$1.4 Billion in Coronavirus Stimulus Went to Dead People

By Yuval Rosenberg

Treasury Sent $1.4 Billion in Coronavirus Stimulus Payments to
Dead People: Report

The Trump administration sent almost 1.1 million coronavirus
relief payments totaling nearly $1.4 billion to Americans who had
died, the Government Accountability Office says in a report
published Thursday.

In their rush to send out more than 160 million emergency
“economic impact payments” worth $269 billion — and to meet the
CARES Act requirement that the payments be sent out as “rapidly as
possible” — the Treasury Department and Internal Revenue Service
used many of the procedures developed to send stimulus checks in
2008. As a result, while the IRS typically uses data such as the
Social Security Administration’s death records to prevent improper
payments, the agency did not filter out people who had died from
the first three batches of coronavirus relief, accounting for 72%
of payments disbursed as of the end of May.

The IRS was aware that some payments may go to people who had
died, according to the report, and officials raised questions about
that possibility with Treasury while the CARES Act was being
drafted. But IRS lawyers initially determined that it did not have
the legal authority to deny payments to people who had filed their
tax returns, even if they had since died, according to the report.
Treasury officials told the GAO that, once they learned that
payments had been made to dead people, the department and IRS
determined that the deceased aren’t entitled to coronavirus relief
money.

The government filtered out payments to the dead starting with
the fourth batch, and the IRS announced in early May that payments
to dead or incarcerated people should be returned. The GAO says
that the IRS does not have a plan in place to notify ineligible
recipients of how to return the payments and recommended that the
agency “should consider cost effective options” for such
notifications. The IRS agreed with the recommendation. GAO also
recommended that Congress allow the Social Security Administration
to share its death records with Treasury and its Bureau of the
Fiscal Service, which distributed the payments.

Why it matters: “The number of economic impact payments
going to decedents highlights the importance of consistently using
key safeguards in providing government assistance to individuals,”
the GAO report says.

But the political significance of the report goes beyond efforts
to root out improper payments. It comes as the administration and
Congress consider another round of coronavirus payments and could
affect that decision: “The news that so much money has gone to the
dead could add to reluctance from some Republicans to agree to more
direct relief payments,” The Washington Post’s Erica Werner

writes.

The prospect of such a backlash has some advocates for
additional coronavirus stimulus concerned. “[T]here's going to be
more scrutiny on the $1 billion that ended up going to recently
deceased people than on the $500 billion that went to corporations,
isn't there?”
tweeted Michael Linden, a fellow at the left-leaning
Roosevelt Institute.

Ernie Tedeschi, a former Treasury economist in the Obama
administration, suggested that the broader context of the
coronavirus relief effort really matters here. The improper checks
amount to less than 1% of the total coronavirus relief payments.
“This strikes me as a fairly *low* error rate, given that stimulus
checks totaled almost $300 billion, and for the sake of speed were
sent out automatically based on prior-year tax returns,” he

tweeted.

Some low-income families got too little: “The report also
includes new data showing that many low-income families were
shortchanged on payments,” The Wall Street Journal’s Richard Rubin

reports. “Some 450,000 households that used a
special IRS online tool for people who typically don’t file tax
returns didn’t get the $500 payments for children that they should
have. According to GAO, IRS is working to get the money to those
households by the end of July.”

PPP problems: The finding of $1.4 billion in improper
payments is just one part of a sweeping 400-page report on the
federal response to the pandemic. The GAO also warns that the $660
billion Paycheck Protection Program is vulnerable to fraud because
the Small Business Administration (SBA), in an effort to streamline
the loan process and get money out quickly, allowed borrowers to
self-certify that they were eligible. GAO also raises the
possibility that people may be getting wages paid from PPP loans
and enhanced unemployment benefits provided under the CARES Act at
the same time.

GAO warns that “the limited safeguards and lack of timely and
complete guidance and oversight planning have increased the
likelihood that borrowers may misuse or improperly receive loan
proceeds.” The report calls on the SBA to develop plans to and
address potential fraud in the small business rescue program. It
also calls out the SBA for failing to provide critical information,
including details of loan data, though the SBA pushed back on that
criticism, saying it provided 420 pages of documents and made
officials available for interviews with the GAO.

Waiting for spending data: GAO also says that total
federal spending data on the $2.6 trillion appropriated for
coronavirus relief efforts are not yet available because the White
House Office of Management and Budget told federal agencies they
did not have to report coronavirus-related obligations 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 report
says.

The bottom line: The government sought
to respond to the coronavirus pandemic with unprecedented speed and
fiscal power. Transparency and accountability about those efforts
still need more work, GAO says. “Consistent with the urgency of
responding to serious and widespread health issues and economic
disruptions, agencies have given priority to moving swiftly where
possible to distribute funds and implement new programs,” the
report says. “As tradeoffs were made, however, agencies have made
only limited progress so far in achieving transparency and
accountability goals.”

More Job Losses Suggest Economy Will Need Another Boost

Nearly 1.5 million people filed for state unemployment benefits
last week, the Department of Labor announced Thursday, bringing the
14-week total for first-time claims to about 47 million.

The latest data shows that new unemployment claims
continue to move lower — but just barely. Initial claims peaked at
6.9 million in late March and have fallen every week since, but the
latest figure of 1.48 million was higher than expected and marks
the 14th week in a row that more than 1 million people have made a
claim for state unemployment benefits.

The aggregate numbers are considerably worse. In
addition to state initial claims, about 730,000 people applied last
week for Pandemic Unemployment Assistance (PUA), a temporary
program created by Congress for workers who ordinarily do not
qualify for unemployment payments.

Taken together, that brings the week’s total of first-time
jobless claims to about 2.2 million.

Joseph Brusuelas, chief economist at the consulting firm
RSM,
said Thursday that by his calculation, more than 2
million people have filed for unemployment aid of some kind every
week for the past 10 weeks.

Worries about a stall: The improvement in the job market
appears to have slowed,
said Bloomberg’s Katia Dmitrieva, even though it’s clear
that some businesses are rehiring. “It looks like jobless claims
declines have stalled. Signals a few things: huge churn in labor
market (hiring vs. firing), and that second wave of layoffs in
white collar jobs and non-restaurant/retail.”

The job market is “not really improving,”
said Heidi Shierholz of the Economic Policy Institute.
“I do think that people are getting hired back, but we are
continuing to see an absolute hemorrhaging of jobs,” Shierholz

told The Washington Post. “Just record levels of
people.”

Implications for the next stimulus package: Some
economists said the data shows that the economy will need more
stimulus from Congress. “If one was looking for confirmation, on
whether further aid for the unemployed and the economy is
necessary, its sitting out in plain sight,” said RSM’s Brusuelas.
“Aid for those negatively affected by the pandemic expires on July
31 which due to those waiting on confirmation is setting up as the
most significant fiscal cliff in American economic history.”

Quote of the Day

“Our best estimate right now is that for every case that’s
reported, there actually are 10 other infections.”


– CDC Director Robert Redfield, in a call with
reporters on Thursday. That would bring the number of U.S. cases to
at least 23 million.

‘Lobster King’ Trump Extends Farmer Bailout to Maine

The White House on Wednesday ordered the Department of
Agriculture to provide financial assistance to lobstermen in Maine,
who have been hurt by President Trump’s trade war with China and
the European Union. The funds will come from the $30 billion
bailout program the Trump administration has created to aid farmers
caught up in the conflict.

In a
tweet Wednesday evening, the president falsely claimed
that President Obama had “destroyed the lobster and fishing
industry in Maine.” The White House
memorandum on “protecting the United States
lobster industry” makes it clear, however, that Maine’s lobster
industry is being hurt by retaliatory tariffs from China, imposed
in response to Trump’s tariffs on Chinese imports to the U.S.

In a celebratory
tweet, trade adviser Peter Navarro — who was

crowned the “lobster king” by Trump earlier this
month for his role in negotiations with the European Union, which
currently imposes tariffs on American lobsters — paid tribute to
the president, saying he was the real crustacean sovereign.
“Promises made, promises kept by the true Lobster King. @POTUS
signed a historic executive order to provide relief for our GREAT
American lobster fishermen. Stay tuned!”

Senior Economic Adviser Leaving White House

The acting chairman of President Trump’s Council of Economic
Advisers, Tomas J. Philipson, will leave his post and return to the
University of Chicago at the end of June.

Following the departure of deputy director Andrew Olmem last
week, the three-member panel will be down to one member, Tyler
Goodspeed, who is trained as an historian.

Another top economic adviser, Kevin Hassett, who preceded
Philipson as CEA chair before stepping down a year ago, also said
recently he would be leaving the White House again after another
stint advising the president.

Why it matters: “The departures come
at a critical time for the White House and the country,” The
Washington Post
said, citing the severe recession, massive job
losses, the resurgence of coronavirus in much of the country, and
the trillions of dollars the government has spent and may spend
again to aid the economy. “Losing two top economists in the midst
of the crisis could push more of the analysis of future steps onto
other advisers who don’t have the same background or expertise,”
the Post added. “Still, Trump isn’t known for relying on the
guidance of economists as much as his own instincts.”

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