Watchdog: Feds Sent $1.4 Billion in Stimulus Checks to Dead People

Treasury Secretary Steven Mnuchin wears a mask as he walks on the grounds of the White House on May 14, 2020. (AP Photo/Alex Brandon)

(CN) — A federal watchdog reported Thursday that the Trump administration’s coronavirus response has suffered from a sweeping lack of transparency and missteps including sending over a million stimulus checks to dead Americans.

Because the IRS did not utilize death records to ensure recipients of stimulus checks were still living, the agency sent about $1.4 billion to nearly 1.1 deceased taxpayers as of April 30, according to a new Government Accountability Office report.

The IRS had relied on tax returns from 2018 and 2019 to send out these payments under the $2 trillion CARES Act, and did not exclude decedents from program requirements, the GAO report states. The government has asked relatives to return the money but it’s unclear if they are required to.

Acting on the devastating economic impacts of the Covid-19 pandemic, Congress appropriated about $2.6 trillion in emergency assistance for individuals, businesses, health care systems and local governments through four separate relief laws so far this year.

The Small Business Administration is charged with implementing one of the laws, known as the Paycheck Protection Program, which is aimed at aiding businesses struggling to stay afloat.  

The GAO, an independent federal agency that monitors how tax dollars are spent, said in Thursday’s report that the SBA processed over $512 billion in guaranteed small business loans, “but isn’t ready to address fraud risks and hasn’t said how it plans to oversee the loans.” 

The GAO’s latest report accentuates a pandemic response by the Trump administration that is shrouded in mystery and is said to lack accountability. The watchdog said the SBA failed to provide timely guidance to borrowers on how the small business loans would be forgiven and failed to provide information critical to the report. 

The Office of Management and Budget guidance does not require agencies to report Covid-19 related financial commitments and expenditures until July. 

“It is unfortunate that the public will have waited more than 4 months since the enactment of the CARES Act for access to comprehensive obligation and expenditure information about the programs funded through these relief laws,” the GAO report states.

A spokeswoman for the SBA said the agency is trying to compile loan-level data for the GAO, but that such information “implicates concerns about borrowers’ personal privacy and confidential, proprietary, and commercially sensitive business information.”

“Unfortunately, the report minimizes the historic work that SBA has undertaken to implement the CARES Act and mischaracterizes SBA’s engagement with GAO,” she said in a statement, noting agency officials produced hundreds of pages of documents. 

In addition to the SBA, Thursday’s watchdog report looked into the country’s Strategic National Stockpile, noting that it was not equipped to keep up with the initial influx of demand for medical supplies including personal protective equipment and ventilators. 

“Both the Congress and the administration have acted to mobilize resources quickly to help the nation respond to and recover from the pandemic,” the report states. “However, the negative effects of the pandemic on families, communities, and health care systems and on the long-term economic condition of millions of Americans and U.S. businesses are likely to persist into the future.”

On Friday, the House Select Subcommittee on the Coronavirus Crisis is expected to hold a hearing with Comptroller General Gene Dodaro, who is the head of the GAO, to go over Thursday’s findings and recommendations.

“Today’s GAO report comes as our nation faces the grim reality that the Trump administration’s policies have failed to contain the coronavirus outbreak,” Congressman Jim Clyburn, a South Carolina Democrat who chairs the subcommittee, said in a statement.

Clyburn added: “More than 120,000 Americans have died, and new infections are at record levels. This report details how missteps led to ‘significant delays in testing,’ shortages in critical supplies, and ‘significant risk’ of fraud in the Paycheck Protection Program. GAO has also sounded the alarm on the administration’s efforts to stymy legitimate oversight by withholding ‘critical’ information and preventing GAO from completing its work. This obstruction must end.”

The report comes as states like Texas and California are seeing record spikes in new Covid-19 infections after taking steps to reopen the economy.  

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