Lost in the Sauce: GAO investigating Trump’s handling of $2.2 trillion CARES Act

Welcome to Lost in the Sauce, keeping you caught up on political and legal news that often gets buried in distractions and theater… or a global health crisis.

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Let’s dig in!

Oversight mechanisms not functioning

The coronavirus relief and stimulus bill, the CARES Act, was signed into law on March 27. In the 25 days since, the $2.2 trillion benefits have been doled out with little oversight. Indeed, only one man was monitoring the funds for the majority of the time: Bharat Ramamurti was appointed by Sen. Chuck Schumer on April 6 to serve on the Congressional Oversight Commission, which is meant to be a five-person panel that oversees the implementation of economic relief provisions, holding hearings, and submitting monthly reports to Congress.

Ramamurti was the only appointee until recently, when on Friday three more positions were filled on the commission – at least on paper. “At the moment, it’s me and my laptop, at home,” Ramamurti told Vice News in an interview published Saturday.

And despite Ramamurti’s attempts to get answers, it remains unclear who will get loans, or what the terms will be. “I’m really concerned that the lending that’s targeted at bigger businesses comes with no conditions on maintaining payroll or [preventing] share buybacks,” Ramamurti said. “You could see taxpayer money going to support a company that then turns around and fires a bunch of its workers, while paying out full executive compensation.”

There is only one vacancy remaining on the commission – the chair, to be filled by an individual jointly-appointed by Senate Majority Leader Mitch McConnell and House Speaker Nancy Pelosi. The other appointees are: Rep. Donna Shalala (D-FL), a former Clinton administration health secretary appointed by Pelosi; Sen. Pat Toomey (R-PA), a former chairman of the conservative Club for Growth appointed by McConnell; and Ramamurti, former aide to Sen. Elizabeth Warren appointed by Sen. Chuck Schumer (and also the only non-lawmaker on the panel so far).

Ramamurti has sounded the alarm already, writing in a New York Times op-ed that “the strings aren’t attached” to the unprecedented spending authorized by Congress.

Congress recently gave the Treasury Department and the Federal Reserve broad authority to lend out trillions of dollars to businesses, states and municipalities…The key question is whether that money ends up helping working people or flows instead to the managers, executives and investors who have already taken so much of the income gains in the past decade.

…Congress placed certain conditions on some of the funds… But beyond those basic rules, the Treasury and the Fed decide who gets money, how much they get and on what terms… The lending program for big businesses, for example, comes with no requirement that beneficiaries keep workers on payroll and no restrictions on stock buybacks, dividends or executive pay.

The other oversight

Meanwhile, none of the other oversight mechanisms are functional. The panel of inspectors general (the Pandemic Response Accountability Committee) was interrupted earlier this month when Trump demoted Chairman Glenn Fine. A successor has not yet been named.

Congress also created a new IG position to oversee the CARES Act spending, called the Special Inspector General for Pandemic Recovery within the Treasury Department. Trump nominated White House lawyer Brian Miller to fill this role, but it requires confirmation from the recessed Senate.

You may recall, Trump undermined the oversight and accountability mechanisms from the very start, issuing a signing statement that declared the provisions requiring consultation with and reporting to Congress were unconstitutional and he would not comply. Sen. Richard Blumenthal wrote a piece in Slate outlining how to ensure accountability by including protections in the next coronavirus relief package. For instance:

The next COVID-19 bill must protect the independence of inspectors general by ensuring that they can only be fired for good cause…this protection should apply to acting inspectors general, as well as to Senate-confirmed ones, to prevent presidential end-runs. The bill must also require the secretary of the treasury, the special inspector general for pandemic recovery, and the chairman and executive director of PRAC to send Congress weekly reports listing instances where the watchdogs have been denied information by some part of the executive branch.

…To ensure participation, there should be a stronger enforcement mechanism this time around. If the letter is not filed, then it should trigger a rider prohibiting the payment of the salaries of any political appointee in the Treasury Department, including the secretary, until the letter is submitted.

…the clause should make clear that, if the administration declares that it will not comply with the provisions requiring reporting to Congress or with the rider denying political appointees’ salaries in the case of noncompliance, then provisions giving the treasury secretary discretion to decide how certain funds will be spent must also fall away.


UPDATE: GAO taking up the challenge

It seems, since none of the built in oversight of the implementation of the CARES Act is functioning, Congress’s own independent watchdog has taken up the challenge. The Government Accountability Office is reportedly preparing a “blizzard of audits” into Trump’s handling of the $2.2 trillion fund. As part of the legislative branch, Trump does not have control over the GAO.

Politico reports that at least 30 CARES Act reviews and audits will be underway by the end of this month.

Topics will range from the government’s handling of coronavirus testing to its distribution of medical equipment, and from the nation’s food supply to nursing home infections and any missteps in distributing the emergency cash payments that began landing in millions of Americans’ bank accounts this week. The office’s top fraud investigator said it’s already received a complaint about a check landing in the account of a deceased person. [emphasis mine]


Handling of CARES Act

Congress rushed to pass the Cares Act while the economy rapidly tanked, but lawmakers and administration officials are only now beginning to understand some of the implications of the law. Many Americans are experiencing the damaging consequences firsthand, while reading about billions of dollars going to big business and the wealthiest among us:

  • A report by the nonpartisan Joint Committee on Taxation found that more than 80% of the benefits of a tax change tucked into the coronavirus relief package will go to those who earn more than $1 million annually. Less than 3% of the benefits go to Americans earning less than $100,000 a year. The provision was inserted into the legislation by Senate Republicans.
    • WaPo: Hedge-fund investors and owners of real estate businesses are “far and away” the two prime beneficiaries of the change, said Steve Rosenthal, a tax expert at the Tax Policy Center, a nonpartisan think tank.
  • As a federal crisis fund of $350 billion established to keep small businesses afloat during the coronavirus pandemic ran out last week, we’ve learned that large companies were able to receive a big chunk of that money. Restaurant and hotel groups with no more than 500 workers at a single location could apply for the program. For instance, Sandwich maker Potbelly (whose CEO makes over $1.6 million salary) and Ruth’s Chris Steak House (whose CEO makes more than $6.1 million) successfully obtained loans worth $10 million and $20 million, respectively.
  • President Donald Trump’s top economic adviser, Larry Kudlow, revealed that his artist wife easily applied for assistance through the small business loan program. Kudlow’s personal assets are valued at a maximum net worth of $2 million according to a 2018 Bloomberg report and his wife charges between $10,000 and $20,000 for commissioned paintings. It is unclear if she even has any employees.
  • An analysis by Bloomberg found an uneven distribution of the first $342 billion of Small Business Administration coronavirus-relief loans. For instance, firms in Nebraska got enough money to cover 82% of the state’s eligible payrolls. It was a different picture in New York and California, where companies did only half as well – 40% in NY and 38% in CA. The states that got the most: NB, ND, KS, and SD. The states that received the least: DC, CA, NY, NV, WA, and NJ.
    • Jackie Speier: “I’m hard pressed not to think that this is political. Blue states like California got a pathetic number of loans issued.”
  • Ten major U.S. airlines reached a deal with the Treasury Dept. to accept $25 billion in government assistance, only having to pay back a small portion. WaPo reports that “under the terms of the deal 70 percent of the money would be given to the airlines outright and 30 percent would have to be paid back to the government.”
  • The Trump administration is allowing banks to collect the direct payments to Americans to pay off an individual’s debt. Ronda Kent, chief disbursing officer with the Treasury’s Bureau of the Fiscal Service, effectively blessed this activity in a call with banking officials last week. So far, only the governors of Illinois, Washington, and Oregon have signed orders to protect stimulus checks from garnishment.
    • Vox: Banks were reportedly told they would be “first in line” to take money from the stimulus money to cover things like delinquent loans or past-due fees.
  • Six federally-recognized tribes have sued the Treasury Department over the disbursement of $8 billion of the CARES Act meant to go to “tribal governments” for assistance during the pandemic. The plaintiffs argue that the Treasury should not be allowed to give a portion of the aid to more than 230 Alaska Native for-profit corporations (ANCs), which are private corporations with shareholders that include both Indians and non-Indians.
    • Law and Crime: Cherokee Nation Principal Chief Chuck Hoskin Jr. called CARES funding “what Indian Country will rely on to start up again,” adding that “Congress surely didn’t intend to put tribal governments, which are providing health care, education, jobs, job training, and all sorts of programs, to compete against these Alaska corporate interests, which looks like a cash grab.”
    • The group of tribal leaders are also calling for the removal of Assistant secretary of Indian Affairs in the Interior Department, Tara Sweeney, over the decision to include ANCs in the emergency money disbursement. Sweeny is the former vice president of an ANC and thus “an interested party.”

More from Congress

Negotiations

Democrats are still negotiating with Republicans and the White House to obtain additional funding in exchange for the roughly $250 billion the GOP wants to use to replenish the small business program. The latest numbers being discussed in a “tentative” agreement include $300 billion for the small business program, $75 billion for hospitals, $50 billion for Economic Injury Disaster Loan assistance, and $25 billion for coronavirus testing.

Remote voting

In a major shift, Speaker Pelosi and House Rules Committee Chairman Jim McGovern now support a rule change allowing House members to cast votes by proxy during the pandemic. Proxy voting, Politico explains, “would allow a member who is physically present in the chamber to cast a vote for lawmakers who are absent, only for a limited period of time.”

Biden probe

Republican Sen. Ron Johnson, Chairman of the Homeland Security Committee, is pushing forward with the investigation of Joe Biden’s son Hunter, planning to release a report in the summer.

Russia probe

Chairman of the Senate Finance Committee Chuck Grassley and Sen. Johnson are also continuing to pursue an investigation into the origins of the Russia probe, promoting recently declassified details from the Steele report as evidence that the FBI’s Russia probe was “tainted.” During a Senate Judiciary Committee hearing in December, DOJ IG Michael Horowitz said the Steele dossier “had no impact” on the initiation of the FBI’s investigation.

During Sunday’s rally coronavirus task force briefing, Trump called the FBI agents who worked on Mueller’s investigation “crooked … dangerous … very bad … human scum.” The president also praised Paul Manafort, Roger Stone, and Michael Flynn.

  • Also… A FOIA lawsuit by Jason Leopold revealed that DOJ personnel sent Fox News talking points to promote then-regular-attorney Bill Barr’s “unsolicited” 2018 memo criticizing Mueller’s probe.

Gaetz controversy

Rep. Matt Gaetz (R-FL) is under scrutiny for spending almost $200,000 of taxpayer money to rent an office from real estate developer Collier Merrill, “a longtime friend, adviser, campaign donor and legal client.” Both men admitted Gaetz “paid below market rent for the space — although Gaetz later shifted,” saying it was actually “at or below market rate,” which is against House rules.

Burr’s stock trades

Two articles to read on Burr came out last week: NPR’s “Sen. Richard Burr’s Pre-Pandemic Stock Sell-Offs Highly Unusual, Analysis Shows,” and ProPublica’s “Senator Richard Burr Sold D.C. Townhouse to Donor at a Rich Price.”


Court cases

SCOTUS

For the first time in history, the Supreme Court will be holding arguments remotely while allowing the public to listen in real time. Ten cases have been scheduled for the first half of May, including three involving whether Trump may shield his financial records from Congress and from a New York state grand jury investigation. It appears arguments will be heard for these cases on May 12.

Stone

Last week, Roger Stone was denied a new trial by DC District Court Judge Amy Berman Jackson, who ruled that the jury forewoman had not lied to the court about her opinions when she was screened for bias before the trial, as Stone alleged. CNN: “Stone could appeal over the next two weeks, but may be ordered to report to prison to serve his 40 months — at earliest, two weeks from now.”

The ruling also removed the gag order that has been silencing Stone, resulting in his immediate appearance on Fox News where Tucker Carlson was able to posit that the president should pardon Stone. Trump had chimed in earlier in the day, calling the denial of Stone’s retrial request “a disgraceful situation.”

Amazon-Pentagon case

It appears that the White House stonewalled an IG investigation into a federal contract that is currently the subject of a lawsuit. Reuters reports:

The Pentagon’s inspector general on Wednesday said it could not determine whether the White House influenced the award of a $10 billion contract to Microsoft Corp over Amazon after several officials said their conversations were privileged “presidential communications.” …Amazon, originally considered to be the favorite to win the award, has blamed President Donald Trump for bias against the company and for improperly pressuring the Pentagon.

Meanwhile, US Court of Federal Claims Judge Patricia E. Campbell-Smith granted the Defense Department’s (DoD) request to put a hold on the lawsuit, filed by Amazon, to allow the DoD to revise the contract in question.

Apprentice tapes

Two weeks ago, an SDNY judge ordered that MGM must turn over unaired footage from “The Celebrity Apprentice” to plaintiffs in a fraud and deceptive trade practices lawsuit against Trump and his children. The ruling specifically pertains to “hundreds of hours of recordings from two episodes of the show, when principals of the marketing company ACN Opportunity LLC were guests on the set.”

Trump and three of his children, Donald Trump Jr., Eric Trump and Ivanka Trump, were sued in 2018 over their promotion of the marketing company from 2005 to 2015, during which Trump allegedly suggested that people could invest in a video phone from the company with little to no risk, Bloomberg News first reported. The Trumps have been accused of not disclosing that they were paid to endorse the company… Plaintiffs claim that they lost hundreds of thousands of dollars by trusting the promotion

Last week, the Trump family filed a notice of appeal, hoping to instead force the lawsuit into arbitration – keeping it out of the public eye.

Fox News lawsuit

Fox News has moved to dismiss a lawsuit filed by a Washington state group accusing the network of “deceptive” coronavirus coverage by arguing that the First Amendment protects “false” and “outrageous” speech.

…The Washington League for Increased Transparency and Ethics (WASHLITE) filed a lawsuit in King County earlier this month seeking a court order barring the network from “interfering with reasonable and necessary measures to contain the virus by publishing further false and deceptive content.” (source)


Not stepping up (or down)

  • WaPo: In five U.S. cities where President Trump’s company operates large hotels — New York, Chicago, Miami, Washington and Honolulu — local authorities said the Trump hotel was not involved in their efforts to provide low-cost or no-cost rooms to those fighting the novel coronavirus.
  • NBC News: Fourteen municipal governments — from Albuquerque, New Mexico, to Wildwood, New Jersey — want Trump’s campaign committee to clear a combined $1.82 million worth of public safety-related debt connected to Trump’s “Make America Great Again” campaign rallies… [to] immediately help them grapple with the coronavirus crisis
  • NYT: [Ivanka] Trump herself has not followed the federal guidelines advising against discretionary travel, leaving Washington for another one of her family’s homes, even as she has publicly thanked people for self-quarantining… Ms. Trump and her husband, Jared Kushner, who is also a senior White House adviser, traveled with their three children to the Trump National Golf Club Bedminster in New Jersey to celebrate the first night of Passover this month.
  • Vanity Fair: 153 non-essential staffers at the Palm Beach club, as well 560 workers at Trump Doral in Miami, have been furloughed… The president, however, issued no tweets about leading by example, minimizing his own profits and offering his workers wage security during these increasingly worrying times.
  • Business Insider: Kimberly Guilfoyle, the girlfriend of Donald Trump Jr., and Lara Trump, the wife of Eric Trump, are being “secretly” paid $15,000 a month [$180,000 a year] each by the president’s re-election campaign, White House advisers report… The payments are reportedly made through companies owned by Brad Parscale — Trump’s re-election campaign manager — in order to skirt Federal Election Commission requirements that mandate political campaigns disclose detailed spending reports.
    • Stuart Stevens, a top aide to 2012 GOP nominee Mitt Romney’s campaign, was even more blunt: “That’s why Parscale has the job. He’s a money launderer, not a campaign manager.”

Immigration

The following is a selection of immigration-related news that broke last week:

  • Daily Beast: In the middle of a pandemic that has killed 27,000 Americans and counting, the Army this week gave a politically connected Montana firm half a billion dollars—not to manufacture ventilators or protective gear to fight the novel coronavirus, but to build 17 miles of President Trump’s southern border wall… That works out to over $33 million per mile—steeply above the $20 million-per-mile average that the Trump administration is already doling out for the wall.
  • WaPo: Smugglers sawed into new sections of President Trump’s border wall 18 times in the San Diego area during a single one-month span late last year, according to U.S. Customs and Border Protection records… The agency said the average cost to repair the damage was $620 per incident.
  • Miami Herald: National health experts say U.S. immigration officials are violating federal guidelines by grouping inmates together by the hundreds if they have COVID-19 symptoms or have been exposed to the coronavirus, according to a lawsuit filed in Miami federal court Monday.
  • Two articles you should read about coronavirus in ICE detention: Mother Jones “At Least 20 People Have COVID-19 at One ICE Jail. Those Inside Say Many More Are Sick.” and ProPublica “At Least 19 Children at a Chicago Shelter for Immigrant Detainees Have Tested Positive for COVID-19.”
  • NPR: Guatemala’s Health Minister Hugo Monroy says migrants deported back to Guatemala from the United States now account for a large number of COVID-19 cases in the country.

Environment

The following is a selection of environmental news that broke last week:

  • This NYT op-ed asks why Trump is focused on profits for the oil and gas industry while seemingly content to allow the USPS and hospitals to flounder. “First, since when is it the president’s job to organize international cartels? Second, why are higher oil prices in the U.S. national interest? We’re not a major oil exporter — in fact, we import more oil than we export… Trump says that it’s about jobs. But U.S. oil and gas extraction employs only around 150,000 workers. That’s less than 1 percent of the number of jobs America has lost in the past three weeks.”
    • The answer: “The oil and gas sector makes big political contributions, almost 90 percent of them to Republicans… Russia and Saudi Arabia are basically petrostates that export oil and almost nothing else. So propping up oil prices is a way for Trump to help his two favorite autocrats.”
  • AP: Ten years after an oil rig [Deepwater Horizon] explosion killed 11 workers and unleashed an environmental nightmare in the Gulf of Mexico, companies are drilling into deeper and deeper waters, where the payoffs can be huge but the risks are greater than ever… safety rules adopted in the spill’s aftermath have been eased as part of President Donald Trump’s drive to boost U.S. oil production… the number of safety inspection visits has declined in recent years
  • Vice News: Republicans Are Planning to Use Coronavirus to Gut Renewable Energy. Conservative groups aligned with the oil industry hope to block any aid for the solar and wind industries, which have been decimated by the pandemic.
  • NYT: Disregarding an emerging scientific link between dirty air and Covid-19 death rates, the Trump administration declined on Tuesday to tighten a regulation on industrial soot emissions that came up for review ahead of the coronavirus pandemic.
  • NYT: The Trump administration on Thursday weakened regulations on the release of mercury and other toxic metals from oil and coal-fired power plants, another step toward rolling back health protections in the middle of a pandemic.

Other

  • The Stranger (a Seattle paper): For the second time in two years, Washington State Attorney General Bob Ferguson has filed suit against Facebook in a case that grew out of reporting by The Stranger. A complaint filed today by Ferguson in King County Superior Court alleges Facebook has “repeatedly and openly violated” state campaign finance law by failing to disclose required details about the money trails behind hundreds of local political ads that targeted Washington state’s elections in 2019.
  • CNN: The bump in coronavirus cases is most pronounced in states without stay at home orders. Oklahoma saw a 53% increase in cases over the past week, according to data compiled by Johns Hopkins University. Over the same time, cases jumped 60% in Arkansas, 74% in Nebraska, and 82% in Iowa. South Dakota saw a whopping 205% spike.
  • Daily Beast: The state of Florida passed two milestones in the coronavirus pandemic this week: its deadliest day yet, and the reopening of several public beaches. Hundreds of people flocked to the newly opened beaches in northern Florida on Friday evening, just two weeks into Gov. Ron DeSantis’ monthlong stay-at-home order began
  • Guardian: Thousands of people are preparing to attend protests across the US in the coming days, as a rightwing movement against stay-at-home orders, backed by wealthy conservative groups and promoted by Donald Trump, continues to take hold.
    • The Michigan Freedom Fund, which said it was a co-host of the rally, has received more than $500,000 from the DeVos family, regular donors to rightwing groups. The other host, the Michigan Conservative Coalition, was founded by Matt Maddock, now a Republican member of the state house of representatives.
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