Stimulus Update June 26: Treasury Learned About Dead People Getting Checks From the News (GOVT FAIL)COVID-19
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This is my stimulus update for Friday, June 26th.
Don’t want to read? Watch the video below!
I want to talk about the GAO Report that came out yesterday. I made a video about it, as it pertains to those of you who did not receive your $500 stimulus payment for your qualifying dependent children.
I’m going to get into the GAO Report later in this post, but I’m talking about why so many stimulus checks were sent to dead people, because the reason is quite shocking.
I was pretty appalled at some of the things that I read in this GAO Report.
But first let’s just talk about the COVID-19 cases really quickly. Yesterday, the United States reported its most coronavirus cases in a single day, 40,401 new cases were reported, according to a Johns Hopkins database.
Missouri, Nevada, Alabama, and Texas, all posted record daily highs. This caused Texas governor Greg Abbott to announce a pause of reopenings. And it looks like some of these governors who were so gung ho about reopening just a week or two ago are now having second thoughts.
A second shut down of the economy would be Donald Trump’s worst nightmare, right? Because he wants this transition to greatness to happen in Q3.
He wants Q3 to be the transition to greatness. And he’s talking about this we’re going to hit that greatness in Q4.
Well guess what folks? Q3 starts… Oh, next week. And we’re having more cases on a daily basis than we have ever had previously.
Pooled Sampling for Coronavirus Testing
Now let’s talk about testing for a bit. Dr. Anthony Fauci, who is the nation’s top infectious disease doctor, You’ve seen him on the White House Coronavirus Taskforce Press Briefings.
He told the Washington Post that they’re considering adopting a technique known as pooled sampling to do more COVID-19 tests.
What is this?
So if you get a COVID-19 test right now, they’re going to test your individual sample. Your individual test tells if you’re positive or negative.
With this pooled sampling, they would pool together 5, 10, maybe even 20 different coronavirus tests in one test tube. I don’t know if that’s the proper nomenclature, but in one test tube, they would test the whole thing.
If the whole thing, that whole test tube comes back negative, they’re going to tell those folks, all those 20 folks or whoever were included, including that sample, “All right. Y’all are negative.” Of course, if that whole test tube as a whole comes back positive, then they would test everyone individually.
Deborah Birx, who is another member of the White House Task Force said that this pooling sampling would give us the capacity to go from half a million tests a day to potentially 5 million individuals tested per day.
And of course, when COVID is up, the markets are down. The stock market is currently dropping today, somewhat significantly.
But you know what? That’s okay. If you’re investing for the long term, like in this video telling you that you should, then you have nothing to be worried about.
Also yesterday, the Federal Reserve banned more than 30 large US Banks from buying back their stocks and limited the size of dividends they could pay out to their shareholders.
Nevertheless, even though we’re in the middle of the crisis, American Airlines said this morning that they will book flights to capacity effective July 1st.
So that’s interesting. That’s next week, but that is their decision to do what they want and that is what they’ve decided to do.
Why Did So Many Dead People Get Stimulus Checks?
Now let’s talk about the GAO Report.
What is this report?
This report is basically the GAO telling the government everything they did wrong with respect to the money that was passed by Congress to go out to various entities, individuals and businesses, as part of the various coronavirus relief packages that have passed, including the CARES Act.
They looked at six different aspects:
- Obviously the stimulus checks and that’s why I’m going to talk about.
- The Paycheck Protection Program.
- Economic stabilization and assistance to distress sectors.
- Unemployment insurance.
- Public Health and Social Services Emergency Fund.
- Coronavirus Relief Fund.
So I’m putting together this over 400 page report that looked at data and the numbers. They interviewed federal and state officials as well as industry representatives.
You’ve probably seen the headlines by now. The GAO found that almost 1.1 million stimulus payments totalling nearly $1.4 billion had gone to dead people as of April 30th.
That is a huge amount. That is bigger than we thought would happen previously.
Now this is the real shocking thing to me.
Page 222 of GAO Report
On page 222 of this GAO Report, it says that the Treasury Department didn’t even know that stimulus payments were going to dead people until they saw it on the news, basically.
Here’s what the GAO Report says on page 222:
According to a treasury official from the Office of Tax Policy, Treasury was unaware that payments would go to decedents (dead people) until it was reported in various media outlets.
Treasury had no idea stimulus payments were going to dead people until they heard it on the evening news.
The very people that were entrusted with making sure this process went out smoothly and to the best benefit of the American people, living American people, I would assume.
Page 26 of GAO Report
And not only that, according to page 26 of this GAO Report, the IRS knew before the CARES Act was even passed that payments might potentially go to dead people.
Here’s the statement:
According to IRS officials, an IRS working group charged with administering the payments first raised questions about payments to decedents in late March as Congress was drafting legislation. IRS counsel (IRS attorneys) subsequently determined that the IRS did not have the legal authority to deny payments to those who filed the return for 2019 even if they were deceased at the time of payments. IRS officials set on the basis of this determination, they did not exclude decedents in the program requirements.
The IRS knew about this issue before the first round of stimulus checks even went out, before the CARES Act was even signed.
But in their infinite wisdom, they got together and said, “Yeah, you know what? Payments to dead people, that’s still okay.”
So they did not exclude dead people in the programming requirements.
Apparently it wasn’t until the folks from the Department of Treasury saw that dead people were getting payments on the evening news that they said to the IRS, “Hey, IRS, we need to talk about this.”
Treasury officials said that upon learning that payments had been made to decedents, Treasury and IRS in consultation with counsel determined that a person is not entitled to receive a payment if he or she is deceased as of the date the payment is to be paid.
BFS and IRS removed such payments starting with the fourth payment batch.
They include this little timeline here of the stimulus checks beginning with March 27th when the CARES Act was enacted.
April 10th is when the non-filer’s tool was launched. April 15th is when Get My Payment was launched.
April 17th is when payments via paper checks began to be sent out. April 24th payments continued to be direct deposited and checks, especially to those on SSA, et cetera.
Then it has on this timeline May 1st. It wasn’t until May 1st, the Treasury and IRS started filtering out payments to deceased and incarcerated recipients.
IRS knew this would potentially be an issue in late March. It wasn’t fixed until over a month later, May 1st.
And of course on May 6th, that’s the date that the IRS put on their website that, “Hey, this is how you return payments if you got a stimulus payment for a deceased individual or an incarcerated person.” I made a video about that.
So why did this happen? Well, obviously, I think it was just kind of some stupidity on the part of the IRS because they flagged this issue initially and they thought it was okay.
But then I think it was a communication breakdown. The IRS is part of the Department of the Treasury, but apparently folks in the IRS specifically weren’t able to communicate to individuals in the Treasury at large that stimulus payments would potentially go to dead people because Treasury officials apparently didn’t know about it directly from the IRS.
They heard about the evening news as this report said, right? They didn’t know about it until they heard about it in various media sources. So why did this happen?
Page 27 of GAO Report
According to page 27 of the GAO Report, the IRS has full access to the death data maintained by the Social Security Administration, but Treasury (and the IRS is part of Treasury so I’m not sure how this works) but Treasury and the BFS (the BFS is the entity whose name is on the checks) do not have access to that Social Security Administration death data.
So it wasn’t until the fourth batch of payments started going out on May 1st that the IRS provided BFS temporary access to the full death data to filter out decedents until the IRS was able to put in place its own processes for filtering out such payments.
GAO recommends that Congress consider amending the Social Security Act to explicitly allow SSA, Social Security Administration, to share its full death data with Treasury for data matching to prevent payments to ineligible individuals.
So basically, it was just a huge government screw up here.
Paycheck Protection Program (PPP)
The GAO Report also talks about the PPP. The GAO Report says because of the number of PPP loans approved, the speed with which they were processed and limited safeguards, there is a significant risk that some fraudulent or inflated applications were approved.
So I believe partially in response to this and in response to increased congressional pressure, Mnuchin caved yesterday to the Democratic demands to disclose basically all the data with Congress.
Mnuchin wrote a letter yesterday saying that the Treasury Department and the SBA would include data with borrower names and loan amounts… All borrower names and loan amounts, not just for those borrowers who had loans of $150,000 or more, but all PPP loan recipients would be provided to relevant congressional committees with the understanding that non-public person identifiable and commercially sensitive business information will be treated as confidential.
You remember that earlier this week, I told you that Congress and other groups were calling on the PPP for more transparency. “Hey, we want to know exactly who got these loans.”
So Treasury and SBA said, “Okay, we’ll tell you the exact names and amount ranges for borrowers that received PPP loans of $150,000 or more, but for those less than $150,000, we’re not going to give you specific names”.
Congressional Democrats have balked at that. They said, “No, that’s not good enough. We want all the names.”
And so it looks like the Mnuchin is going to give them all the names.
New Green Tax Benefits
Last but not least, House Democrats unveiled a major green tax package yesterday offering tax incentives for renewables, electric vehicles and a host of other environmentally friendly businesses.
Logan is a practicing CPA, Certified Student Loan Professional, and founder of Money Done Right, which he launched in July 2017. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.