Home US Backlash grows as pandemic relief stumbles

Backlash grows as pandemic relief stumbles

Backlash grows as pandemic relief stumbles 1

This article was reported in collaboration with Zachary Warmbrodt, Susannah Luthi, John Hendel, Ryan McCrimmon, Michael Stratford, Brian Faler and Brianna Gurciullo.

Congress’ mad dash to shovel nearly $ 3 trillion into the economy and rescue failing industries met little resistance as the coronavirus crisis overwhelmed communities across the country.

But now the hangover has set in.

- Advertisement -

The sprawling CARES Act, and its similarly rushed companion bills, has fueled rising angst for lawmakers. They’ve been bombarded with complaints about breakdowns in the small business lending program, loopholes that have allowed large companies to snatch cash meant for smaller operations and administrative failures that have delayed stimulus checks to struggling American households.

Hospitals, lawmakers say, are competing with each other and the federal government for life-saving equipment for their employees, and coronavirus testing is still hard to access in many parts of the country, despite Congress’ efforts.

And it’s all occurring without the oversight operations meant to confront these problems as they arise.

“Our constituents have a lot of questions about where the hell this $ 3 trillion is going and why it isn’t coming into their pockets,” Rep. Mary Gay Scanlon (D-Pa.) said during a Thursday meeting at the Capitol.

Lawmakers are now begging for fixes to a litany of legislative shortcomings. Several brought up issues with the small business program on a call with the head of Small Business Administration, Jovita Carranza, on Wednesday.

But the very next day, Congress passed another roughly massive relief bill with little done to address the early problems that have emerged.

And though they won’t say it out loud, lawmakers are also acutely aware that they’ll be judged in November if their solutions to the pandemic are perceived as broken or exploited by powerful interests. That’s driving at least some of the latest recriminations and urgency to fix what isn’t working.

“Fraudulent actors go to where the money is, and this is where the money is right now,” said Rep. Rob Woodall (R-Ga.). “So I absolutely think that we have to redouble our effort to make sure that these dollars aren’t wasted.”

Here’s look at the growing list of breakdowns in the rescue effort:

Small businesses get sideswiped

It was bad enough that the $ 350 billion fund for small businesses was depleted so quickly. But the revelation that large, publicly traded companies were snagging the scarce dollars outraged the public — and lawmakers.

- Advertisement -

“Promises were made in the CARES Act that made small businesses believe they would receive their loans in a timely fashion,” Rep. Pete Stauber (R-Minn.) said during a meeting of the Small Business Committee on Thursday. “Instead, some received a fraction of what they were promised and many others received nothing at all.”

Scores of small business owners were furious after they were unable to get loans approved through major banks like JPMorgan Chase, which signed off on several of the loans for big companies like Shake Shack and Potbelly.

The backlash spurred Shake Shack and others to announce that they planned to return the loans. The Trump administration and key committee leaders are now discouraging large, publicly traded companies from seeking the aid and is asking that they send back funds by May 7.

But there might be more complaints soon. Though Congress sent another $ 320 billion into the so-called "Paycheck Protection Program" last week, banks warn the money could run out in a matter of days with hundreds of thousands of applications still pending.

Hospitals ‘utterly perplexed’

So far Congress has delivered $ 175 billion to hospitals and health care providers, but the convoluted process has left hospitals and even some Washington insiders confused. That’s led to fears of uneven assistance, particularly for hospitals serving poor patients on Medicaid. The administration has said some of the dollars will go to these providers, but hasn’t yet detailed how much. An HHS spokesperson said far more dollars will go to these providers in the next funding rounds, but the administration hasn’t clarified how much.


Big hospital chains that see the most elderly patients have so far received the most federal funds; executives of the for-profit conglomerate HCA Health Care told investors this week they received a whopping $ 700 million.

Health officials have defended their decision to use a formula relying on total Medicare revenue as a speedy way to push money out the door, but individual hospitals still don’t understand how exactly the administration calculated their checks. HHS has altered its formula for the next batch of money, which also includes billions for rural areas and hot spots.

“We are all utterly perplexed trying to figure out what the hell this formula is and how it’s going to work,” one health care consultant said. “They could be sending out checks today, and we truly don’t know how they’re doing it.”

Mystery also shrouds a pot of money that’s supposed to cover coronavirus treatment for the uninsured — a policy the White House touted as an efficient and targeted alternative to offering a special Obamacare sign-up. HHS has banned any hospital that dips into this fund from also charging patients but hasn’t specified how much money is available, nor have officials told the uninsured how to seek recourse if they do see medical bills.

Ivy League gets shredded

The culture war over the CARES Act was in full swing last week over the prospect that some of the nation’s wealthiest universities might receive federal funds. The backlash, largely from Republicans and the Trump administration, came swiftly against elite schools with large endowments who were initially in line to get a slice of the aid.

Soon after, Harvard, Princeton, Yale, Stanford and the University of Pennsylvania each said they would forfeit millions of dollars that the law allocated to their campuses. Their decisions came after a torrent of criticism about the funding from Trump, some GOP senators, Fox News and Education Secretary Betsy DeVos, who urged all wealthy universities to give up the stimulus money that her agency is in the process of doling out to colleges.

Meanwhile, colleges and universities are still waiting to receive the bulk of the roughly $ 14 billion in funding earmarked for campuses and student assistance under the law, nearly a month after it was signed. Only last week did the Education Department start to move more quickly to distribute the money.

College leaders and some Democrats were incensed all over again by a new condition that DeVos imposed on the money — blocking aid to DACA recipients and international students.

IRS under pressure

The IRS has pushed out a lot of stimulus payments in a hurry, but there’s still been plenty of hangups.

Some checks have gone to the accounts of deceased Americans even as others say they haven’t received payments or got the wrong amounts. Many gripe the IRS’s website is difficult to use.

Backlash grows as pandemic relief stumbles 2

The agency has been under pressure to make the process as automated as possible, though that too has had problems. Many lawmakers have complained the IRS only gave Social Security beneficiaries 48 hours to register dependents with the agency or see their payments for them delayed until next year. Treasury says it has no choice thanks to the idiosyncrasies of the IRS’ computer systems.

Liberals have also been stewing over the cost of provisions in the stimulus plan allowing wealthy business owners to take advantage of a break allowing cash-strapped businesses to qualify for tax refunds. “The ultrarich can claim paper losses during boom times before the pandemic even began,” complained Rep. Lloyd Doggett (D-Texas) in a statement accompanying legislation to repeal the language.

Meanwhile, the IRS has had trouble processing requests for those very refunds because the forms are normally required to be filed on paper, and the agency hasn’t been able to get to the mail with employees working from home. The IRS has set up a workaround asking businesses to instead fax in their requests.

Farmers fear aid will run dry

Small farmers and ranchers have struggled to access forgivable loans through the Paycheck Protection Program because of delays by the Trump administration in approving agricultural lenders and community banks to participate. Some farm credit institutions were approved only after the initial pot of $ 350 billion had already run dry.

The program wasn’t designed with agriculture in mind, but it offered a lifeline for farmers who are bleeding profits and dumping their products without demand from restaurants, schools and other markets. Even with a fresh infusion of funding from Congress, farm lenders doubt the money will last more than a few days, and some producers could again be stuck in limbo.

“We’re not confident at all that this will be terribly effective for agriculture,” said Todd Van Hoose, president of the Farm Credit Council. “We had a terrible time getting approval for our lenders to participate through the SBA program.”

Telehealth troubles

The Federal Communications Commission has already doled out $ 9.5 million in emergency telehealth grant money since welcoming Covid-19 Telehealth Program applications on April 13. That cash will go to boost connectivity for 17 health care providers across 10 states and comes from $ 200 million that Congress handed the agency in the CARES Act.

But there’s been grumbling over eligibility restrictions that the FCC has imposed — specifically the FCC’s move to cut out for-profit health care providers from this pot of telehealth money.

The American Hospital Association petitioned the FCC to rethink the eligibility decision, a move quickly endorsed by the Federation of American Hospitals, which says it represents over 1,000 health care entities, and the 232-member Rural Hospital Coalition.

But the FCC hasn’t budged, and there’s no reason to think it will change course.

Airlines stunned as some grants turn into loans

The Treasury Department has started to dole out billions of dollars in payroll aid to airlines, but carriers and unions alike were surprised when Treasury said recipients would have to pay back 30 percent of the money.

“We believe the law indicated that the Direct Payroll Assistance funding was to be only in grants – which is considerably more effective for our employees – and not a combination of grants and loans,” said industry trade group Airlines for America.

Democratic lawmakers were also unhappy with Treasury’s terms. “Congress intended for $ 25B in passenger airline grants to be used as direct payroll aid not loans,” Sen. Richard Blumenthal (D-Conn.) said in a tweet. “These new conditions could cause employee cuts. Sec. Mnuchin must reverse course—if not, Congress should act to restore the original purpose of these grants.”

But with Republicans loath to risk even more of the public’s funds, it seems unlikely Congress will override Mnuchin.

Oversight left in the dust

Every snag in the CARES Act and its multi-billion-dollar brethren is fodder for potential audit or investigation by a slew of entities tasked with ensuring taxpayer dollars aren’t wasted or bilked from the coronavirus relief effort.

But a month into the implementation of the massive new law, most oversight efforts are either nonexistent or just getting started.

Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell have still yet to agree on a bipartisan choice to lead a five-member congressional panel charged with monitoring the most sprawling aspect of the CARES Act. That’s the $ 500 billion fund entrusted to the U.S. Treasury and Federal Reserve meant to shore up distressed industries, companies and local governments.

A special inspector general nominated by Trump to oversee the same fund has yet to get a confirmation hearing in the Republican-run Senate, as lawmakers weigh whether to return to Capitol Hill for their currently scheduled May 4 session. And a panel of inspectors general tasked with sweeping oversight responsibility in the CARES Act was thrown into turmoil after Trump demoted the watchdog picked to be its chairman.

Backlash grows as pandemic relief stumbles 3

So far, only the Government Accountability Office has begun pursuing audits of coronavirus relief efforts, promising to launch dozens of reviews before the end of the month.

The House also formally approved the establishment of a new select committee to oversee the Trump administration’s implementation of the CARES Act. But it’s not clear when it will begin work. And Republicans have already rejected it as a political weapon intended to damage Trump in the runup to the election, potentially undermining oversight efforts.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Popular