He Oversaw $787 Billion in Stimulus Spending. Here Are His Lessons on Spending Coronavirus Recovery Effectively.
Earl E. Devaney served as chairman of the Recovery Accountability and Transparency Board from February 23, 2009 until December 31, 2011. The position was created by the Obama administration to provide oversight of the $787-billion American Recovery and Reinvestment Act. That program was designed to provide new jobs, save existing ones, and offer financial relief to those hardest hit by the Great Recession, largely through investments in infrastructure, health, education, and renewable energy.
A long-time veteran of law enforcement, Devaney began his career as a police officer in his native Massachusetts. He then joined the Secret Service, where he served as special agent in charge of the fraud division, gaining stature as an expert on white-collar crime. He went on to become director of criminal enforcement at the Environmental Protection Agency, then served as inspector general of the Department of the Interior.
Before Devaney’s retirement from government service in 2011, his leadership as chairman of the Recovery Accountability and Transparency Board drew bipartisan kudos. Representative Darrell Issa, then the hard-charging Republican chairman of the House Oversight and Government Reform Committee, noted that “Supporters of accountable government will miss the energy, tenacity and innovation” with which Devaney carried out his job. Then-Vice President Joe Biden praised Devaney as a leader whose oversight of the stimulus program achieved “an unprecedented level of transparency.”
Oversight will be a critical component of the coronavirus recovery. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) requires President Donald Trump to nominate a new special inspector general to oversee portions of the $2 trillion law. Meanwhile, Glenn Fine, the acting Pentagon inspector general, will lead the new Pandemic Response Accountability Committee, which will serve a similar role as the Recovery Accountability and Transparency Board, coordinating the work of existing inspectors general monitoring the act’s implementation.
POGO asked Devaney to answer a few questions about what he learned that could help those conducting oversight of the huge 2020 stimulus bill. The interview is lightly edited for length and clarity.
Question: From an oversight perspective, what are the major differences between the 2008-2009 financial debacle, and the current crisis involving the coronavirus pandemic?
Answer: The Recovery Act money came in three buckets: 1) $288 billion in tax cuts, 2) $273 billion in entitlements, and 3) $226 billion in education and infrastructure projects. We focused primarily on the $226 billion in infrastructure money. Since these funds were being distributed from 29 separate agencies, each with their own inspector general (IG), we decided as a board to create an analytical platform which could identify recipient anomalies and then farm out any needed follow up investigation to the IG which “owned” those particular funds. Simply stated, we chose to leverage the IG community rather than do the investigative and audit work ourselves. At the height of our operations we employed about 35 people, most on detail from other agencies. Eventually our analysts were skilled enough that we were identifying recipient anomalies before the money actually made it into the hands of the bad guys. For the very first time, IGs were actually preventing fraud rather than simply detecting fraud after the fact and then trying to chase stolen money down the proverbial street.
Obviously, there is a huge increase of funds under the CARES Act. However, like with the Recovery Act, money will be flowing to both individuals and businesses. Since monitoring money sent to individuals is virtually impossible to do, it strikes me that the oversight goal should be to watch over money flowing to businesses. The $349 billion going to small businesses should be the primary focus.
The differences include, but are not limited to, small businesses receiving this money directly from banks backed by Small Business Administration and no other federal agency will be involved. Presumably, Treasury, Commerce and maybe others will be giving money to big business. So, the question that arises when the new board detects a problem is which IG will get the referral about money going to a small business. Certainly, the Small Business Administration does not have that capacity.
Question: What are the main lessons that we should take from the previous crisis, and apply to this one?
Answer: In terms of lessons learned, the biggest one is that transparency is a force multiplier in fighting fraud. Our public-facing website, Recovery.gov., provided the American taxpayer with an ability to see where their money was going and what it was being spent on. ESRI technology [Environmental Systems Research Institute, a mapping company] allowed us to show where Americans could go to hunt down to their own zip codes to learn a myriad of information about all the recovery money being spent in their own neighborhoods.
The second takeaway was that Congress will put any oversight board in the crosshairs of partisan bickering. Once the two-week “honeymoon” is over, one can expect an unending series of contentious hearings on the Hill, particularly during an election year. The chairperson should expect to testify on a regular basis and he or she will be constantly pressed about fraud dollar losses.
Question: In light of President Trump's recent remark that, "I'll be the oversight," why is independent oversight and accountability so important to keep track of the new stimulus and bailout measures?
Answer: I view the president’s remark as a bad omen. It strikes me that he vastly underestimates the job of protecting this money and he is definitely not ready for the embarrassment of losing any of it to fraud. Historically, fraud losses on big government outlays usually run between 5% and 7%. With $2 trillion on the table, every fraudster in America will show up. Recovery kept the fraud losses at less than 1% with a very sophisticated enterprise. The new board will be challenged to duplicate that effort without the full backing and support of the president.
Question: What was the role of the Recovery Accountability and Transparency Board, and how did you uncover and expose fraud? Who did you report to?
Answer: I reported, as all IGs do, to both Congress and the administration. In the administration’s case, I nominally reported to the vice president. However, while I was always able to maintain my independence, he was enormously helpful to me in getting the rest of government to adhere to the reporting requirements we were imposing on them and helping me draw from the best talent in government.
Question: How does a board or committee of IGs add value beyond existing IG shops?
Answer: Any board of experienced IGs will be value added with respect to the wisdom and experience they bring. However, board members have to understand that there can be only one chairperson and that he or she runs the day-to-day show. Quite frankly, the job of chairperson is so fraught with peril that the other board members adopted a very low profile and stayed out of harm’s way.
Question: What are some things you’d want to advise the new chair of this committee, given your previous experience?
Answer: Don’t take the job!! But if you do, be ready to totally give up your day job. There will be no time to do both. Walk away from your IG shop and trust your deputy to run the place. If you keep your hand in, the troops will be confused as to who’s the boss and you’ll be doing a great disservice to the deputy.