How the Swamp Swallowed Your Coronavirus Relief
As America’s economy was crumbling amid the spread of the coronavirus pandemic in the first quarter of this year, the lobbying business in Washington, D.C., was booming.
Fiscal crises are a potential goldmine for firms whose business it is to secure their clients bailouts and giveaways from the federal government because Congress is compelled to allocate astronomical amounts of money in response and very few people pay close attention to how it’s spent. As Congress was negotiating what would end up being a $2.2 trillion coronavirus relief package in March, corporations and special interests were loading up on K Street influence-peddlers to work every angle to tuck something lucrative into the bill. Their pricey retainers were not paid in vain.
Most Americans associate the Coronavirus Aid, Relief and Economic Security (CARES) Act, the largest economic stimulus bill in American history, with the $1,200 lump sum they received, plus $500 more for each child. What few people realize is that while hard-hit working class and poor Americans received this critical payout, which totaled less than $300 billion, rich Americans got over $250 billion in tax breaks from the legislation.
Wealthy people in businesses like real estate (e.g. Donald Trump and Jared Kushner) and hedge fund managers who make a lot of money through LLCs and other “pass-through” entities scored a roughly $140 billion tax break. Based on Congress’ own accounting, ProPublica determined that around $115 billion of that money will go to about 43,000 Americans who make $1 million or more annually—an average of $2.68 million per person.
Lawmakers Know They Can’t Keep Track of the $2.2T They Just Spent on Virus Relief
Corporations got another $88 billion through a tax break that allowed them to apply their losses this year to their income from previous years and collect the difference in the form of a refund. A change in permissible deductibles for companies carrying lots of debt worked out to another $12 billion. According to New York Times business reporter Jesse Drucker, these lucrative provisions had the fingerprints of lobbyists all over them, because there are so few people who understand the intricacies of the tax code.
Knowing that the bill was packed with problematic spending, members of both parties didn’t want to go on the record supporting it and risk payback down the line from voters. House Republicans didn’t want to take responsibility for trampling on their professed principles of fiscal restraint. House Democrats didn’t want to own legislation so obviously beneficial to corporations. Speaker Nancy Pelosi and House Minority Leader Kevin McCarthy tried to protect everyone by sliding through the bill by unanimous consent.
Progressive congresswoman Alexandria Ocasio-Cortez was so disillusioned with the bill she mused aloud about insisting on a recorded vote, but in the end it was conservative Rep. Thomas Massie of Kentucky, one of the congressmen featured in The Swamp, our new documentary about Congress, who forced his colleagues to fend off his attempt to make them vote on the record.
Massie’s colleagues on both sides of the aisle in Congress slammed him for endangering their lives by forcing them to risk contracting the virus by coming to the Capitol to vote. But the outrage directed at Massie was a smokescreen to shield members from taking the distasteful vote. Massie advocated for Speaker Nancy Pelosi to change the chamber’s rules to allow for virtual voting, as several state legislatures have done, but while that move would have protected members’ health, it would have left their voting records exposed. Ultimately, Pelosi and McCarthy called enough of their members back to Washington so the bill could be passed by a voice vote, another parliamentary procedure that spares members from individual accountability.
Soon after President Trump signed the bill, more glaring problems with the CARES Act surfaced. For one thing, the oversight mechanism Congress put in place to monitor the $500 billion it had allocated the Treasury Department to distribute to businesses in distress wasn’t functioning. Pelosi and Senate Majority Leader Mitch McConnell were supposed to jointly name a chair of the newly created COVID-19 Congressional Oversight Commission, but more than four months later they still haven’t been able to agree on an appointee. Meanwhile, hundreds of billions of dollars have been spent and Treasury Secretary Steven Mnuchin has argued against disclosing who received it.
Despite Congress also having little grasp on how another part of the CARES Act was spent—the $350 billion Paycheck Protection Program (PPP) for small businesses that many big businesses ended up receiving—less than a month later after passing the initial legislation, Congress allocated $310 billion more for PPP as part of a $484 billion add-on to the CARES Act.
Now Congress is wrestling over another coronavirus stimulus bill. Time is of the essence, particularly because one of the most effective and popular provisions of the original CARES Act—a supplemental unemployment benefit of $600 per week that has kept millions of Americans afloat during this time of economic disaster—expired last week.
In May, Pelosi squeezed a $3 trillion bill through the House that went nowhere in the Senate, but which she is using as her baseline for negotiations. The size of the bill is intended to make up for the insufficiency of the $2.7 trillion CARES package. But while Americans certainly need trillions of dollars more in assistance, it is essential that this new legislation actually directs all of its money to those in need, instead of letting hundreds of billions of dollars (or more!) get siphoned away by the lobbyists who have significantly more pull in the legislative process than regular Americans.
Rep. Matt Gaetz (R-FL), another one of the congressmen we follow in our documentary, calls the giveaways and tax breaks barnacled onto these massive stimulus bills “the corruption tax.” For most members of Congress, there’s simply an assumption—a certainty, really—that corporations, trade groups, and other big-time lobbying shop clients will walk off with a good size piece of any spending bill pie, regardless of whether they really need it.
When times are good it’s easy to brush aside this systemic corruption as Congress just being Congress, but it’s inexcusable to do so when our nation is beset by so many massive problems—a pandemic still raging out of control, more than 30 million people on unemployment, 11 percent of Americans living in households without enough to eat, over 100,000 small businesses closed permanently, and so many more tribulations on the horizon.
Undoubtedly, Congress needs to pass another massive stimulus bill as soon as possible that boldly tackles the profound hardship the American people are experiencing. But in making haste, Congressional leaders must not produce a bill that their members barely get a chance to read before they’re forced to vote on it. They must not produce a bill their members are too embarrassed about to vote for on the record. And above all they must not produce a bill that serves the special interests, rather than the American people’s interests.
So many question marks remain as to how the $2.7 trillion CARES Act was spent and how effective that spending was in helping our country weather the crisis. The recently released, first comprehensive study of the government’s pandemic-related spending by the Government Accountability Office, a nonpartisan federal agency, illuminates the lack of transparency and thoughtfulness with which the stimulus money has been distributed.
This time around every dollar must be accounted for and the lion’s share of that money must go toward the people, small businesses, and state and local governments most in need of assistance. We can afford to spend as much as we need to save and revive our nation, but we cannot afford to waste a single dollar more on paying Congress’s corruption tax.
Daniel DiMauro and Morgan Pehme are the co-directors of the new HBO documentary The Swamp.
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