Declarations of Covid-19 as a health emergency, followed by extreme and continued government mitigation mandates, are unprecedented for any respiratory virus in our history. The economic consequences of these directives – masks; social distancing; testing; travel, school and business restrictions − have led to historic levels of job losses and businesses stopping new hiring. People looking for work have been crippled from finding jobs. Tens of millions of Americans are at risk of losing their group health insurance. As Americans grow increasingly more desperate, they are more willing to be convinced to accept government bailouts.
Government handouts come with strings attached and lead all of us down a dangerous path.
As emergency orders crippled people’s ability to work and support themselves and their families, the government-created economic crisis was used to rationalize government giving away “free” taxpayer money and expanding social welfare programs. These political measures to “help” are important to closely examine, as they reveal a very different motive.
The $2 trillion CARES Act, which was preceded by the $3.5 billion Families First Coronavirus Response Act, the $8.3 billion Coronavirus Preparedness and Response Supplemental Appropriations Act, and the $75 billion Paycheck Protection Program and Health Care Enhancement Act, resulted in massive Federal and State money towards expanded government aid and social programs. These included:
- $290 billion in stimulus checks. (The stimulus bills alone cost each American taxpayer $16,800 according to the Committee for a Responsible Federal Budget.)
- $260 million on extended unemployment benefits from 26 to 39 weeks, with four months of an additional $600 in weekly benefits under Pandemic Emergency Unemployment Assistance.
- Extended four weeks of paid sick leave and ten weeks of expanded family leave benefits under the Families First Coronavirus Response Act for workers impacted by Covid-19.
- $750 million for Head Start. (Since it began in 1969, the program has still not demonstrated quantifiable improved long-term academic outcomes for children, failing even after 90 studies, while costing taxpayers about $12 billion a year, according to the Congressional Budget Office.)
- $3.5 billion for early learning and child care. (universal preschool has no research to demonstrate meaningful positive outcomes for children or to be cost-effective, as the School of Public Policy at George Mason University reported.)
- $685 million for public housing and urban development (HUD). (This program was established in 1965 and budgeted at $59.5 billion for 2021. It has been plagued with scandal and corruption since its inception.)
- $30.75 billion for education. (The University of New Mexico, for example, gave $8.6 million to students for tuition, housing, high speed internet, and food.)
- $13.2 billion of the educational funding was set aside for the Elementary and Secondary School Emergency Relief Fund for low-income, literacy, English learners (non-English speaking immigrants), minorities, homeless, childcare and other social services. (New Mexico’s K-12 public school system, for example, received $22.3 million.)
- $25 billion on expanded food assistance programs, food banks, extended SNAP and EBT benefits; $19 million for expanded U.S. Department of Agriculture food programs.
- $16.5 billion to extend the Temporary Assistance for Needy Families (TANF) program. (This is a program created in 1996 that has been shown to be a weak safety net that does little to alleviate poverty and hardship, and rarely lifts families out of poverty or moves parents into jobs, according to the Center on Budget and Policy Priorities.)
- $100 million for broadband grants. (For example, $1 million for broadband in Santa Fe County went to Redi-Net, which had been the subject of a 2018 State Auditor investigation for $1 million of unaccounted funds and “significant violations” after being awarded a $10.5 million grant from Obama’s American Recovery and Reinvestment Act in 2010.)
- $25 billion was awarded to public transportation agencies, according to the Federal Transit Administration; New Mexico got $133 million towards public transportation, which according to the NM DOT went to numerous social programs, including, for example, $84,661 to Assistance Dogs of the West, $296,269 to Adelante, $487,288 to Capacity Builders, $205,328 to Mandy’s Farm, $193,607 to Life ROOTS, and $232,265 to Tresco; $79.8 million went to Albuquerque, an amount more than 165 percent higher than the city’s total transit budget for 2020 – that’s a lot of face masks.
- $150 billion in “coronavirus relief funds” and $45 billion “disaster relief funds” to state and local governments for expanded social programs which have been spent on a $4.5 million new boardwalk with a helicopter along the popular Little O’Malley Peak hiking trail near Anchorage, Alaska and $236,000 for a mountain bike trail in Chugach State Park; a new fence around the breezeway of the Sanford city hall in Florida; and $2.2 million for illegal immigrants in Albuquerque. The National Endowment for the Arts received $44.5 million.
- $400 million in election grants to states, which, according to reports filed with the U.S. Election Assistance Commission were primarily used by the states to promote mail-in absentee ballots; California was questioned by the House Oversight and House Administrations Committees for using it to give a $35 million contract to SKD Knickerbocker, Joe Biden’s mail election campaign advisory firm.
Americans are coming to understand that the crisis resulting from the government lockdowns and restrictions was used to convince politicians to support the CARES Act. This Act, however, was never about health or helping working Americans. It can best be described as bailouts in return for socialism.
It’s undeniably evident that the CARES Act was focused on the progressive tenet of redistribution of wealth and growing the numbers of Americans dependent upon the government. It also epitomizes imprudent government spending and spending not free from corruption by special interests. Money is taken from working taxpayers, given to those who aren’t, expanding social programs and the size and power of government entities, while lining the pockets of special interests. That’s socialism.
Winners and Losers
Equally undeniable, but sacrilege to report, is that the CARES Act was less about altruism and caring for people or the best interests of working Americans, and more about making money for special interests. Covid-19 and the CARES Act brought huge profit potential to the largest and wealthiest corporations and individuals.
Large healthcare industry hospitals and healthcare providers stood to benefit most from the CARES Act.
- The $175 billion Provider Relief Fund was allocated to hospitals and other providers, with significant portions supposedly targeted for safety net hospitals for indigent care and rural hospitals. Also called the Public Health and Social Service Emergency Fund, there was no requirement that losses had to be related to Covid-19; there was no formal report to document how providers spent the money or initially any application process; and the government conducted no review of which providers qualified for the money, leading to the initial $30 billion given with no strings attached, followed by $50 billion for general distribution. Of the initial $30 billion allotments, for example, New Mexico received $169.5 million and Texas $2.1 billion. To date, a total of $10.93 billion of the $24.5 billion Phase 3 funding has been distributed, $19.6 million to New Mexico and $844 million to Texas.
- This fund paid out an average of about $108,000 per hospital bed in the U.S., according to a Kaiser Family Foundation report. Over 394,000 providers had received payments as of December 16, 2020, according to the HHS database.
- Of the $100 billion going to hospitals and health facilities, the Fund included 20 percent increased reimbursements for Covid-19 patients, along with accelerated reimbursements, making it more profitable to care for patients suspected of or testing positive for Covid-19.
- In August, HHS added $1.4 billion for 80 children’s hospitals, although children account for a small fraction of Covid-19 cases. Georgia’s children’s hospitals got $33 million in Covid-19 aid, for example, even though only 279 Georgian children had been hospitalized testing positive for Covid-19 (equating to $118,279 per pediatric patient).
- Large major hospital networks got the largest payments, and it was later realized that poor rural hospitals had received significantly less.
- One of the largest hospital systems, HCA Healthcare, reported a profit of more than $800 million during the second quarter of 2020 thanks to the CARES Act money. While it returned about $6 million of its CARES Act money, as did a few other hospitals, most didn’t.
- Hospital systems tied into government managed care and Covid-19 government funding profited the most. The University of New Mexico Hospital, for example, received $20 million from the CARES Act; on top of increased reimbursements for Covid-19 patients and providing other pandemic-related care. This hospital, alone, finished the 2020 fiscal year with $137 million more in profits over 2019. UNM Health Sciences Center also reported a $36 million surplus in 2020 fiscal year.
As government mandates forced medical practices to reduce care for non-Covid-19 patients and “nonessential” services, smaller rural hospitals and physician practices have been financially run out of business.
- By January 21, 2021, according to the Center for Healthcare Quality and Payment Reform, 897 rural hospitals across the country were at risk of closing – 40 percent of all the rural hospitals in the country. Some 500 were financially struggling prior to Covid-19 restrictions and their financial situations deteriorated with the pandemic, said Becker’s Hospital CFO Report. In Texas, 56 percent of its rural hospitals (82) and 25 percent in New Mexico (6), for example, are at risk of closing.
- About 16,000 medical practices closed last year, around eight percent of the nation’s physicians surveyed; and another four percent plan to close this year. According to the Physicians Foundation, doctors said their closures were the result of Covid-19 regulatory burdens. In its survey, most doctors stated concerns of serious consequences for patient health due to not receiving care during the pandemic. They also voiced concerns that doctors are not part of national health care conversations, as the system is being directed by policy makers and special business interests. Doctors overwhelmingly ranked government-funded and administered single payer healthcare as the poorest option for the country’s healthcare system and for patients.
The CARES Act became a money maker for many of the largest U.S. and international companies:
- Four thousand international companies were awarded an estimated $24.8 billion for Covid-19 contracts for everything from masks, test kits, laptops and sanitizer, to audiobook and mobile tracking apps.
- The pharmaceutical industry received $18 billion by October for Operation Warp Speed for vaccines. Besides these lucrative contracts, according to an Accountable Pharma report, the Securities and Exchange Commission Market Abuse Unit was alerted when it was discovered that top executives of just five of these pharmaceutical companies had personally profited by over $145 million in stock trades, and 22 executives had pocketed more than $6.6 million apiece, on top of their salaries and bonuses.
- Insurance companies were provided significant tax benefits and other financial benefits enabling them, for example, to add a five-year carryback period and repealing the 80 percent limitation for net operating losses for the past three years.
Insurance companies enjoyed huge profits off the government Covid-19 mandates. Government emergency declarations restricted and cancelled all “nonessential medical care” and countless patients were no longer able to receive needed medical care for conditions, including heart attacks, strokes, diabetes and cancers. Covid-19 patients were prioritized. New York physicians reported in the Journal of the American Medical Association that hospitalizations across a full range of non-Covid-19 diagnoses had plummeted during the peak of the pandemic and have continued at about half of baseline care levels. Even this past December, Beckers Hospital Review reported 106 major medical centers across the U.S. were still not performing “elective” procedures.
While patients haven’t been receiving medical care as “nonessential” medical care was cancelled and care for non-Covid-19 patients was curtailed, hospitals and doctor’s practices have sat underutilized with staff layoffs and even closures. As a result, health care payouts and insurance claims have plummeted while insurance company profits have doubled over the last year, as John Hopkins’ researchers reported in JAMA. Second quarter net profits alone for UnitedHealthcare doubled to $6.7 billion; Anthem to $2.3 billion; and Humana to $1.8 billion compared to last year. Forbes’ Infographic illustrated the massive boost in profits. Anthem, which operates Blue Cross and Blue Shield plans in 14 states, admitted that its $29 billion in revenue during the second quarter was gained by reductions in healthcare during the pandemic to patients covered by its commercial plans, Medicaid and Medicare seniors.
As the New York Post reported, profiteering off the pandemic by insurance companies and the nation’s largest insurers between April and June prompted a Congressional probe from the House Energy and Commerce Committee.
By law, insurers are only allowed to keep 15-20 percent of premiums for administration costs and profits. Blue Cross Blue Shield of Michigan announced last May it was issuing over $100 million in refunds to customers because it had paid out too little in medical claims due to the pandemic; UnitedHealthcare issued credits of 5 to 20 percent; Harvard Pilgrim Health Care announced $32 million in premium credits; BCBS of Massachusetts returned $101 million to its members in August; and BCBS of New Mexico announced in October that it was issuing $4 million in premium credits to its insured employer customers, equating to 15 percent of group plan medical premiums.
However, millions of unemployed Americans on COBRA who’d lost their employer group plans and were paying their own health insurance premiums in full didn’t receive the credit. While employee members would have received their share of the excess premium rebates, most COBRA participants were covered through employer trusts and, under Department of Labor guidelines, the rebates went to their former employers. A single COBRA participant covered under New Mexico’s Public Schools Insurance, for example, paid out $17,547.78 in premiums in 2020 for himself and his spouse, leaving the school system to pocket significant profits off each member with no accountability.
Profiteering off the pandemic mandates created a “billionaire bonanza.” Covid-19 government policies made the richest billionaires richer – making unfathomable amounts of money while Americans were struggling. By mid-April, the richest 600+ billionaires had already scored $700 billion, averaging $42 billion a week, the Americans for Tax Fairness and the Institute for Policy Studies reported. Jeff Bezos (Amazon) had made $25 billion; Elon Musk (Tesla contracted to make ventilators) made $5 billion, Eric Yuan (Zoom) $2.58 billion, and Steve Ballmer (former Microsoft, think videoconferencing) made $2.2 billion, as examples.
As the pandemic lockdowns and government policies continued, so did billionaire profiteering. By January 10, 2021, Elon Musk had a net worth of $189.7 billion, Jeff Bezos $185.7 billion, the Arnault Family $155.4 billion, Bill Gates $122 billion, Mark Zuckerberg $97.9 billion, etc. Just ten billionaires had accumulated a net worth of $1.2 trillion during the pandemic, as was reported in AIER:
Big Government budgets and salaries have ballooned thanks to Covid-19 policies. Anthony Fauci, Director of NIAID, is now the highest paid Federal employee in the entire government, making more than even the President of the U.S., Forbes reported. Covid-19 has given him public celebrity status and power. NIH’s and NIAID’s budget had been increased in FY2020 to $41.68 billion and $5.89 billion, respectively. Initially, the FY2021 budget was to be lower, but a July 2020 Covid-19 spending package awarded the NIH an additional $5.5 billion, giving it a budget increase twice that of other federal institutions, including $40 million to Fauci’s lab for research on a universal influenza vaccine. The CARES Act gave $1.5 billion in supplemental money to his NIAID, $233 million of that for building infrastructure; along with $767 million for Operation Warp Speed vaccine development. His NIAID lab, Vaccine Research Center, is being doubled in size, with a $197.4 million addition on its 310-acre grounds, to be completed in 2024, and envisioned to have over 25,000 employees.
The CDC’s budget was similarly expanded last year with an additional $16.3 billion awarded to support government actions surrounding Covid-19, in addition to $39.36 billion to state health departments through the CDC. CDC’s FY2021 budget totals more than $12.6 billion. Objectivity about Covid-19 is obviously compromised when your department stands to gain so much money.
Meanwhile, at the end of the year, states and municipalities across the country had billions of unspent CARES Act money and governors and city officials were scrambling to figure out what to do with it: $2 billion was unspent in Texas, $2.4 billion in NJ, $818 million in Alabama, $700 million in Indiana, $819.7 million in West Virginia, $440 million in Utah, $310 million in South Dakota, $56 million in Palm Beach County, $27 million in Arkansas.
- Across the country, states and localities rushed in last minute spending sprees of unused CARES Act money on everything from a football stadium and broadband to fire and police bonuses.
- The CARES ACT community grants have been significantly unused in Alaska, for example, where 63 communities hadn’t accepted their grants and only 18 had applied for followup payments.
- Vast amounts of CARES Act money for education have yet to be spent or even allocated, according to a January 2021 Center for American Progress report. It found $847 million hasn’t even been allocated by states and another $3 billion allocated to colleges and $463 million for students remains unspent.
- CARES Act money for rent relief has also gone unspent; $108 million in Pennsylvania, $38 million for rent and small business money in Atlanta, most of the $4 million to Syracuse and Onondaga County, and $53 million in Minnesota, as examples.
All told, according to the February 3, 2021 Issue Brief by the Committee to Unleash Prosperity, $1 trillion of the Covid-19 relief bills has yet to be spent. Clearly, the emergent need for another bailout is questionable when they haven’t even spent the first one.
Digging deeper into the CARES Act reveals Obama-era entitlements in action. Part Two will examine how Obama-era entitlements set the stage for the greatest destruction of the workforce and expansion of government entitlements our country has seen in over half a century.