Congress approved CARES Act money, but how was it dished out?

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It’s easy to appropriate money for pandemic relief. A simple vote in Congress. It’s a lot harder to actually mitigate the pandemic and spend that money in the right way. So how has the government done, with the first three trillion dollars already appropriated? With highlights of their just-released report, the chairman of the Pandemic Relief Accountability Committee, Michael Horowitz, joined Federal Drive with Tom Temin.

Interview transcript:

Tom Temin: Mr. Horwitz, good to have you on.

Michael Horowitz: Great to be here, Tom.

Tom Temin: Now, the latest February 3 report from the PRAC, not super long, only 26 pages, but give us the top line highlights.

Michael Horowitz: We issued this report to update an earlier top management challenges report we issued last June to give the incoming agency heads an idea of what we were seeing as the biggest challenges now that there’s about $3 trillion plus, in pandemic relief having gone out and potentially another $1.9 trillion coming up. What we did is we identified four new challenges on top of the ones we had previously identified facing the government, they are preventing detecting fraud against government programs, informing the public about pandemic related fraud, data transparency and completeness, and federal workforce safety.

Tom Temin: Now, this whole issue of the fraud in these government loan programs, the PPP program, we hear anecdotes, and a little piece comes out here in there. Do we have yet a comprehensive picture either via the PRAC or some of the people that have actually FOIA’ed SBA for information? Do we have any sense yet of how much of this money was spent and used properly?

Michael Horowitz: We don’t yet, that’s one of the things we at the PRAC and the IGs that are part of the PRAC are seeking to do is we’re looking at these programs. And what we have done though is identified the difficulties and the challenges as hundreds of billions of dollars are going out the door quickly. The problems that we’ve seen and identified in terms of the fraud are substantial. And what we’re trying to do is give the agencies a roadmap into how they can better manage these programs, particularly as new bills are passed.

Tom Temin: Because the third new challenge, data transparency and completeness, that would seem to be the linchpin to understanding the scope of how well or how badly the money has been spent.

Michael Horowitz: That’s exactly correct. And that’s one of the things we’ve found has been a challenge from the outset of this. Since last March, when the first bills were passed on Coronavirus relief, we’ve been advocating for filling gaps in data that exists in various platforms such as USAspending and others, we have continued to identify those gaps. We issued a report in November about 16 gaps that still exist. I’ve been very pleased though recently with the incoming leadership at OMB, their engagement with us on these issues and their effort to work with us to try and address those gaps that we’ve identified.

Tom Temin: And from what we can understand also, the SBA has really done a lot of work in recent weeks even to get their data more complete down to the zip code, the Census Bureau district level, if you will, so that the fine grained understanding what’s going on can be executed.

Michael Horowitz: That’s right Tom. And as you noted, for us to be able to conduct oversight and for the agencies themselves to be able to conduct oversight, you need to know at that granular level where the money is going. You also importantly need that data not only to find the fraudsters and the wrongdoers, but frankly, the key question, which is did the money get to the right people? And what was the impact of that spending, because this may be a unique 100 year event in terms of a pandemic, but as we all know, there are disaster relief efforts that happen, unfortunately, very frequently — whether it’s earthquakes, fires, hurricanes, other natural disasters, you want to know where the money’s going, and if it’s having the impact you’re hoping it has.

Tom Temin: So it was an apparatus for oversight and transparency set up a dozen years ago during the financial crisis relief spending, that seems to have rusted away, and they’re starting over with that whole ability to oversee that kind of special trillion dollar level spending.

Michael Horowitz: Well, this is precisely one of the issues we’re talking about what you just raised, which was, I was on the Recovery Board back in the day after the collapse, the Great Recession in 2008. We had the Recovery Act in 2009, it created the Recovery Board. And the Recovery Board, those of us, the IGs on it created something called the ROC, the recovery operation center. It was a data analytics platform, and we spent roughly $10 million a year to have that operational which provided a tremendous resource to the IGs and to others in oversight, whether it’s FBI or other law enforcement agencies to see where the money was going. When the Recovery Board sunset in 2015, nobody wanted to take that platform, no one would be willing to pay for that platform, so it was dismantled. Some of the pieces of it went to The Treasury Department, but the ROC itself was dismantled. GAO wrote a report back then indicating how valuable the ROC was and urging it to be kept. It wasn’t, and here we are now, five/six years later, looking to do the same thing. And the PRAC is looking to do something similar.

Tom Temin: I’m surprised Earl Devaney hasn’t come back into town wagging his finger and everybody.

Michael Horowitz: Well, we’ve engaged with Earl, and one of the first things I did as chair, as acting Chair of the PRAC, was to talk to Earl about these issues. And Earl provides great insight, as you know, and something we’ve thought about very carefully.

Tom Temin: And getting on to one of the other new challenges I wanted to ask you about too, and that is federal workforce safety. Because the federal workforce has mostly been absent, at least the the white collar, if you will, the in office type of workforce, if not law enforcement and those people. So what is the challenge there? Because everyone saw the struggles agencies had early on in the pandemic, with deciding what the heck to do and whether to have masks and plexiglass and all of that.

Michael Horowitz: Yeah. So there are a number of challenges here, right. There’s the challenge of getting people back to the workplace during the pandemic, and all of the safety challenges that go with that, for example, PPE, Plexiglas, safe distancing, all of those things. But there’s also the question of when people do start coming back to work, as the pandemic starts to wind down, what have we learned from this? And how do we make our workplaces safer from future events? Just generally, in one of the things we’ve seen, I know as IG at Justice, we’ve had to deal with some of these issues, is how do you make sure, first of all, you’re getting the message out there, the agency is letting people know, where has there been positive tests? And what buildings? What steps have been taken? How do you do contact tracing? How do you make sure, for example, I have law enforcement agents, how do we make sure they’ve gotten the PPE they need to do their jobs? All of those are critical issues. One of the things we identified in our oversight, and in looking at these issues, is trying to create work neighborhoods within a facility to try to reduce exposure between units of work so that you’re essentially creating pods within your own space, so you’re keeping people apart. While there may be people who have to work together, keep those people in one area and keep other people who have to work together in other spaces, things like that.

Tom Temin: Yes. And whatever happened to the whole phase 1-2-3 apparatus that characterize, I guess, the Trump administration approach, even they never seemed to really pay much attention to it after it was established. Are we past that now? And is there any kind of overarching policy that’s formed yet, or maybe it’s too early for the Biden administration?

Michael Horowitz: It’s probably too early for me to say — we haven’t seen new guidance on this other than the executive order that President Biden issued. And we have gotten internally, for example, the Justice Department, a series of guidances, for example, not only the mask requirements that have been put in place through the executive order in federal buildings, but also, for example, at Justice it’s been made clear that even if you’re in the building, if you can meet remotely by camera, you should still meet remotely by video. So being conveniently in the building together at main Justice, for example, doesn’t mean you necessarily should get together in a conference room, even if you can do it at more than six feet apart. So those are some new guidelines.

Tom Temin: And getting back to the larger PRAC level, what is next? Now you’ve just got to report out with these new problems and the data is starting to be available. Sounds like the real data analysis itself might be next on the agenda.

Michael Horowitz: That’s correct Tom. That is one of the things we’re now looking to do, as we’ve seen and gotten more data and we’re getting these discussions ongoing that we need to have with OMB about how to fill these gaps. We are putting a substantial amount of our focus on a couple of things, looking at the data for anomalies and other issues so that we can identify wrongdoing and misuse. But importantly, also be able to let agencies know what systemic issues, we can identify from those anomalies so that they can better manage the program’s themselves. Because ultimately, that is, of course, our mission as IGs to help improve the programs and let management know how they can do that better. The other thing we want to do is now that there is nine months of funding gone out through this pandemic and potentially substantial additional money about to go out is try and look at where the money has gone at a more granular level, and focus on whether the servicing that was supposed to have happened is happening and whether there’s been an impact. For example, on the PPP, what we’ve determined is the SBA isn’t gathering the data it needs to get to see if people’s jobs were saved, they need to do a better job doing that, the SBA IG has already determined. We want to try and figure out how can we assess that through the data that’s available. Things like that are what we’re now thinking about trying to do.

Tom Temin: And a big initiative of the Biden administration is ensuring what they call equity. That’s the new term of art, I guess, in these issues. So the more granular the data, the more able someone, PRAC or someone else in the administration, could determine whether the loan and grant money did achieve that equitable distribution that they that they strive for.

Michael Horowitz: That’s exactly right. And, of course, as the data, the scientific data has reflected, communities of color have suffered a greater impact on the health side, certainly. And we’ve seen that on the economic side as well, having disproportionately affected communities of color. And so, again, that to your point, is a place where we are looking to try and gather more information. The GAO just recently issued a report about that challenge and that issue, and we want to try and dig into that data as well.

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