Priorities for Phase 4 COVID-19 Response Funding Bill (May 2020)

As Congress begins to negotiate a fourth stimulus package, POGO has put together a list of 10 policy recommendations for the upcoming COVID-19 spending bill. With trillions of dollars in new federal spending, these critical reforms will help to increase oversight, accountability, and transparency.

1. Enact for-cause removal protections for inspectors general: This is a top priority, especially in light of recent developments and the president’s recent declarations regarding inspectors general and oversight more broadly. Both the special inspector general at the Treasury Department and the Pandemic Response Accountability Committee (PRAC) created by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) will only be successful if the inspectors general involved are insulated from political pressure coming from the White House or agency leadership. Right now, the president can fire an inspector general for any reason. The Project On Government Oversight (POGO) believes giving these watchdogs for-cause removal protections will provide a reasonable limit to when the president can fire them without insulating ineffective inspectors general from accountability. For more details, read our recent bipartisan coalition letter supporting this idea, and an op-ed we published further making the case.

2. Grant emergency hiring authorities to the special inspector general for pandemic relief: This special inspector general was created to scrutinize the actions of the secretary of the treasury in distributing $500 billion in aid appropriated by the CARES Act. However, without emergency hiring authorities, like those granted to the PRAC, the office is unlikely to become operational as quickly as is necessary to effectively oversee this largely discretionary spending.

3. Clarify oversight jurisdiction for guaranteed loans and other funding: The CARES Act defines covered funds to include “any funds, including loans, that are made available in any form to any non-federal entity, not including an individual.” This should explicitly include guaranteed loans in which the government backs loans made by private lenders. Other provisions of the law are worded such that there is room for the interpretation that the PRAC’s reporting and transparency requirements only apply to awards that expend federal funds now. We recommend that Congress craft language to clarify that federal loan guarantees count as covered funds, that they count as federal awards that must be tracked and reported on the PRAC website, and that they count as awards that require recipients to produce quarterly reports on their use.

4. Create transparency and accountability requirements for tax expenditures: Tax expenditures are likely to be a significant vehicle in future legislation to counter the economic impacts of the coronavirus pandemic. The CARES Act did not include individual tax expenditures as part of the awards and funds on which the PRAC is required to report. As Congress crafts specific tax break provisions, it should structure them to require applications and quarterly progress reports, including employment numbers, from companies seeking to make use of them. This data should be provided to the PRAC, which should in turn be required to make the data available on its website alongside the federal award data. Separate from individual tax provisions, we also recommend that Congress craft legislative language to make it clear that any companies using pandemic-related tax breaks must report a range of data similar to those listed in the section of the CARES Act regarding reporting on use of funds.

5. Outlaw retaliation against whistleblowers making coronavirus-related disclosures: Whistleblowers are individuals who come forward with disclosures about conduct they believe evidences waste, fraud, and abuse. We’re already seeing health care employees being retaliated against for coming forward about a lack of personal protective equipment during the pandemic. POGO recommends that Congress prohibit retaliation against whistleblowers making disclosures related to the use of coronavirus response funds, and that Congress also prohibit retaliation against essential workers making disclosures related to worker or public health and safety during the pandemic. Any such prohibitions must also include due process enforcement of whistleblowers’ rights.

6. Narrow the transparency exemption afforded to the Federal Reserve: In an effort to give the Federal Reserve the flexibility it needs to respond to the current crisis, the CARES Act exempted it from provisions of the Government in the Sunshine Act. However, this exemption is too broad. Congress should narrow it by re-imposing the requirement that the Fed keep records that will be available to the public. This would ensure the Fed has the flexibility it needs while ensuring the public isn’t completely in the dark about actions considered and taken by the Fed during this time.

7. Require beneficial ownership transparency: As hundreds of billions of taxpayer dollars are being made available to businesses through coronavirus relief legislation, it is critical that we know who owns the companies that will benefit from that assistance, to ensure it is going where it is really needed. Often, creative accounting and lawyering obscure who truly owns a company and its various subsidiaries and shells. Congress should require beneficial ownership transparency, because this information will be critical as the government decides which businesses will receive assistance, which relief mechanism they will receive it from, and how much assistance they will receive.

8. Implement an alternative appointment procedure for inspector general vacancies: The persistent lack of permanent inspector general appointments across many federal agencies is undermining oversight and accountability. Five members of the PRAC (the inspectors general for departments of the treasury, transportation, education, health and human services, and defense) are all serving in acting capacities. Some of these positions have been vacant for more than a year. While the president has nominated individuals for some of these positions since the CARES Act was signed into law, there are still no nominees for either the treasury or transportation inspectors general. POGO recommends that Congress create an alternative temporary appointment process to address long-standing inspector general vacancies. Such a model would allow qualified individuals to fill those vacancies on a temporary basis and would remove the flexibility that allows the president to choose inspectors general without Senate participation by appointing acting officials while not nominating officials to fill the posts on a permanent basis.

9. Enact automatic appropriations funding cutoffs to punish oversight noncompliance: There are few consequences in place for inappropriately stymieing either congressional oversight or inspector general investigations. Such a defunding mechanism could be geared toward agency leadership offices to create a disincentive to stonewall oversight without defunding the uncooperative agency entirely. This mechanism could deter agencies from obstructing investigations by the special inspector general, the PRAC, or the newly established Congressional Oversight Commission.

10. Require enhanced reporting on use of funds: The CARES Act requires recipients (not including individuals) of federal awards that use covered funds to report quarterly on the use of those funds. Reports must include a description of the project, the estimated number of jobs created or retained, and details on any sub-awards made by recipients, their subcontractors, or sub-grantees. However, this reporting requirement is limited to those receiving $150,000 or more. This was likely done to limit the reporting burden on small businesses and others who receive smaller awards. But the limited range of data required should be easy for any recipient to provide. Moreover, waste, fraud, and abuse are not limited to large awards. Collectively, the individual awards under the $150,000 limit could represent a significant portion of the relief funds, especially considering the amount of small business loans that are likely to be approved. Congress should either remove or significantly reduce this reporting limit to ensure accountability for more of the relief funds.