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Veronique de Rugy: The Inconvenient Truth About COVID-19 Aid Scandals | columnists

Raise your hand if you’re surprised that the trillions of dollars spent on COVID-19 relief have given way to billions of dollars in government waste, fraud and abuse. I’m not, but based on recent reports you might think that this kind of carelessness with taxpayers’ money has never been seen before. Unfortunately, such waste and fraud are normal by-products of most government programs.

Too much focus on waste and fraud overlooks a more important issue: much of the COVID-19 spending that is not considered wasteful or fraudulent was nonetheless misspent.

When the pandemic hit the United States in March 2020, people across the country panicked. Everyone seemed to agree that pumping as much money as possible into the nation as quickly as possible was the right thing to do. As a result, almost everyone — married, single, employed, unemployed, through small and large businesses — got cash through the $2 trillion CARES Act.

Some people have raised the potential for fraud. We were told there was no time to take sufficient action to prevent this. However, the CARES Act created an oversight mechanism called the Pandemic Response Accountability Committee (PRAC). The committee faced a difficult task due to the sheer size of the aid bill, a hardship compounded by the fact that the program had to work before it could even begin auditing the expenditure. Dollars flowed quickly from Washington, and the committee fell behind from the start.

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Then Congress added two more assistance bills totaling about $3 trillion that include expansions to some of the programs implemented in the CARES Act. It is now clear that an enormous amount of the eventual $5 trillion was “improperly” spent and that some of it was downright fraudulent.

For example, according to the Department of Labor, at least $163 billion of the $873 billion in unemployment benefits was spent in error, and little of that amount was recovered. To make matters worse, a significant portion of the $163 billion was claimed by organized scammers and scammers in the United States and countries like China and Russia.

The uncomfortable truth behind all this fraud and waste is that these government programs were never meant to be designed the way they were. For example, while the federal government rightly increased state unemployment benefits early in the pandemic, increasing benefits by $600 a week was irresponsible. As a result, 76% of those receiving such benefits made more by not working than when they worked. It was also irresponsible to extend the program long after the economy had reopened and started growing again.

The same goes for the overly generous three rounds of $1,200, $600, and $1,400 paid to people who have either already received the increased unemployment benefits or have never lost their jobs. Most recipients of these funds did not need them. In fact, only 15% of people who received the first round of checks said they had spent them or planned to spend them. And besides these checks, there were other benefits.

The bottom line, according to Marc Goldwein of the Federal Budget Committee, was that the COVID-19 benefits were so generous that a family of five could have received $25,000 regardless of the parents’ employment status. This non-fraudulent spending is now helping fuel inflation.

Then you spent the money on companies. One way or another, these expenses accounted for a large portion of COVID-19 relief efforts. Whether it was through airline bailouts or the Payroll Protection Program, shareholders were actually collecting trillions of dollars in government cash that they didn’t need. For example, most of the PPP funding went to companies whose workers were never at risk of losing their jobs because they were well suited to working from home.

Eventually, billions of dollars went to state and local governments, including for schools that remained closed, even though revenue growth for many of those governments has matched or exceeded pre-pandemic levels.

Of course there was cheating, but the misconduct only happened because the programs were created in the first place and designed to be available to everyone regardless of need. This ruthless “design” is the real scandal.

Will Congress ever learn its lesson? I suppose no, because it’s easier to complain about scammers than to acknowledge that the real fraud is the entire process – a process that begins on Capitol Hill.

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