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Pentagon Redirected Coronavirus Response Funds to Defense Contractors, WaPo Reports

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  • In March, Congress gave the Pentagon $1 billion under the Cares Act to help the country prepare and respond to the coronavirus. 
  • However, according to a Washington Post report, rather than using the money to build up the nation’s supply of medical equipment, the Pentagon funneled the majority of the funds to defense contractors and used it for making things like jet engine parts, body armor, and dress uniforms. It even gave funds to companies that had already received assistance from the Paycheck Protection Program.
  • The report comes as healthcare officials continue to ask for more funding and medical equipment. Congress even criticized the Defense Department for not using the money as intended. 
  • Still, the Pentagon argues that the funds are crucial to niche manufacturers that have been impacted by the pandemic. It’s also asking for an additional $11 billion in the next stimulus package.

The Funds 

The Washington Post released a new report Tuesday highlighting how the Pentagon redirected taxpayer money meant for coronavirus response efforts.

Back in March, Congress gave the Pentagon $1 billion under the Cares Act to “prevent, prepare for, and respond to coronavirus.”  The fund was allocated under the Defense Production Act, which allows the president to compel U.S. companies to assist in producing items deemed essential to the national interest. 

After the money was allocated, however, the Department of Defense began reshaping how it would give out the funds in a way that deviated from what Congress had intended. Lawyers for the department concluded that the money could be used for defense production, including projects that had little to do with responding to the pandemic.

So rather than use that money to build up the nation’s supply of medical equipment, the report says the Pentagon funneled the majority of the funds to defense contractors and used it for making things like jet engine parts, body armor, and dress uniforms. 

For example, Firms like Rolls-Royce and ArcelorMittal received $183 million to “maintain the shipbuilding industry.” Tens of millions of dollars were given for space surveillance, drone and satellite technology.

According to the Post, $80 million was given to a Kansas aircraft parts business that was “suffering from the Boeing 737 Max groundings and the global shutdown of air travel,” and around $2 million was awarded to a domestic manufacturer of Army dress uniform fabric. 

The newspaper also reported that at least 10 of the 30 companies that received assistance from the Defense Department had also received loans through the Paycheck Protection Program. That program allocated billions of dollars in forgivable loans to the small businesses impacted by the coronavirus pandemic.

This news made critics even more frustrated because it seemed to once again show how bailout funds have been handed out unfairly in certain sectors of the economy. 

For instance, the company Weber Metals received between $5 million and $10 million through the PPP in April to support 412 jobs, then it got an extra boost through a $25 million Department of Defense relief award in June. 

When pressed about this, a Defense Department spokesperson told the paper that the two bailout programs are not “in conflict or duplicative,” because a PPP loan does not make any directive with respect to supporting national defense.

Still, the Post notes that the Trump administration has done little to limit defense firms from accessing multiple bailout funds at once. He’s also not requiring the companies to refrain from layoffs as a condition of receiving the awards.

COVID Relief Money Still Needed 

This news comes as health officials across the U.S. continue to request funding for pandemic response efforts. In his Senate testimony just last week, CDC director Robert Redfield said states desperately need $6 billion to distribute vaccines to Americans early next year. On top of that, reports of severe N95 mask shortages at hospitals around the country have continued to emerge. Both are precisely the types of issues that the money was meant to help address.

The Washington Post notes that the $1 billion is just a fraction of the $3 trillion in emergency spending that Congress approved earlier this year. Still, it shows how in many cases, the money is redirected to firms that weren’t originally targetted for assistance. 

It also shows how hard it is for Congres to track how this money is spent and intervene when changes are made. 

The Pentagon did initially plan to spend the bulk of the fund on medical supplies. In April, Ellen Lord, undersecretary of defense for acquisition and sustainment, told reporters that three-quarters would go toward medical resources and the rest to defense contractors.

Then in June, she told lawmakers during a congressional hearing that the department realized defense contractors had “critical needs as well.”

According to the report, DOD lawyers approved an arrangement where some $17 billion in Health and Human Services funding would be used for the medical industry instead, freeing up more money for defense contractors. Ultimately, the Pentagon presented a spending plan to Congress in June that set aside $688 million for the defense industry.

So essentially the Defense Department claims that the funds are crucial to niche manufacturers that need production from the economic instability caused by the pandemic. Like companies that make aircraft parts for military and commercial jets, for instance. They’ve been pretty impacted by the slowdown of air travel. 

Lord told the Post that her office had worked closely with Congress to meet the needs of both the medical and defense industries.

“We are thankful the Congress provided authorities and resources that enabled the [executive branch] to invest in domestic production of critical medical resources and protect key defense capabilities from the consequences of COVID,” she added.

“We need to always remember that economic security and national security are very tightly interrelated and our industrial base is really the nexus of the two.”

However, the Democratic-leading House Committee on Appropriations has made it clear that the Defense Department has not distributed the money as intended under the Cares Act.

The committee wrote in its report on the 2021 defense bill, “The Committee’s expectation was that the Department would address the need for PPE industrial capacity rather than execute the funding for the DIB (defense industrial base).”

The Pentagon has countered that it has been fully transparent with Congress about its plans.  Still, the Post notes that the $1 billion in coronavirus funds came at a time when U.S. military spending was already near all-time highs.

According to the report, “the $686 billion defense budget for fiscal year 2019 is comparable to a typical year during the Cold War or the period shortly after 9/11, although it has declined somewhat as a percentage of the economy.”

It also notes that some of the major defense contractors have remained financially healthy despite all the pandemic related disruptions and have continued to pay stock dividends to investors.

Though its already given out millions, the Pentagon is requesting an additional  $11 billion in a potential new stimulus.

See what others are saying: (CNN) (The Washington Post) (The Hill) 

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At Least 130,000 Covid-19 Deaths Were Avoidable, Columbia Study Finds

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  • A report from the National Center for Disaster Preparedness at Columbia University estimates that between 130,000 and 210,000 coronavirus deaths were avoidable in the United States.
  • While the U.S. accounts for just 4% of the global population, the country makes up 20% of the world’s coronavirus cases and fatalities. The country’s proportional death rate is twice as high as Canada’s and 50 times higher than Japan’s.
  • The report largely blamed the Trump administration for ignoring warning signs and scientists, arguing that he has been downplaying the issue, peddling misinformation, and turning the pandemic into a political game.
  • It also criticized the Trump administration and other federal leaders for not responding quickly enough in terms of testing and social distancing measures, which could have saved lives if implemented sooner.

Preventable Deaths in the U.S. 

The National Center for Disaster Preparedness at Columbia University released a report on Wednesday estimating that at somewhere between 130,000 and 210,000 coronavirus deaths in the United States were avoidable. 

At the time the report was made, the county had lost 217,000 thousand lives to the virus. As of Thursday morning, the U.S. death toll stands at 222,000. While the U.S. accounts for just 4% of the global population, the country makes up 20% of the world’s coronavirus cases and fatalities. 

According to the report, the U.S. has the ninth highest proportional death rate in the world behind Peru, Belgium, Bolivia, Brazil, Ecuador, Chile, Spain, and Mexico. The country’s proportional death rate is twice as high as Canada’s and 50 times higher than Japan’s.

The report estimated how many deaths may have been preventable by seeing what the U.S. death toll may have been if it had mirrored the strategies of more proactive and high-income countries.

For example, it says that if the U.S. had followed policies similar to those in Canada, the country may have seen just 85,192 fatalities, making more than 132,500 American deaths “avoidable.” If the States had mirrored Germany the death toll may have been 38,457, leaving 179,260 avoidable losses. If the U.S. modeled after South Korea’s robust intervention, Americans may have seen around 2,799 deaths, leaving nearly 215,000 deaths avoidable.

The researchers do acknowledge that other various factors could contribute to a country having a higher mortality rate, including demographics, distribution of population, health risk factors like obesity, and health care access in general. Still they do not believe this would explain the magnitude of the COVID-19 deaths in the U.S. According to the report, even if the U.S. had implemented an “averaged” response, the virus may have only claimed between 38,000 to 85,000 lives, meaning that at least 130,000 COVID-19 deaths might have been avoidable.

Failures of the Trump Administration

Many, including the researchers behind this report, largely blamed state and federal governments as well as President Donald Trump’s Administration for the catastrophic death toll in the nation. Criticism has come from leaders all over, including former president Barack Obama. During a speech on Thursday, Obama said that he handed Trump’s White House a “pandemic playbook” that got thrown out the window.

“Other countries are still struggling with the pandemic but they’re not doing as bad as we are because they’ve got a government that’s actually been paying attention,” Obama added. “And that means lives lost. And that means an economy that doesn’t work. And just yesterday, when asked if he’d do anything differently, Trump said, ‘Not much.’ Really? Not much? Nothing you can think of that could have helped some people keep their loved ones alive?” 

Because the U.S. has been repeatedly condemned for its reckless mishandling of the virus, the idea that thousands of deaths could have been prevented is not surprising. Still, seeing the staggering numbers and lives that did not need to be taken is a sobering reminder of the tragedy the country is currently facing. The report said this tragedy falls on Trump’s hands and specifically criticized the president for ignoring science and instead spreading misinformation and turning the pandemic into a political game. 

“Many nations facing the pandemic crisis have put politics aside and orchestrated a response led by public health experts and global coordination,” the report stated. 

“Unfortunately, the Trump Administration has shown hostility to much of the critical guidance and recommendations put forth by its own health agencies, with the President at times misleading the public on the scope of the threat, attempting to ‘downplay’ the extent of the crisis, and advocating for unproven therapeutical or unsafe treatments.”

A Delayed Response From the U.S.

Among the many oversights, the report claimed the administration was responsible for was a lack of testing. From the start of the pandemic, the U.S. was far behind on testing efforts, which are essential in fighting a pandemic. Both the U.S. and South Korea had their first confirmed cases on the same day. South Korea began rapid widespread testing and had conducted 250,000 by March 16. At this time in the United States, Trump was still peddling the idea that the virus was like a flu and might fade away. 

The report also noted that a lack of mask mandates and delayed responses in other areas like social distancing likely contributed to the spread of the coronavirus. If major cities in the country had introduced social distancing measures just one or two weeks earlier, it is estimated that 62% of cases and 55% of deaths could have been avoided. 

Deaths and case counts are not the only things that could have been avoided. The report noted that in New York State alone 325,000 children have been pushed to poverty because of the pandemic and 4,200 children have lost a parent to COVID-19. If policies had been implemented earlier, there could be at least 1.5 million less people grieving across the country right now. 

“The U.S. should have – and could have – done better to protect the nation, and particularly its most vulnerable populations, from a threat that was identified and recognized early in 2020,” the report said in its conclusion.

“The weight of this enormous failure ultimately falls to the leadership at the White House – and among a number of state governments – which consistently undercut the efforts of top officials at the CDC and HHS…a pandemic is not a time for a decentralized and combative national response.”

See what others are saying: (Forbes) (Axios) (CNN)

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Purdue Pharma Agrees To Plead Guilty To 3 Opioid-Related Charges in $8B Settlement, But Don’t Expect Them To Pay the Full Amount

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  • As part of a more than $8 billion settlement with the U.S. Department of Justice, Purdue Pharma will plead guilty to one count of conspiracy to defraud the U.S. government and two counts of violating anti-kickback, or bribery, laws.
  • Because Purdue filed for bankruptcy last year, that full figure likely won’t be collected by the government.
  • Under the settlement, which will need approval in bankruptcy court, Purdue would become a public benefit corporation that is controlled by the government, with revenue from opioid sales being used to fund treatment options and programs.
  • A number of state attorneys generals and Democratic lawmakers have said the settlement does not hold Purdue or its owners fully accountable and could derail thousands of other cases against the company.
  • They have also argued that the government should “avoid having special ties to an opioid company… that caused a national crisis.”

Purdue to Plead Guilty to 3 Criminal Charges

The Justice Department announced Wednesday that Purdue Pharma has agreed to plead guilty to three criminal charges related to fueling the country’s opioid epidemic. 

Notably, those guilty pleas come as part of a massive settlement worth more than $8 billion, though Purdue will likely only pay a fraction of that amount to the government.

Purdue is the manufacturer of oxycontin, which is a powerful and addictive painkiller that’s believed to have driven the opioid crisis. Since 2000, opioid addiction and overdoses have been linked to more than 470,000 deaths. 

As part of the settlement, Purdue will plead guilty to one count of conspiracy to defraud the United States. There, it will admit that it lied to the Drug Enforcement Administration by claiming that it had maintained an effective program to avoid opioid misuse. It will also admit to reporting misleading information to the DEA in order to increase its manufacturing quotas.

While Purdue originally told the DEA that it had “robust controls” to avoid opioid misuse, according to the Justice Department, it had “disregard[ed] red flags their own systems were sending up.”

Along with that guilty plea, Purdue will also plead guilty to two anti-kickback, or bribery, related charges. In one charge, it will admit to violating federal law by paying doctors to write more opioid prescriptions. In the other, it will admit to using electronic health records software to increase opioid prescriptions.

According to a copy of the plea deal obtained by the Associated Press, Purdue “knowingly and intentionally conspired and agreed with others to aid and abet” the distribution of opioids from doctors “without a legitimate medical purpose and outside the usual course of professional practice.”

The $8 billion in settlements will be split several different ways.

In one deal, the Sackler family — which owns Purdue — will pay $225 million to resolve civil fines. 

As part of the main deal, another $225 million will go directly to the federal government in a larger $2 billion criminal forfeiture; however, the government is actually expected to forego the rest of that figure.

In addition to that, $2.8 billion will go to resolving Purdue’s civil liability. Another $3.54 billion will go to criminal fines, but because Purdue filed bankruptcy last year, these figures also likely won’t be fully collected — largely because the government will now have to compete with other claims against Purdue in bankruptcy court.”

Purdue Will Become a “Public Benefit Company”

Since Purdue is in the middle of bankruptcy proceedings, a bankruptcy court will also need to approve the settlement.

“The agreed resolution, if approved by the courts, will require that the company be dissolved and no longer exist in its present form,” Deputy Attorney General Jeffrey Rosen said. 

However, that doesn’t mean that Purdue’s fully gone or that it will even stop making oxycontin. In fact, as part of this settlement, the Sacklers would relinquish ownership of Purdue, and it would then transform into what’s known as a public benefit company.

Essentially, that means it would be run by the government. Under that setup, money from limited oxycontin sales, as well as from sales of several overdose-reversing medications, would be pumped back into treatment initiatives and other drug programs aimed at combating the opioid crisis.

For its part, the Justice Department has endorsed this model. 

Should Purdue Be Punished More?

There has been strong opposition to this deal, mainly from state attorneys general and Democratic members of Congress who say it doesn’t go far enough.

Those critics argue that the settlements don’t hold Purdue or the Sackler family fully accountable, especially the Sacklers since — unlike Purdue — they didn’t have to admit any wrongdoing.

“[W]hile our country continues to recover from the pain and destruction left by the Sacklers’ greed,” New York Attorney General Letitia James said, “this family has attempted to evade responsibility and lowball the millions of victims of the opioid crisis. Today’s deal doesn’t account for the hundreds of thousands of deaths or millions of addictions caused by Purdue Pharma and the Sackler family.”

“If the only practical consequence of your Department’s investigation is that a handful of billionaires are made slightly less rich, we fear that the American people will lose faith in the ability of the Department to provide accountability and equal justice under the law,” A coalition of 38 Democratic members of Congress said in a statement to Attorney General Bill Barr last week.

While this settlement doesn’t include any convictions against the Sacklers specifically, as the Justice Department noted, it also doesn’t release them from criminal liability and a separate criminal investigation is ongoing. 

Still, last week, 25 state attorneys general asked Barr not to make a deal that includes converting Purdue into a public benefit company, urging the Justice Department to “avoid having special ties to an opioid company, conflicts of interest, or mixed motives in an industry that caused a national crisis.” 

Part of their concern is that the government would essentially run this new company while also holding the original one accountable. Those attorneys general instead argued that Purdue should be run privately but with government oversight. 

See what others are saying: (Associated Press) (The New York Times) (Fox Business)

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Parents of 545 Children Separated at U.S. Border Still Can’t Be Found

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  • A Tuesday filing update from the ACLU and Department of Justice revealed that a Steering Committee in charge of reuniting families that were separated at the U.S.-Mexico border has not been able to find parents of 545 separated children. 
  • Efforts to reach these parents via telephone have been unsuccessful and those involved are not hopeful that will change. Two-thirds of these parents are believed to be in their respective countries of origin.
  • So far, parents for 485 kids have been reached.
  • Finding these parents is an already complicated process made even more strenuous by the coronavirus pandemic. On-the-ground searches were suspended because of COVID-19 but have now picked up in limited capacity.

Parents of 545 Children Remain Unfound

A Tuesday court filing from the U.S. Department of Justice and American Civil Liberties Union revealed that the parents of 545 children who had been separated at the U.S.-Mexico border have not been found or contacted.

Two thirds of those parents are expected to be in their respective country of origin. While there have been efforts to reach these families via phone, they have not been successful. Other efforts to reach these parents are in the works. 

Thousands of families were separated in 2018 under President Donald Trump’s zero tolerance policy, but a federal judge ordered that those families should be reunited. Soon after, many were, but in reality many more families had actually been separated. It was later revealed that the Trump Administration had been separating families back in 2017 under a pilot program. A court order reuniting those families was not issued until last year. 

A Steering Committee, of which the ACLU and other organizations are members, is now searching for these parents. According to the filing, the government provided a list of 1,556 children. The current focus on reaching children whose membership in this case is not contested and who have available contact information for a sponsor or parent. The Steering Committee has attempted to reach the families of all 1,030 children who fit that bill, and have successfully reached the parents, or their attorneys, for 485 kids. 

“There is so much more work to be done to find these families, Lee Gelernt, the deputy director of the ACLU Immigrants’ Rights Project, told NBC News, which broke the story.

“People ask when we will find all of these families, and sadly, I can’t give an answer. I just don’t know,” he continued. “But we will not stop looking until we have found every one of the families, no matter how long it takes. The tragic reality is that hundreds of parents were deported to Central America without their children, who remain here with foster families or distant relatives.”

Efforts to Find Parents

Because so much time has passed between family separation practices and today, initiatives to find those parents are difficult. They are also further complicated by the fact that during the pilot program, U.S. officials did not collect thorough information from these parents, and many were deported before courts ordered they be reunited with their kids. 

Nan Schivone, the legal director for Justice in Motion, which carries out on-the-ground searches for parents, told The Washington Post that attorneys “take the minimal, often inaccurate or out-of-date information provided by the government and do in-person investigations to find these parents.” 

Schivone said it is an “an arduous and time-consuming process on a good day.” Sometimes, these lawyers might find themselves in remote villages where outsiders are suspect and language barriers can slow down communication.

The pandemic halted these efforts as lockdowns and curfews made it impossible for Justice in Motion to look for parents abroad. Though, Tuesday’s filing revealed that “limited physical on-the-ground searches for separated parents has now resumed where possible to do so.” 

See what others are saying: (NPR) (NBC News) (Washington Post)

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