At an estimated $2.2 trillion, the Coronavirus Aid, Relief and Economic Security (CARES) Act, the mother of all response bills (this is WAY beyond stimulus) is a behemoth.
Before we go any further, let’s be clear: as the U.S. now stares at the largest number of infected people per country on the planet, we’re still in response mode. Americans are being asked to stay home from work, turn away potential customers, and sacrifice for a greater good. Health care providers, grocery store workers, and those in the supply chain are being asked to risk infection head–on so the rest of us are protected. We don’t actually know the full scope and length of the COVID-19 crisis. We only know that the economic disruption needed to beat the virus will be costly, and that the CARES Act – a massive government response to meet a massive challenge – might well just be the beginning.
We also know, after a quarter-century of budget watchdogging, that the devil is in the details. It’s why we’ve always proudly rocked the green eyeshades. We know one thing from decades of having reviewed, examined, and conducted oversight of this type of legislation and implementation: oversight matters. And the larger the pot of cash, the more we need transparency and accountability about how your tax dollars are being spent.
Thankfully, we will not be alone. One key provision in the bill creates a Pandemic Response Accountability Committee (PRAC) that will be chaired by an Inspector General and include the IGs of various affected agencies. It will be staffed up and tasked with both tracking the funding and conducting oversight. Just as important, in addition to regular reports there will be a public-facing website that will enable the public to track the funding down to the state, the community, and the congressional district. In addition, a Special Inspector General is charged with tracking the loan fund under the purview of the Treasury Secretary. Further, the Inspectors General of fifteen different federal agencies are seeing increases to their budget to keep up with oversight of all this new money. A bipartisan Congressional Oversight Commission will be appointed to monitor how Treasury and the Federal Reserve dole out funds.
The language is very specific about the dollar amounts to be provided to various federal agencies either responding to or impacted by the virus outbreak. But when it comes to economic assistance to the private sector, most of the decisions about how the money will be allocated could be written as TBD or “To Be Determined” and left largely to the discretion of the Department of the Treasury; in other words, the White House.
We went digging into the $2 trillion package looking for highly parochial spending – funds designated to a specific industry or business – based on the data we’ve collected. For years we’ve made exposing this kind of “putting a thumb on the scale for a particular industry central to what we do.” But what we found, instead, was that Congress, rather than setting guidelines on how the government should provide assistance to the private sector, opted instead to create a mechanism for distributing the funds, with the oversight to come AFTER these decisions had been made.
TITLE IV of the legislation, known as the “Coronavirus Economic Stabilization Act of 2020,” provides $500 billion in grants, loans and loan guarantees to industries and businesses hard hit by the virus, and to states and municipalities. The funds include $25 billion for passenger airlines, $4 billion for cargo airlines, and $17 billion for companies deemed critical to national security. (There is also a separate special fund specifically for aviation workers that includes an additional $25 billion for passenger aviation, $4 billion for cargo aviation, and $3 billion for contractors.)
How the remaining $454 billion – and any leftover from the money designated for the airlines and national security, if there is any – will be distributed is left to Treasury Secretary Mnuchin. The criteria for the distribution of these funds is vague. According to the legislation, the funds are to “provide liquidity to eligible businesses, States, and municipalities related to losses incurred as a result of coronavirus.” This leaves a tremendous amount of authority to the Trump Administration to determine the distribution of these resources. The Office of the Special Inspector General shall terminate five years after the enactment of this legislation.
Congress clearly has concerns about the “spend now, report later” funding mechanism adopted as part of the creation of a roughly $500 billion “slush fund.” But as is the case with any oversight entity – Special Inspectors General Congressional Oversight Commissions included – their effectiveness will only be as great as the watchdogs chosen to do it and how much power they really have.
One particular provision already raising eyebrows is the $17 billion for companies deemed critical for national security. This pot is widely viewed as being a bailout for aerospace industry giant Boeing. In addition to being one of the world’s largest manufactures of civilian aircraft, Boeing is also one of the nation’s top defense contractors.
Here at TCS we’ll keep digging. This includes adding to our list of corporations lining up for their piece of the largest bailout in U.S. history.
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