Can we have any faith that the Trump administration and the Federal Reserve are doing this right?
Unfortunately, we have almost no idea of the answers to any of these questions. That’s because the oversight provisions that were written into the $2 trillion CARES Act (also known as Phase 3 of the economic rescue) were weaker than they should have been, and President Trump is working hard to undermine what oversight there is.
It’s not too late to fix it. But the danger is that a year or two from now, you’ll read on Page A17 of your newspaper about a shocking inspector general report detailing waste, mismanagement, cronyism and even outright fraud — but it will all be in the past, and few people will even notice.
“There’s a failure to appreciate how many decisions are being made each day that could order the American economy for the next 10 or 20 years,” Hauser told me, adding that so far the oversight hasn’t even begun.
Let’s recap what the CARES Act provided for oversight, and how Trump is subverting it.
The bill created three means of keeping watch over the rescue: an inspector general appointed by the White House, a Pandemic Response Accountability Committee made up of inspectors general currently overseeing other departments, and an oversight panel appointed by Congress.
None of them is up and running.
For the special IG, Trump nominated one of his own aides, a loyalist who has helped him stymie congressional oversight of his administration. In addition, when he signed the CARES Act, Trump issued a signing statement declaring that he would prevent the special IG from giving information to Congress without his permission.
When Glenn Fine, the IG of the Defense Department, was chosen to head the Pandemic Response Accountability Committee, Trump demoted Fine, as part of his broader ongoing assault on IGs and accountability. That made Fine ineligible to serve on the panel. Now a new chair will have to be chosen.
Meanwhile, Congress has chosen only one of the five members of its committee that will oversee the rescue. Nancy Pelosi and Mitch McConnell are negotiating over the rest of the membership, and something tells me McConnell is in no hurry.
Meanwhile, the rescue is already in motion.
The largest part of that rescue is being conducted by the Federal Reserve — an institution that was already largely free from oversight. At the very least, though, it’s insulated from the corrupt influence of Trump, though it’s working closely with the Treasury Department as it sends money to banks, businesses, and state and local governments.
“We have essentially a planned economy, and it’s being planned by Donald Trump, Steven Mnuchin and [Fed Chair] Jerome Powell,” Hauser told me. He warns that we just don’t know what decisions are being made, and it’s entirely possible the process could end up favoring “economic sectors that are important to donors or key constituencies.”
And so, if Sheldon Adelson were to call up Treasury Secretary Mnuchin to make sure the casino industry is given special consideration, we’d never hear about it.
Then there’s the small-business side. The Small Business Administration is being asked to oversee the distribution of $350 billion, with perhaps another $250 billion on the way, a far larger task than it has ever undertaken before.
The fact that the $350 billion was far too small has already created huge problems, as businesses rushed to access a pot of money they couldn’t be sure would be there for them. Larger businesses and those with preexisting relationships with banks have vaulted to the front of the line. There have been huge administrative problems.
“A Congress doing real oversight of the SBA would not have written this bill,” Hauser told me.
So what do we do know? The first step is to understand that we can and must fix what isn’t working. As Hauser pointed out, the best model is the New Deal. FDR didn’t just pass a bunch of bills and let them go; he and Congress spent years tweaking them and repairing what wasn’t working.
But none of the processes that were meant to pay attention are operating. So not only do they need to be augmented in the next phases of the rescue package, Congress needs to start exercising its preexisting oversight powers right now, even if it means figuring out how to do it electronically.
“I’m worried about the fact that there are no hearings going on, no subpoenas being issued, no administration officials testifying,” Hauser said, which might alert the media and voters to what’s happening.
This is not about whether we can find some “gotcha” to discredit the Trump administration. It’s about making sure the administration and the rescue itself accomplish what they’re supposed to.
At the moment, we’re on a path to a worst-case scenario, in which Trump and congressional Republicans slow-walk, obstruct and undermine every attempt at oversight, months and months go by, and in the end all we get is a couple of damning inspector general reports.
And by then it will be too late.