EP. 13 — HIDDEN TRILLIONS

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Weston Wamp: I’m Weston Wamp, and this is Swamp Stories brought to you by Issue One.

President Trump: It’s the biggest ever approved in Congress. We used to get used to the billion, it used to be million, then it was billion, now it’s trillion. It’s gonna go a long way, it’s gonna make a lot of people very happy.

Weston Wamp: The numbers are frankly hard to comprehend. The CARES Act, which was designed and signed into law over the course of just a few weeks in March, will cost taxpayers a little more than $2 trillion in hard money when it’s all said and done.

For perspective: If you were to add up all the worldwide annual sales of Walmart and Amazon and Apple, it would total a little more than $1 trillion. If you added the budgets of all 50 states together, they equal $2 trillion. Other than China, the budget of every other government in the world is less than $2 trillion. The CARES Act was truly huge. 

Most of our federal government’s $4.4 trillion annual budget goes to what's called mandatory spending:  Medicare, Social Security and Medicaid. When you take out defense spending, you’re left with about $660 billion of discretionary spending that Congress oversees every year. The CARES act nearly tripled that with one signature in the Oval Office. 

So if a normal year of government spending justifies a multi-billion dollar lobbying industry, you can just imagine what happened when the CARES Act came into focus. It was a lobbyist's dream buffet.

This is Episode 13: Hidden Trillions. 

Weston Wamp: The first quarter of 2020 saw $900 million spent on lobbying Congress. 1,500 companies with registered lobbyists disclosed that they lobbied Congress over the CARES Act, and based on what we covered about shadow lobbying in our last episode, there’s no telling how many more companies sought to do the same. 

The point is that the largest government stimulus package in human history may have set off the largest lobbyist feeding frenzy. The massive amount set aside by the CARES Act — again, about $2 trillion — is in itself neither good nor bad. It’s clear Americans were hurting in the face of an unprecedented challenge with COVID-19. And Congress had to step up with relief, and they did, in a surprisingly bipartisan way.

But it’s critical that in emergency circumstances like these that we have transparency and oversight. That’s what gives taxpayers confidence that the government can move fast — because ultimately there will be accountability.

A good example of this was reported by OpenSecrets: In late March, the Department of Homeland Security updated its list of “critical” industries to recommend that laundromats and county recorder offices should remain open. This happened after the firm of Trump fundraiser Brian Ballard lobbied the agency on behalf of New York laundry machine supplier Laundrylux and on behalf of title insurance company Fidelity National Financial.

Now, there may be nothing inappropriate with any of that. Laundromats seem like a critical industry. But with real transparency requirements, investigative journalists can look at what registered lobbyists are doing. They can examine policy decisions and reveal a clearer picture of what has happened. Then voters can come to their own conclusions.

And transparency of how taxpayer dollars are spent is usually the norm. It’s a basic expectation of taxpayers at a local, state, and federal level that they know where their taxpayers dollars go. Transparency is the reason that your city council openly debates the cost of a public art installation, and it’s the reason that you can google the cost of a price of a fighter jet.

Fortunately it’s one of those issues that isn’t very partisan at all. And in times of true emergency spending like these, this sort of transparency matters the most:

Danielle Brian: Well, we're always worried about the risk of fraud and misconduct when the government’s spending money at all. But when you're spending it at these levels and with this speed, you have that much more to worry about. And what we're particularly worried about now is we have seen just this week that the administration has made it clear that they don't even intend to allow the public or even the Inspectors General to know who is getting this money, especially from the SBA program. We're having what are likely to be millions of recipients of federal funds, our taxpayer dollars, and we don't know who they are. Whether they are actually those businesses or individuals who need it because they are in danger of likely laying off their employees. Whether they meet the kinds of requirements that the law requires, for example, that the money not go to executive compensation, or it not go for stock buybacks.

Weston Wamp: Danielle Brian is the executive director of the Project on Government Oversight, known in D.C. as “POGO.” The SBA program she mentioned is the novel $659 billion PPP program which was intended to serve as a lifeline to millions of businesses across the country. The idea was that the government would provide forgivable loans to small businesses for up to two-and-half-times their monthly payroll, and this was to help build a bridge through the pandemic. And in a creative twist, its bipartisan architects designed it so that banks across the country have been compensated to facilitate these loans so that the money could get to businesses as quickly as possible.

Danielle Brian: And frankly, the fact that the administration is making it clear they're not going to reveal this information is inviting every fraudster out there saying, "Hey. We're not going to get caught. Let's create a shell company and say we need the money, because they're not going to catch us." It's in some ways our worst nightmare.

Weston Wamp: Now you might be thinking… surely not. Surely the single largest bill,  made up mostly of money going straight to businesses from the government, isn’t going to be a big secret. My first thought was, “Isn’t that what the Freedom of Information Act is for?”

And yes, the New York Times, the Washington Post, and Associated Press have all filed lawsuits against the Small Business Administration for not having released information about the PPP loans.

But nonetheless, Treasury Secretary Steven Mnuchin has indicated that the Trump administration has no plans to release the names of companies who received hundreds of billions from the federal government or the names of the banks who were compensated to make millions of loans.

Secretary Mnuchin: And as it relates to the names and amounts of specific PPP loans, we believe that that’s proprietary information, and in many cases for sole proprietors and small businesses, is confidential information.

Weston Wamp: Now, bear in mind, I can look up how much my local school district spends on a copying machine. So the possibility of $2 trillion dollars going unaccounted for is an outrage.

But at this point, this can’t just be blamed on Secretary Mnuchin. In late May, Congress voted on the bipartisan TRUTH Act, which was introduced by Pennsylvania Republican Brian Fitzpatrick and Minnesota Democrat Dean Phlilips. The point of the bill was to force the SBA to create a publicly available database of every company that took more than $2 million of stimulus money. It also would disclose the extent to which banks got in on the action.

And it should be noted that the bill set a very reasonable bar. Only the recipients of loans of $2 million or more would be revealed — protecting the privacy of smaller businesses or self employed people who took a loan. And for context, a $2 million dollar loan would mean a company has a monthly payroll of $800,000 or more. This is not your local hardware store we’re talking about.

Even with these limitations in place, the bill still managed opposition from 147 members of the House — all Republicans — and Justin Amash. 

With 269 votes in favor, the bill normally would have passed with flying colors. But under suspension of the rules, it needed ⅔ majority. At 269-147, it failed with 65%.

Weston Wamp: What’s interesting, though, is that the 38 Republicans who voted for the TRUTH Act reads something like a who's who among rising Republican stars in Congress. Dan Crenshaw, Matt Gaetz, Elise Stefanik, Adam Kinzinger, Chip Roy, Mike Gallagher, Bryan Steil, and Tim Burchett, who used to be the county mayor right up the road from me in Knox County, TN. 

I reached out to Congressman Burchett and he agreed to talk with me about why some Republicans may have voted against transparency and whether stimulus money should be treated just the same as other taxpayer dollars. 

Rep. Burchett: Absolutely, I think it should. That's why I voted for the TRUTH Act. Due to the coronavirus we vote alphabetical order. So I was one of the first people to vote on it and I was definitely the first Republican to vote for it. I was sorry it didn't pass.

Every dollar we ought to know where it goes. There ought to be no excuse. That shouldn't be debated. As a Republican we ought to be leading that charge. And unfortunately too many times we worry too much about how it'll be portrayed in a partisan manner. But in fact, it just gets in the way of everything and I was disappointed we couldn't get enough votes. I just thought that was the right thing to do regardless if a Democrat was proposing it. And I take it on its face value that we need to know where the dollars are going. We spent a trillion dollars on relief. We ought to know where every dadgum dollar goes.

Weston Wamp: I think it’s possible that there’s more that meets the eye to why certain conservatives supported transparency. As I’ve said before, even though transparency isn’t usually controversial among liberals or conservatives in state and local government, these basic principles are weaponized inside the Beltway. And certain Republicans have sought, it seems, to create battle lines where they just shouldn’t exist.

Rep. Burchett: Well, it's getting close to an election. We didn't have caucus. They sent a memo out I'm sure on the bill. But perusing the bill very quickly it was pretty obvious what it was. I think we've got some independent folks and that's what it's going to take, because if we're not I'm afraid a lot of times leadership is so covered up in what the media is saying or so surrounded by that, that we forget our base. As they say, "You need to run with the one that brung you." And we forget that occasionally I think.

But I think it speaks well for the future of our party. But we've got to put that message out to young folks to say, "Hey, we are not the party of trying to cover things up or hide things." At least the young members aren't. And that we aggressively support legislation even when some in leadership don't like it. And that's the way it is. And I think that speaks well for it.

Weston Wamp: In a sense, this shouldn’t be controversial at all. Senator Marco Rubio, who took the lead in designing the Paycheck Protection Plan said early on that its recipients would be disclosed. And even after Secretary Mnuchin walked that back, Rubio doubled down, tweeting on June 16 that there would be PPP loan disclosure and that there was no dispute over larger loans. That the only conversations underway with SBA were about how to handle smaller loans. 

But Danielle Brian points out that there’s yet another reason this should be simple.

Danielle Brian: Well, actually it's that pot itself. So, the SBA's program for the PPP loans was based on an existing SBA loan program. Those datasets of who was getting those loans has been publicly available since 1991. So we're taking a program that already existed, and it was already made available for Inspectors General, journalists, or the public to see who are getting those loans, and now suddenly the administration is saying that the information about who's receiving these sums that are going, as you said so quickly out the door, are suddenly proprietary.

Weston Wamp: When I asked Burchett about Danielle’s earlier point about whether he was concerned possibility of fraudsters taking advantage of a lack of transparency, his answer was classic Tennessee. 

Rep. Burchett: Yes. Our mutual friend, Fred Thompson, who's passed away, said, "Don't ever be afraid of a one word answer." But yes. Yeah, of course. As soon as they said dollars there's people already lining up, figuring out a way to scam the system. What we've got to do is bust their butt if they do it and go after them with everything. And we need to fine the heck out of them and make sure they'll never have access to that kind of funding again.

Weston Wamp: Danielle went further to point out that while basic transparency is necessary, further oversight is needed in other parts of this massive bill that would potentially allow companies to take taxpayers for a ride.

Danielle Brian: A company like 3M, that had been caught defrauding the government by charging the government $7.63 for 85 cent earplugs, now gets a billion-dollar contract from the government for medical supplies. So, there are different ways that there is a danger of fraud taking place during all of this COVID relief funding that is going out. It's also the contracts, not just the grants.

And the thing that worries me most is the way that we find out about these things, is by having good congressional oversight and strong Inspectors General. And both of them are back on their heels right now.

Weston Wamp: In this specific scenario, it seems likely that transparency will prevail. And on June 19, the SBA and the Treasury agreed to a deal that would disclose PPP recipients of more than $150,000. But it’s instructive about the resistance that basic principles of self-government can get at times in Washington. In this case, for no apparent reason, and that’s why this podcast exists. To push and prod and try to understand why the swamp is the way that it is.

On the next episode of Swamp Stories, I’m going to sit down with the CEO of Issue One, Nick Penniman. His book “Nation on the Take” is one of the most comprehensive accounts of how money influences politics. We’ll discuss the ways that Issue One is working to ensure a safe election in November and we’ll talk about his profound concern that the world is sliding into what he calls a “democracy recession.”

Thanks for listening to Swamp Stories, presented by Issue One, the country's leading political reform organization that unites Republicans, Democrats, and independents to fix our broken political system. Please subscribe to the podcast and share it with your friends. Even better? Rate and review it on iTunes to help us reach more listeners. You can find out more at swampstories.org. I'm your host, Weston Wamp. A special thank you to executive producer, Ethan Rome, producers Evan Ottenfeld and Sydney Richards, and editor Parker Tant from ParkerPodcasting.com. Swamp Stories was recorded in Tennessee, edited in Texas, and can be found wherever you listen to podcasts.

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