Q & A with an accountability expert

Steve Ellis, president, Taxpayers for Common Sense talks about the challenges of getting to a real coronavirus stimulus package that helps Americans, recognizing it’s ‘hard to shame a lawmaker’ and more.

Once the pandemic hit, Taxpayers for Common Sense was one of the first organizations to put together a COVID-19 stimulus tracker. How did that come about?

We received a flurry of requests in the spring from different industries ranging from the airlines to confectioners inquiring about coronavirus aid. So we set up the tracker to follow the stimulus packages, bailouts, and a subsequent legislation tracker. There have been several legislative proposals since then, the latest two being the Health, Economic Assistance, Liability Protection and Schools (HEALS) Act proposed by Senate Republicans and the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act passed by House Democrats in May that could potentially meld into a hybrid legislation. Negotiations like these tend to drag on, and then happen really fast. So it remains to be seen how soon a deal will be reached this time around.

Looking at the coronavirus stimulus package negotiation process mainly from the taxpayers’ perspective, it appears when it’s for big-budget items like the Pentagon, or bailing out big businesses, a bipartisan agreement is reached relatively quickly, but when it’s a negotiation to temporarily assist Americans, it’s a long process and a consensus can’t be reached. What’s your take on that?

The coronavirus pandemic response called for novel approaches that the government hadn’t implemented before. For example, the government had never done a Paycheck Protection Plan before. Handling a main street lending program through the federal government is new and trickier compared to administering aid to big businesses, there’s just more of an institutional memory for how the latter have been done in the past. And that’s why we noticed certain big missteps.

For example, we saw the PPP initially went to larger businesses, and not necessarily small businesses. We heard the news of a large chain like Shake Shack returning the PPP loan so smaller restaurants would have more access to the funds. Then there was resistance and delays from the Small Business Administration regarding the disclosure of the names of PPP loan recipients. And now we are not even going to know who received funds below $150,000 because the administration would like to forgive those loans.

In your experience, what has been the most unusual aspect of the coronavirus stimulus package negotiation process far?

Everything about the process has been unusual because of the pandemic, also we just haven’t seen this amount of money go out the door so fast with the Coronavirus Aid Relief, and Economy Security Act, and now with the HEROES Act and HEALS Act for which the final tag is going to be close to $3 trillion. Senate Majority Leader Mitch McConnell’s sticking point is a liability shield that protects businesses that are negligent in their responsibility to protect their employees from COVID-19. It’s a pretty high bar for negligence because it gives businesses immunity from civil liability. It’s already almost impossible to prove where a person contracted the virus. Out of 4,000 COVID-19 related lawsuits to date, only about 80 have been in the workplace. You don’t want businesses to not take seriously their responsibility to protect employees and follow coronavirus prevention measures. It’s a bad deal for taxpayers and businesses, and it really doesn’t protect anyone, it just reduces risk to businesses.

TCS reporting suggests that Congress appears to be abandoning all fiscal discipline and the normal budget process by including provisions for the Department of Defense, National Aeronautics and Space Administration appropriations, that aren’t related to the pandemic included in their proposals. What can Americans do about this?

TCS works to expose this so Americans can register their outrage. We want businesses to get the relief they need during the pandemic. But it’s preposterous that the defense industry is getting a bailout. Yes, they provide an important service, but in this era of the coronavirus there are more critical areas that need relief.

After coronavirus relief negotiations stalled, Trump announced executive orders. What concerns you about them?

It’s pure theater, and it’s essentially one executive order and a few memos basically directing the affected Cabinet Secretaries to figure it out. For the payroll tax relief, for instance, Secretary Mnuchin has already indicated that it’s not mandatory and absent legislation people will have to pay it back at the end of the year. Employers and payroll companies are expected to come up with a system for a few months. Some may escrow the employees’ funds so they’re not on the hook at the end of the period. Others won’t do it at all. If you have to pay it back, you should be saving it not spending it. And raiding the Department of Homeland Security’s Disaster Relief Fund (DRF) for unemployment went similarly poorly. They’re already talking about rolling back the match requirement, so it’s $300 instead of $400. While there is a bunch of cash in the DRF, Josephine just became the earliest “J” named storm in the North Atlantic. So states and the DHS have to figure out a mechanism to make these payments. The reality is none of this was necessary if the administration continued to negotiate with Congress. Instead it’s a Potemkin village policy. It looks like something but there is really not much there.

TCS flagged that there was only $18 million in additional funding devoted to oversight of a trillion dollar-plus package, signaling less concern about oversight even though there has been several reports about rampant conflicts of interest in the coronavirus relief aid that has already been disbursed. What’s a more optimal ratio to you, if any?

There’s no absolute ratio, but Congress needs to allocate the resources oversight would need to effectively oversee the package. It’s indicative of a lack of concern about how the monies get spent. We fought along with Open The Government for greater oversight on the CARES Act and HEROES Act. The funding needs to be increased in commensurate amount as different programs need different amounts of oversight. We have already heard of checks going to the wrong people or to dead people. For an initiative such as the PPP that the SBA hadn’t done before, you’re going to have to increase oversight because there are savvy actors that can take advantage of the system if there isn’t adequate oversight in place.

It seems there are real problems with the overall package, even though it has been presented as a way to extend a comprehensive economic lifeline to the people and businesses. How does TCS hold Congress accountable so they are more effective when they put these packages together?

It’s important to understand what the packages entail and point out the problems and the possible solutions to them. I recognize it’s really hard to shame a lawmaker. And having done this for 20 year, we’ve had defeats, but you have to continue, and it will be worse if groups like TCS weren’t there. Frankly, we weren’t crazy about the HEROES Act, but our primary focus has always been getting to a real package that helps people out and the businesses who are struggling to adjust to this public health challenge that’s beyond their control.

Trump was adamant about “not bailing out state and local” governments and it’s one of the issues that has caused the current impasse. What’s your perspective on that?

There will be funding for states and local governments, but the lack of executive leadership on this has really been bothersome. The virus doesn’t know borders and states are being tasked with responding to it too along with the federal government. We shouldn’t shortchange them because in terms of fiscal responsibility, most of the states have a balanced budget requirement that is in our Constitution. For good or ill, the federal government doesn’t. So states need a real handle on the pandemic and require the support to do so because what happens in one state affects us all.

What are the main issues TCS will be focusing on for the remainder of the year and into next year?

We will definitely pay attention to how a potential deal would be implemented. Beyond that, one problem with Congress writ large is that they write the checks and then walk away. When they finally agree on a multi-trillion package, it’s important to remember there’s still money from the CARES Act that hasn’t been spent. The advocacy work doesn’t stop when the legislation is signed, that’s when the work actually begins. We saw this with the PPP 2.0, so a lot of our focus will be on implementation and unfortunately it will be right in the middle of an election.

Also, past disasters underscore the importance of holding Congress accountable. From the federal government’s response to Hurricane Katrina in 2005, we uncovered funds that hadn’t been spent more 15 years later. When such money isn’t spent, it should be returned to the Treasury. We saw the same thing with Hurricane Sandy, and while we were tracking bailout funds that came after 9/11. Experts are already predicting a record storm season this year, so we will likely see great economic impact from the storms. With major storms coinciding with the pandemic, there’s a higher risk of people needing health services and going to emergency rooms. These are all issues we will be following closely.

You have been at TCS for more than 20 years. Recently you took helm of the organization as its new president. What keeps you up at night these days?

My focus is on keeping the organization running efficiently. I am worried about the safety and well-being of my TCS colleagues because we have had scares with the virus. We won’t be physically opening for a while, but remotely we are working to support the viability of the budget and tax services we provide related to COVID-19 and our other issue areas which include agriculture, energy, infrastructure, and national security.

What are some of the issues Americans should keep in mind as we head toward the November election?

I would advise Americans to look closely at the people you are voting for and how they have spent your money. You want your elected officials to be an active part of the process, not a bystander. It’s harder with the elected officials that are freshmen but voters can assess whether or not they speak up for fiscal responsibility. This should apply to all candidates from state and local up to the president. Social issues are important, but people tend to vote more with their hearts than their heads. TCS is nonpartisan and we have worked with and had successes with both political parties.

This year has made it painfully clear to all that we can’t look at the economy in isolation, you have to do it in the context of the pandemic. On the right, the administration pushing to reopen too soon and then shutting down proved to be quite damaging. On the left, there’s the perception that because we print our currency we can just spend and spend. But the people who own our debt think differently. We need to protect the fact that the dollar is the world’s currency reserve. Our debt can hurt our credit rating. Right now, our interest rate is a trillion-plus, more than what the U.S. spends on defense. So I’d advise Americans to keep in mind during the election that it’s not ‘don’t spend money’, it’s ‘spend money wisely’ and figure out ways to fix the problems when you realize there have been inefficiencies. Over time, the process of how our government operates becomes seemingly etched in stone, and people don’t think they can change that, but they certainly can influence it with their vote.