Mnuchin argued that the economic recovery has strengthened in recent weeks, citing improved consumer spending, growth in the manufacturing sector and a booming housing market. It is the inability of some states to reopen activity that is holding the economy back, he said.
But Democrats have insisted dire economic conditions persist for many. “Millions of Americans are now facing eviction, debt and hunger,” said panel chair Rep. James Clyburn, a Democrat from South Carolina. “As the pandemic continues, states, cities and businesses are warning that more layoffs could come. ”
Democratic staff on the subcommittee, meanwhile, said they identified breaches indicating possible fraud and abuse in an iconic element of the administration’s relief effort, the more than 10 million dollar small business loan program. $ 660 billion – including more than $ 1 billion granted to companies that have received multiple loans. .
Staff investigators said in a report that a lack of government oversight and accountability for the program “may have led to the diversion of billions of dollars into fraud, waste and abuse, rather than reaching small. companies really in need ”.
With a bipartisan agreement, Congress enacted an unprecedented $ 2.3 trillion pandemic bailout in March. Now the Trump administration and the main Democrats in Congress are in a months-long standoff over the new relief legislation, with the two sides splitting billions of dollars. Lawmakers left Washington for the August vacation without a deal.
The stalemate left millions of people out of work without a $ 600 per week unemployment bonus in the event of a pandemic, which had helped families stay afloat, left state and local governments in search of a high and dry tax break, and withheld a more than $ 100 billion school assistance program.
According to the US Department of Labor, about 27 million people receive some form of unemployment benefit, although the figure may be inflated by double-counting by states.
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Mnuchin identified additional spending for small business aid as the area where Democrats and Republicans are most likely to agree. In sometimes heated exchanges, he and the Democrats on the panel disagreed over the state of the economy and traded blame for the deadlock on new bailout legislation.
Mnuchin blamed the unwillingness of House Speaker Nancy Pelosi and Senate Democratic Leader Chuck Schumer to compromise. While praising the partial recovery of the economy, he acknowledged that “we still have work to do”.
Pelosi said this week that the talks collapsed because administration officials “do not understand the seriousness of the problem” the country is facing.
The Small Business Administration (SBA) Paycheck Protection Program (PPP) was a key part of the government’s economic assistance program to respond to the pandemic. Small businesses across the country received a punch in the spring as huge swathes of the economy were shut down, millions of jobs were lost and consumers slashed spending.
Economists generally give credit to the small business program for helping to prevent the labor market collapse from deepening.
The program was overseen by the Department of the Treasury. Because the SBA only audited loans exceeding $ 2 million, about 99% of the awards received little or no oversight, investigators said. The agency approved hundreds of loan applications that lacked key borrower credentials, according to the report.
Mnuchin said in his testimony on Tuesday that loans of $ 2 million or less can also be audited, although this is not automatic.
Spokesmen for the Treasury and the SBA did not immediately respond to requests for comment on the report.
Loans are forgivable if businesses use the money to keep employees on the payroll or rehire workers who have been laid off.
The investigation also found that more than 600 loans, totaling $ 96 million, were made to companies that had not been allowed to do business with the government due to previous violations. And more than 350 loans, worth $ 195 million, have been made to government contractors with “significant performance and integrity issues,” the report said.
Additionally, investigators said they found red flags – such as mismatched addresses – for $ 2.98 billion in loans to 11,000 businesses by comparing a federal government grant database with information on PPP requests from companies.