Coronavirus / Economic Developments

Accountability in The CARES Act

CARESWhile not reported in much of the media, the Senate Republican Majority insisted on a number of provisions to minimize waste, fraud, and abuse in order to ensure as much financial integrity as possible in the expenditure and use of the funds in the CARES Act. Indeed, throughout negotiations over the Act, Senate Republicans insisted at every step that the new law NOT be any kind of “blank check.” While simultaneously stripping Democrat provisions totally unrelated to the pandemic, Republicans insisted on strict accountability provisions, mostly modeled after the oversight Congress put in place for TARP, the $700 billion bank bailout passed during the 2008 financial crisis as part of the Emergency Economic Stabilization Act.

  • Pandemic Response Accountability Committee (“The Committee”):  With an $80 million appropriation, The Committee will oversee CARES Act funds as well as aid money for phases one and two of COVID-19 relief.  Independent Inspectors General will conduct and coordinate audits and investigations to provide accountability and identify fraud, waste, abuse, and mismanagement, and mitigate risks that cut across agency and program boundaries.  This Committee is authorized to conduct investigations and required to submit biannual reports to the President and Congress.  The CARES Act also requires extensive public reporting through on what the Inspectors General find during oversight.  The Committee will terminate on September 30, 2025.
  • $20 Million for Government Accountability Office (GAO):  The CARES Act provides $20 million to enable the independent GAO to help Congress conduct oversight of spending under the new law and other efforts to respond to the crisis.  GAO has the ability to conduct oversight and inspections of private entities to protect against fraud.
  • Special Inspector General for Pandemic Recovery:  The CARES Act provides $25 million to establish a Special Inspector General, appointed by the President with advice and consent of the Senate, for five years to conduct oversight over stimulus spending by the Department of the Treasury.  The Special Inspector General is tasked with tracking all loans, loan guarantees, and other obligations and expenditures made by the Treasury Department under the Act.
  • Congressional Oversight Commission:  The CARES Act establishes a legislative branch commission to oversee stimulus spending by the Treasury Department and The Federal Reserve.  The Commission is tasked with evaluating issues such as the impact of loans, loan guarantees, and investments made under the Act and is required to submit reports to Congress every 30 days.
  • Airline Industry Oversight:  The CARES Act requires air carriers to agree to strict conditions in order to accept loans or loan guarantees.  The conditions impose limitations on stock buy backs, dividends, employee layoff and furloughs, and executive compensation.

In sum, while the CARES Act is a huge spending bill, it was a necessary emergency measure to assist Americans, to rescue the economy, and to mobilize our nation’s business, industry, and agriculture.  While imperfect, the accountability features in the Act are important as the full weight of the federal government is mobilized to respond to and to mitigate the impacts of this unprecedented pandemic.

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