobs and family homes were being diverted to small businesses that either did not need it or received multiple forgivable loans based on fraudulent claims.

U.S. Rep. James E. Clyburn, D-S.C., demanded better accountability for the Paycheck Protection Program and other government bailouts “to make sure the taxpayers’ dollars are not squandered.”

He also said the Treasury Department should try to recover money that was wasted through fraud.

Clyburn chairs the House Oversight and Reform Select Subcommittee on the Coronavirus Crisis, which called the hearing to assess the need for additional economic relief for persons who lost their jobs and to stimulate economic recovery from the pandemic.

The main recovery program so far has been the CARES Act, the $2.2 trillion bill signed by President Donald Trump on March 27. Key provisions included $300 billion in one-time cash payments to individual Americans, $260 billion in increased unemployment benefits and creation of the Paycheck Protection Program that provides forgivable loans to small businesses.

A primary goal of the Paycheck Protection Program was to help employers avoid layoffs as the nation shut down much of the economy to slow the spread of coronavirus.

However, a report released Tuesday by the Select Subcommittee on the Coronavirus Crisis said improper oversight of the more than $600 billion Paycheck Protection Program “may have led to billions of dollars being diverted to fraud, waste and abuse, rather than reaching small businesses truly in need.”

About $1 billion went to businesses that incorrectly received multiple loans, the report said. About $96 million went to companies cited previously for government contract violations that should have disqualified them. 

The Paycheck Protection Program is implemented by the Small Business Administration, with support from the Treasury Department. The SBA audited only loans worth more than $2 million.

The other 99 percent of the loans were not monitored, leading to widespread abuse, the report said.

Democrats on the Select Subcommittee blamed Treasury Secretary Steven T. Mnuchin for some of the lapses.

“The Treasury department must improve its implementation of relief programs approved by Congress,” Clyburn said.

Mnuchin spent much of his time describing successes of the Trump administration’s coronavirus relief program.

“We also are seeing signs of strengthening and economic recovery across industries,” he told the subcommittee members.

He said 43 percent of the jobs lost since the pandemic began cutting deeply into the U.S. economy last winter have returned as the crisis eases. The economy gained 8.1 million jobs in July, Mnuchin said.

He acknowledged that 16 million workers remain unemployed but said the figure is down from a low point of 24 million job losses.

“The housing market has nearly returned to pre-pandemic levels,” Mnuchin said.

Some Republicans, such as Rep. Maxine Waters, D-Calif., were skeptical of his optimistic report.

“Stop bragging about what’s already been done,” Waters said. “We have people who are hurting.”

Mnuchin agreed another economic stimulus bill like the CARES Act was needed but did not make specific recommendations.

“We are sensitive to the fact more work needs to be done,” Mnuchin said.

He called the pandemic an “unprecedented” challenge for economic planners.

“We’ve been working hard to get an agreement on a bipartisan basis,” he said.

The leading proposal is the Health and Economic Recovery Omnibus Emergency Solutions Act or HEROES Act. It would fund a $3 trillion stimulus package.

It was passed by the House on May 15 but awaits a vote in the Senate, where Republicans seek to trim the amount of funding. They say it would burden the economy with too much debt.

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