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National Debt

Waste, Fraud and Abuse in the Stimulus Program Revealed

  • May 26, 2011

    A Government Accountability Office report released Tuesday, found that at least 3,700 government contractors and nonprofit organizations that received more than $24 billion from the stimulus owed $757 million in back taxes as of Sept. 30, 2009, the end of the budget year. According to the report the tax delinquents accounted for nearly 6% of the 63,000 contractors and grantees examined. However, that number could be much higher. This is because the known tax debt does not measure such factors as income underreporting.

    The stimulus package, enacted in February 2009, funneled some $821 billion into the economy. Of that, about $275 billion was designated for contracts and grants, of which nearly $200 billion had been paid out as of March 25, 2011.

    Here are three examples from the hundreds of firms in arrears to the federal government:

    - An engineering firm that received a $100,000 stimulus act contract but owed $6 million in taxes
    - A social service nonprofit that received more than $1 million in stimulus funds owed taxes of $2 million.
    - A security firm that owed $9 million received more than $100,000 in stimulus money.

    Federal law does not prohibit tax delinquents from getting government contracts or grants. While the federal government requires contractors to present documentation that their taxes are paid, some recipients escaped federal review because the money was disbursed at state or local levels.
    This is just the kind of waste, fraud and abuse that was set to take place in a multi-billion dollar program without any real supervision by the government. Americans voted this past fall for an end to the stimulus and bailouts which have yet to reverse the struggling economy, or produce hundreds of thousands of promised jobs. Unfortunately, it’s all too often that news like this is uncovered. If the government would live within its means, and be of limited and manageable size, American tax dollars would be better spent and less likely to end up in the hands of tax cheaters. This is exactly what CapitolWatch is working to change on behalf of all Americans.

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