Pandemic fraud has many lessons for governmental competence

The monetary emergency that struck early in the COVID-19 crisis, and the government response that led to hundreds of billions of dollars being stolen via fraudulent claims for pandemic relief funding, are spelled out on the Government Accountability Office’s website: “Prioritizing rapid distribution of aid over control checks — such as for verifying identity and eligibility — was important for getting aid to people impacted, but also increased the risk of fraud.”

In mid-March 2020, the United States and its economy largely shut down. The potential for economic devastation felt almost as endangering as the medical threats. In the past 30 months, the federal government has distributed close to $5 trillion in pandemic relief. About $2 trillion of that went to individuals and businesses via the Paycheck Protection Program, Economic Injury and Disaster Loans, and Pandemic Unemployment Assistance.

And at least $300 billion of that was stolen, much of it by foreign and domestic organized crime syndicates. Another portion went to people who, although the rules allowed them the money, faced no hardship.

Since President Joe Biden’s election, assessments by Democrats of the massive thefts often focus on the fact that, they say, 97% of the stealing happened during Donald Trump’s presidency. That’s likely true, but the push to get money out as fast as possible was urgent in both parties, and among most people. Seemingly every voice was demanding we keep the cash flowing so the economy would survive and Americans could meet their needs.

And the states, tasked with distributing massive tranches of unemployment benefits, mostly didn’t do any better at stopping fraud than the federal government did.

The urgency was real. But so, too, is the sense that government is terrible at the kind of efficient operations other organizations, especially private businesses, master. Our government granted fortunes to dead people, federal prisoners, businesses seemingly operating in other countries, and businesses and individuals who provided phone numbers that had no relation to their claimed identities.

People on the U.S. Treasury’s “do not pay list” got paid. As many as 1.6 million EIDL checks went out with no evaluation whatsoever, in batches of up to 500 at a time.

Now, with the horse out of the barn, the government is trying to close the door. And it should. States need to share unemployment information to stop bogus multistate claims. Applicants for government aid cannot be allowed to “self-certify,” claiming any size business or number of employees with no verification. Anyone who can be prosecuted must be, to deter future theft. And all levels of government must learn from this debacle that fraud steals money from those who truly need it.

Government has to be competent to be trusted. It too often isn’t. And if it isn’t competent on a day-to-day basis, it certainly won’t be in a catastrophe.