Fiscal responsibility has never been a hallmark of the current administration — and President Joe Biden isn’t much concerned about changing course. Now the White House stands by as federal bureaucrats let billions in COVID aid go up in flames.
During the pandemic, Congress approved the $500 billion Economic Injury Disaster Loan program. Its mission was to provide loans of up to $2 million through the Small Business Administration to help businesses cover non-payroll expenses incurred during shutdowns. The loans — more than 4 million — were to be repaid.
Like many similar COVID initiatives, the EIDL program was infested with fraud. According to Reason magazine, an estimated $136 billion — one-third of the money distributed — was sent to scammers. The statute instructed the SBA to refer all delinquent loans to the Treasury Department, “which has the authority to take steps the SBA cannot, like garnishing wages and foreclosing on property, in order to encourage repayment,” Reason reports.
Yet the SBA in April stopped efforts to collect fully 75 percent of the loans — those under $100,000 — on the basis that enforcement costs “would likely be more than the recovery amount” thanks to the extent of the fraud.
Who says crime doesn’t pay?
To make matters worse, the SBA’s inspector general says that ignoring delinquencies likely violates federal law. It also sets an awful precedent.
“SBA’s decision not to pursue all available collection activities for these loans,” wrote Inspector General Hannibal “Mike” Ware, “does not hold those who borrowed upon the public trust accountable and could incentivize other COVID-19 EIDL recipients to stop paying on their loans, creating a larger chain of delinquency.”
Republicans in the House and Senate have demanded answers. The House Small Business Committee last month opened an investigation into the SBA’s decision, while Republicans in the upper chamber have requested records from the agency. “It’s completely unacceptable,” Sen. Joni Ernst, R-Iowa, told The Washington Post, “that SBA is leaving taxpayers on the hook for $62 billion in EIDL loans.”
Unacceptable, yes. Surprising, no. This is the same administration, after all, that sought without congressional authorization to erase up to $10,000 in debt for each student loan borrower. There seems to be few limits when it comes to Mr. Biden giving away taxpayer money.
“The overall losses to taxpayers threaten to reach into the billions of dollars,” the Post reported, “compounding the government’s fiscal troubles as the deficit rises and interest rates soar.”
The president is clearly indifferent to any of that. Republicans should continue to demand the SBA pursue the delinquent loans. It’s past time someone showed respect for the taxpayers.
