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Government Spending Is Becoming One Big Fraud-Fest

We knew that with the speed Congress rushed to write and pass the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act) last March, very little attention was given to the potential for fraud and abuse.
Indeed, as the Wall Street Journal reports, “The CARES Act, the March law that established the PPP, effectively used the honor system. If a company had fewer than 500 employees and certified ‘current economic uncertainty makes this loan request necessary to support the ongoing operations,’ it was generally approved.”
So how’s that “honor system” working out?
The Small Business Administration’s inspector general has been trying to identify the prevalence of fraud in the Paycheck Protection Program.  According to the SBA’s most recent report, “We found nearly 55,000 loans for approximately $7 billion to potentially ineligible businesses…”
But there’s so much incomplete information that it’s hard to know exactly how big the problem was: 
We found that SBA’s loan-level data for job statistics was inaccurate and incomplete. In our review of data extracted from SBA’s mainframe loan accounting system as of June 30, 2020, we found that 

  • 191,003 loans totaling approximately $11 billion did not include employment information in the required job field for the number of current employees

  • 148,019 loans totaling approximately $6.7 billion had no employment information for the number of current employees and the number of jobs retained

  • 845,778 loans did not contain data in the jobs retained field.

In other words, know one really knows—and we will probably never know—how much fraud there was.
And it wasn’t just the financial help from the CARES program. Medicaid fraud also grew in 2020.

The Centers for Medicare and Medicaid Services (CMS) tracks what it refers to as “improper payments.” Not all improper payments are fraud. They can include payments that do “not meet statutory, regulatory, administrative, or other legally applicable …” But it is an indication of the fraud problem.
What’s telling is that CMS-identified Medicaid improper payments increased from 14.90 percent of Medicaid spending in 2019 to 21.36 percent, or $86.49 billion, in 2020—an increase of nearly 50 percent.

Now President Joe Biden and Democrats are trying to push through another $1.9 trillion spending package.

Some moderate Democrats and virtually all Republicans are trying to impose some spending discipline on the process and target those most harmed by the pandemic, which could reduce the potential for fraud. But Democrats don’t appear to be interested.

Democrats have concluded that government spending is the best way to create jobs and jumpstart the economy. In that case, just handing out taxpayer dollars may be more important than who gets them.