Hearing Of Senate Committee On Homeland Security & Governmental Affairs - Follow the Money: An Update on Stimulus Spending, Transparency, and Fraud Prevention

Statement

Hearing Of Senate Committee On Homeland Security & Governmental Affairs - Follow the Money: An Update on Stimulus Spending, Transparency, and Fraud Prevention

Seven months ago, the American Recovery and Reinvestment Act was signed into law. Since that time, this Committee has conducted oversight to help ensure that these funds are used as intended: to help revitalize the economy by creating needed jobs, improving roads and bridges, sustaining vital health care programs, and investing in infrastructure and science.
Today marks the fifth hearing that this Committee has held to review the use of Recovery Act funds. In these hearings, we have examined transparency initiatives such as the Recovery.gov website and the challenges facing state and local governments in accessing, using, and monitoring stimulus dollars.
These funds must be dispersed quickly to meet the goal of stimulating the economy, but we must ensure that haste does not make waste -- or permit fraud or mismanagement. Striking the right balance between speed and caution has been a challenging task.
For example, we recently learned that the Social Security Administration erroneously sent about 10,000 stimulus checks for $250 each to people who were either dead or incarcerated. This mistake may cost taxpayers about $2.5 million and could have easily been prevented. Now, instead of these funds stimulating the economy, the Social Security Administration must work to recover them and put controls in place to prevent similar errors in the future.
Today, we will explore three issues that could blunt the economic recovery impact of the stimulus: unnecessary delay, inadequate transparency, and outright fraud.
First, some reports indicate that stimulus funds are entering the economy too slowly, delaying the potential economic benefits. OMB, however, has reported that it is on track to meet spending targets. I am interested in hearing our witnesses' views on whether spending to date has had the desired effect on the economy.
Second, I want to ensure that we are providing the American public with accurate and thorough information about stimulus projects around the country. Congress directed the creation of the Recovery.gov website to increase transparency -- to allow the American public to monitor stimulus projects in their own states and report any abuses. Progress on Recovery.gov initially has been slow, however, particularly when compared to some private sector alternatives.
Third, I am concerned about the growing incidence of fraud and predatory scams that appear to be on the rise as con artists prey on citizens facing financial hardships. These crooks are smart and opportunistic. They exploit these tough economic times to lure Americans into scams that look and sound legitimate. They use phrases we hear on news reports and see in headlines, such as “stimulus grants” and “government funding,” to confuse victims. They manufacture forms that have an “official” look to them, when in fact, the “services” offered are not connected to any government agency or to the Recovery Act.
To appreciate the potential that these scams have to grow and spread, possibly ensnaring thousands of trusting consumers, we must recognize that the federal stimulus program is instantly recognizable; it is a part of our economic and political vocabulary. It carries so much weight that police in Florida recently used the lure of economic stimulus checks to conduct a sting operation in which seventy-six people were arrested.
The Florida example demonstrates the attention-drawing power that the words “economic stimulus” can have on the public. It is critical that we aggressively pursue scam artists who brazenly use the federal stimulus program as a spring board for fraudulent or other unfair activities.
I have brought two examples of mailings, sent to my constituents in Maine, to illustrate my point. The first example, sent shortly after Congress passed the Recovery Act, is misleading because it resembles an official government form and can easily be mistaken for a legitimate government offer of help and assistance.
As you can see, the mailing is particularly confusing because it refers to the Stimulus Act and looks like an IRS form, even providing an identification number for the individual.
The second example is a letter that claims the constituent is pre-approved for the “Consumer Debt Initiative” because he “may be experiencing a financial hardship.” The letter implies that this initiative was established under the “Economic Stimulus Act of 2009.” In the letter, the alleged manager of the so-called “Credit Relief Division” of the Consumer Debt Initiative -- all fictitious, but realistic-sounding titles -- encourages the constituent to call and refer to the case number provided.
I look forward to hearing from Chairman Leibowitz on the Federal Trade Commission's efforts to identify, publicize, and prosecute stimulus scams.
I also appreciate the work that the Department of Justice has been doing to train more than 10,000 federal, state, and local officials to monitor the contracting process for abuses such as collusion and bid-rigging. Officials and agencies at every level of government can play an important watchdog role.
With a combination of education and enforcement, we can help prevent exploitation and stop scams. At the same time, this hearing should serve as a warning to con artists that our government is on the lookout.
We will alert citizens.
We will expose scams.
And criminals will be prosecuted.
Preventing fraud in the execution of stimulus funding is a key element to the ultimate success of the Recovery Act.
I wish to thank all four distinguished witnesses for their assistance, and I welcome their testimony.

Source