$400 billion in COVID relief, vanished to fraud
Four hundred billion is just a starter figure.
According to Reason magazine's Eric Boehm:
Over the past three years, the federal government distributed more than $4.2 trillion in aid connected to the COVID-19 pandemic. More than $400 billion of it — nearly one in every $10 spent — was either wasted or stolen, according to a new report.
And that figure is likely to grow, the Associated Press reported on Tuesday, "as investigators dig deeper into thousands of potential schemes." Already, prosecutors have charged more than 2,230 defendants with pandemic-related fraud crimes, the A.P. reports. They'll be busy for years to come, sorting through what Mike Galdo, the Justice Department's acting director for COVID-19 fraud enforcement, calls "an unprecedented amount of fraud."
But if federal prosecutors are interested in catching the real culprits of this mess, they'll have to take a look at government officials who were in charge of distributing the cash too. One major failure, according to the AP, was the Small Business Administration's (SBA) decision not to cross-check Paycheck Protection Program (PPP) loan applications against the Treasury Department's "Do Not Pay" list, which is intended to keep federal dollars from flowing to known criminals and scam artists.
Word got around to fraudsters early that money was going out fast, and $400 billion was theirs.
Convicts in prison, Nigerian scammers, all-around criminals, crooked businesspeople, crooked non-businesspeople, South American thief rings all got their cut. Some 2,000 people have been charged with fraud in a bid to claw some of the money back, but millions more potential cases were "lost" in early 2021.
Meanwhile, the hundreds of thousands of small businesses whom the money was slated for often did not get it. During the COVID era, news was of a raft of businesses being denied COVID relief unless they were very large, or else politically connected.
The original Associated Press story noted that the Small Business Administration, which handed out the loans, could have just made a small check for the legitimacy of the claims with existing databases...and didn't.
Reason noted by triangulation that the amount of fraudulently passed out money is understated, and likely to grow — exponentially.
Still, the most surprising thing about the Associated Press's report might be that the overall figure isn't higher. That probably has to do with how it defines "fraud" and "waste."
Take, for example, this National Bureau of Economic Research study that found "only 23 to 34 percent of the [PPP's] funds went directly to workers who would have otherwise lost their jobs." Or a similar study from the Federal Reserve Bank of St. Louis that found taxpayers paid roughly $4 for every $1 of wages and benefits to workers via PPP. The rest of those dollars went to business owners, which wasn't the original intention of the program. That's technically not fraud, nor is it likely to be included in the final tallies of how much aid was wasted during the pandemic — but maybe it should be.
If only 23 percent of the funds went to workers it was supposed to go to, then...77% of the funds went someplace that wasn't to workers.
This kind of money-shoveling, which could only happen with the Federal Reserve turning on the printing presses, is what brought us Bidenflation, turning what had been President Trump's stellar, growing economy into...well, Joe Biden's economy.
The Bidenites have yet to admit where inflation, which is money-printing, comes from, as inflation is "always and everywhere" a monetary phenomenon, to cite the phrase of economist Milton Friedman.
They'd have a golden campaign issue for themselves in which they could at least partially blame President Trump for this scandal, given the distribution datelines. But they can't, because they've spent so much more in their massive porkulus spending bills that have followed since they took office in early 2021.
Huge amounts of money, as Reason notes, lead to huge amounts of fraud, and there seems to be an actual connection.
Reason's Boehm observes:
One of the lasting lessons of the COVID-19 pandemic should be that there's an implicit trade-off between the velocity of emergency spending and the ability to limit fraud. Even under the best of circumstances, the federal government struggles to ensure that only qualified individuals and businesses receive public dollars: Taxpayers lose around $100 billion every year due to Medicare and Medicaid fraud.
In a rushed panic, and with unprecedented amounts of cash being thrown around, it was always going to be an impossible task to meaningfully police who got what.
That might explain why Joe Biden is so addicted to spending huge amounts of money at one time. The opportunities for graft, for Biden himself, his friends, his political familiars, and his allies, is astounding.
In any case, the scandal is his issue now, and very little seems visible on the horizon to do something about it. Now President Trump can put that, very legitimately, on him.
Image: Pixabay, Pixabay License.