“Reuters found multiple examples of pay mistakes affecting active-duty personnel and discharged soldiers. Some are erroneously shortchanged on pay. Others are mistakenly overpaid and then see their earnings drastically cut as the Defense Finance Accounting Service (DFAS) recoups the money... Precise totals on the extent and cost of these mistakes are impossible to come by, and for the very reason the errors plague the military in the first place: The Defense Department’s jury-rigged network of mostly incompatible computer systems for payroll and accounting, many of them decades old, long obsolete, and unable to communicate with each other.”

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“The DFAS accounting system still uses a half-century-old computer language that is largely unable to communicate with the equally outmoded personnel management systems employed by each of the military services. The department’s authorized 2013 budget, after sequester, totaled $565.8 billion – by far the largest chunk of the annual federal budget approved by Congress. Yet the Pentagon is literally unable to account for itself. As proof, consider that a law in effect since 1992 requires annual audits of all federal agencies – and the Pentagon alone has never complied.  It annually reports to Congress that its books are in such disarray that an audit is impossible.”

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“In its investigation, Reuters found that the Pentagon is largely incapable of keeping track of its vast stores of weapons, ammunition and other supplies; thus, it continues to spend money on new supplies it doesn’t need and on storing others long out of date.  It has amassed a backlog of more than half a trillion dollars in unaudited contracts with outside vendors; how much of that money paid for actual goods and services delivered isn’t known.  And it repeatedly falls prey to fraud and theft that can go undiscovered for years, often eventually detected by external law enforcement agencies. In its annual report of department-wide finances for 2012, the Pentagon reported $9.22 billion in ‘reconciling amounts’ to make its own numbers match the Treasury’s, up from $7.41 billion a year earlier. It said that $585.6 million of the 2012 figure was attributable to missing records. The remaining $8 billion-plus represented what Pentagon officials say are legitimate discrepancies. However, a source with knowledge of the Pentagon’s accounting processes said that because the report and others like it aren’t audited, they may conceal large amounts of additional plugs and other accounting problems.”

 

Ten years later, the Government Accountability Office revealed that, even though the Department of Defense’s financial management practices have been on the GAO’s High-Risk List since 1995 – yes, you did the math right, that’s 30 YEARS – it still has major issues: “DoD’s financial management continues to face long-standing issues – including its ineffective processes, systems, and controls; incomplete corrective action plans; and the need for more effective monitoring and reporting. Although DoD’s spending makes up about half of the federal government’s discretionary spending, and its physical assets represent more than 70 percent of the federal government’s physical assets, it remains the only major agency that has never been able to accurately account for and report on its spending or physical assets. DOD’s financial management issues extend beyond financial reporting as long-standing control deficiencies adversely affect the economy, efficiency, and effectiveness of its operations.”

 

Oh, for the love of #@^%.

 

But hold on to your hats, because this last example may be the most infuriating of all. On March 27, 2020, President Donald Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), unleashing the largest flood of federal money into the American economy in U.S. history. According to the nonpartisan think tank Committee for a Responsible Federal Budget, as of January 2025 – among the Federal Reserve, U.S. Congress, and the Trump and Biden administrations combined – well over $14 trillion has been allocated in response to the financial fallout caused by the COVID-19 pandemic.

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When dealing with this much money plus the government, there were basic bookkeeping errors, naturally – like when the Government Accountability Office found that the United States sent stimulus payments to nearly 1.1 million dead people, a mistake that totaled $1.4 billion – but the fraud associated with this money is epic. In September 2023, the Government Accountability Office issued a report that estimated between 100 billion and 135 billion dollars – or 11-15 percent of the total amount of unemployment insurance benefits given to Americans during the pandemic – was fraudulently obtained.

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Another massive theft involved a federal food program called the Federal Child Nutrition Program, an initiative that provided free meals for low-income children throughout the pandemic. In this scheme, criminals used fake names of children “in need” to defraud the American people of almost $250 million. The U.S. attorney for the district of Minnesota Andrew M. Luger said that, after using shell companies and bribes to steal the money, the perpetrators bought “houses in Minnesota, resort property and real estate in Kenya and Turkey, luxury cars, commercial property, jewelry, and much more.”

 

But these stolen amounts are child’s play when you consider the amount of fraud associated with the PPP. The Paycheck Protection Program, one of the signature programs in the CARES Act, was a loan program enacted during the pandemic to provide an incentive for small businesses to keep workers on the payroll. This $840 billion program – which included Economic Injury Disaster Loans (EIDLs) – offered up to $10 million in loans and, if certain rules were followed, they didn’t have to be repaid. The rules included that the number of employees and their compensation had to stay consistent and at least 60 percent of the money had to be spent on payroll costs. A National Public Radio (NPR) analysis of data released by the U.S. Small Business Administration (SBA) in January 2024 revealed that 96 percent of PPP loans had been forgiven.

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The amount of PPP money that was misused, misappropriated, and even flat out stolen is shameful. Okay, we get it. The pandemic was wreaking economic havoc, and we had to do something fast, and if we didn’t the American economy would crater, and on and on and on.  We get that, and we believe that. 

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This is not a commentary on the concept of PPP. It’s an indictment of how haphazard this country continually conducts business. At what point did our government decide to not prepare for ANYTHING? EVER?!? Being in a rush IS NOT AN EXCUSE for gross negligence. We had 13 years since the last financial crisis to get our s%@# together. Did not one person in Washington think it was wise to draft even the most rudimentary plan of action for the next one? 

 

Guys, seriously. We can’t go on like this.

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Taking time to design an effective program before we needed to use it would have made a huge difference because the PPP as it was thrown together was not the best use of our money, to say the least. The Wall Street Journal reported that “researchers at the Massachusetts Institute of Technology in July 2020 compared payroll data at PPP-eligible companies to ineligible ones and estimated the program had boosted employment by about 2.3 million jobs. At that rate, the PPP would have cost about $224,000 per job supported.” In other words, we paid $224,000 for jobs that usually paid employees just a small fraction of that amount. Using that logic, why not just hand everyone $224,000?

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We almost never knew about how badly the PPP was mismanaged because the first Trump administration tried everything under the sun to keep the information from seeing the light of day – including sidelining inspectors general and refusing to hand over information to watchdog agencies like the Government Accountability Office, even though the CARES Act mandated the information be released.

 

This reluctant behavior of the Trump administration is far less surprising when you read some of the Inspector General’s reports. For instance, on June 27, 2023, the SBA’s Office of the Inspector General issued a report that revealed the “SBA disbursed over $200 billion in potentially fraudulent COVID-19 Economic Injury Disaster Loans (EIDLs), EIDL Targeted Advances, Supplemental Targeted Advances, and PPP loans.” The report goes on to say that the SBA’s oversight and investigative work – after the fact and in collaboration with the U.S. Secret Service, other federal agencies, and financial institutions – had resulted in nearly $30 billion in COVID-19 EIDL and PPP funds being seized or returned to SBA,” plus “1,011 indictments, 803 arrests, and 529 convictions related to EIDL and PPP fraud as of May 2023.”

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Honestly, none of this should come as surprise since businesses applying for PPP loans were allowed to self-report their eligibility with practically zero vetting. Among those arrested were people who spent the money on personal luxury items; those who applied for multiple loans, which was not allowed; and people who faked documents and even entire companies. 

 

The Washington Post and ten other news organizations were finally forced to sue the Small Business Administration under the Freedom of Information Act to get more information about PPP. What they found was disturbing. The first problem is how the loans were distributed. Instead of targeted relief based on need, the program was essentially a first-come, first-served deal, which threw everything off from the jump. Large companies, including those backed by private equity and/or otherwise well capitalized, headed to the front of the line, even though the PPP application required borrowers to verify the money was “necessary to support ongoing operations.” 

 

Because outside lenders across the nation processed these loans, business owners with long-term banking relationships – which tend to be larger companies – had a tremendous advantage. Businesses with fewer employees and less revenue were put at an additional disadvantage because, since banks were allowed to establish their own lending criteria, the lenders were inherently incentivized to select large businesses over smaller ones. The fact that the program allowed multiple subsidiaries of the same owner to apply for loans separately further increased the advantage for larger businesses while amplifying the disadvantage for smaller ones. All these factors, in turn, disproportionally hurt businesses owned by racial and ethnic minority groups.

 

The lenders that processed PPP loans won big. Combined, they collected somewhere between $18 billion and $20.9 billion in fees. The reason for the wide divergence – the Miami Herald put the number at $18 billion while The New York Times had it at $20.9 billion – is that news agencies had to extrapolate the numbers since the SBA refused to release the exact amount (which is telling in and of itself). Back in 2020, the University of Massachusetts Amherst’s Political Economy Research Institute estimated the lenders collected a total of around $19 billion in fees. By their math, JPMorgan Chase earned just over a billion, with Bank of America right on their heels. Both firms originally said they would donate any profits they made from processing PPP loans but then said their expenses were so high there wasn’t any money left over after all. Dang! That’s some expensive paperwork those guys did.

 

< At least some lenders did the right thing. Citi and Wells Fargo each committed millions of the net profits they earned in PPP fees to support communities disproportionally impacted by the pandemic. Wells Fargo CEO Charlie Scharf said that “by donating approximately $400 million in processing fees to assist small businesses in need, Wells Fargo’s Open for Business Fund created opportunities for near-term access to capital and addressed the road ahead to meaningful economic recovery, especially for black and African American entrepreneurs and other minority-owned businesses.” Citibank expanded its COVID-19 U.S. Small Business Relief Program – which was launched to help smaller businesses and entrepreneurs who may not otherwise be eligible for federal stimulus programs and to support small businesses owned by people of color and lower-income individuals and communities – plus donated funds  to the Local Initiatives Support Corp. to support the New York Forward Loan Fund, which provides loans to small businesses, nonprofits and small landlords for working capital. >

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A month into the PPP program, almost 300 publicly traded companies had received over $1 billion in PPP money that was meant for small businesses. Several of these companies had executives who were paid at least $2 million a year. An artificial intelligence tech firm named Veritone, for example, received $6.5 million after paying its chief executive $18.7 million and the company president, his brother, $13.9 million in 2018. Around 600 large entities – including chain restaurants, hotels, law firms, horse tracks and even churches – received a $10 million loan, the maximum allowed. In fact, the run on the PPP was so aggressive by these larger entities that the program ran out of money in just 13 days, leaving over 80 percent of applicants with no funding. 

 

In the end, although 87 percent of the PPP loans were for $150,000 or less, these loans made up less than 30 percent of the total amount dispersed. ONE PERCENT of the 5.2 million borrowers received a FULL QUARTER of the $523 billion distributed. Twenty-seven companies that enjoyed annual sales of $1 billion+ received loans, as did 2,068 that reported over $100 million in sales just a year before. Providence Health Systems, for instance, is a multibillion-dollar institution and one of the largest hospital chains in the country. Although Providence had $12 billion in its coffers, the company received at least $509 million in federal assistance. Just so you know, Dr. Rod Hochman, Providence’s chief executive, made over $10 million in 2018. In addition to Providence, nineteen other large hospital chains received over $5 billion – even though, combined, these hospitals had over $108 billion in cash. The Cleveland Clinic received $199 million, then paid investment consultants $28 million to manage the windfall.  It’s worth noting that most of these organizations are established as nonprofit organizations, which exempts them from paying federal income tax.

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On the flip side, 2,000 rural hospitals didn’t have enough money to survive for even a month. The $3 million St. Claire HealthCare in Kentucky received only paid for two-weeks of payroll, forcing them to lay employees off and cancel vendor contracts.

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So, how in the world did this get so twisted? The answer will not surprise you. Yep, good ‘ol lobbying.

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For example, the National Restaurant Association and the American Hotel & Lodging Association lobbied hard to make sure large hotels and restaurants got their rightful due. Combined, they spent $5,400,000 on lobbying efforts in 2020 alone, plus $2,523,251 in political contributions. This strategy was nothing new for them. Together, they have spent $95,221,273 on lobbying since 1998 and $28,546,814 in political contributions since 1990.

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They also saw a perfect opportunity to pounce on something that had alluded them pre-pandemic. For years, the retail, restaurant, and hotel industries had been pushing hard to allow quick write offs for renovation costs. Even though this had nothing – NOTHING – to do with the pandemic, the provision was put in the CARES Act at a cost to the U.S. government of $15 billion.