Stimulus checks and other coronavirus relief threatened by old technology and a rocky government rollout


Stimulus checks and other coronavirus relief threatened by old technology and a rocky government rollout

The bulk of the challenges have occurred with three initiatives designed to get cash to struggling Americans: a $1,200 per adult relief program that launched this week, $349 billion in Small Business Administration loans, and $260 billion in weekly unemployment benefits for the more than 22 million people — and growing — out of work.

The SBA ran out of money to make small business loans this week, almost no unemployment aid has reached eligible self-employed and gig workers, and a significant number of Americans who were due to receive relief payments this week went on the IRS.gov website only to see a message that “payment status not available.”

Current and former government officials say it would be a tall order for any president to execute massive new programs in a matter of weeks, and tens of millions of Americans did receive direct deposits worth $1,200 or more this week. But the Trump administration’s promise of swift and effective action — President Trump called the small business program “flawlessly executed” this week — is colliding with a federal and state apparatus not well designed to deliver so much money so fast.

The technological backbone to much of the relief — including the distribution of relief checks and the unemployment insurance system — is rooted in systems dating to the 1960s, requiring knowledge of programming languages not widely used in decades. An administration that had made little priority of keeping senior positions staffed, meanwhile, is struggling now to quickly implement one of the biggest government interventions in history.

If problems continue, it could leave people even less able to pay bills or buy groceries and further exacerbate the economic decline. Politically, it could be highly damaging to Trump, who is continuing to belittle his predecessor’s record of managing complex government operations.

“Biden/Obama were a disaster in handling the H1N1 Swine Flu. Polling at the time showed disastrous approval numbers. 17,000 people died unnecessarily and through incompetence!” Trump tweeted Friday, adding “Also, don’t forget their 5 Billion Dollar Obamacare website that should have cost close to nothing! ”

The White House on Friday defended its rollout, saying of 80 million payments made this week, all but 1 percent reached their intended recipients. Trump on Friday called the initiative an “incredible success. ”

“We couldn’t be more proud of what we’ve done,” Treasury Secretary Steven Mnuchin said Friday in an interview.

Still, a big test faces the administration as tens of millions of additional taxpayers are eligible for relief, and many of those without bank accounts or direct deposit information on file could face lengthy delays.

Among the problems taxpayers reported this week were payments being sent to incorrect bank accounts, failures to include $500 checks for children, and not getting money at all due to a technical glitch involving tax preparers.

For example, MetaBank, which serves tax preparers, received payments for 300,000 temporary bank accounts it uses for people who use an online tax service or accountant to pay their taxes. The bank sent them back to the IRS, which is now likely to issue paper checks. The IRS largely used 2018 taxpayer data, and some people have died or changed banks.

The IRS said it is aware of the problems, but is limited in what it can do to help. Taxpayers trying to sort out why they got an inaccurate check — or nothing at all when they qualified for a payment — are unable to communicate with the IRS. With the tax filing deadline delayed to July 15, the agency closed the last of its service centers — in Ogden, Utah — early last week, and the IRS had not been able to expand a pilot telework program for phone agents because of budget constraints, the agency said.

Americans were told to use the “Get My Payment” portal on the IRS website to check on the status of their payment and see if they need to input their bank account information. But many people who went on the portal received a message that the IRS doesn’t know the status of their payment is. Or they were locked out of the website altogether.

“The IRS systems are still hard-coded,” said John Koskinen, who was IRS commissioner from 2013 to 2017. “It’s not just a keystroke to go into the code and make the change and hope you’ve made it correctly. When you set up a new portal like this, it requires you to get into some very old legacy systems.”

The IRS uses a decades-old software and computer programming language called COBOL. The stimulus program has required multiple coding changes. The agency has at least 16 other databases with taxpayer information, none of which can communicate with the other.

The IRS raced to stand up the stimulus program with a depleted staff. Overall, the agency had 76,000 employees last June, down from 99,500 in 2010. Dozens of experts in the agency’s legacy computer systems have left or retired, current and former officials said. Starting in 2011, Republicans in Congress have repeatedly sought cuts to the IRS budget.

“[The agency] didn’t have the time to think about the outliers,” said a senior IRS official familiar with the agency’s technology operation who spoke on the condition of anonymity to be candid. “You’ve got two filing years. You’ve got divorced people. You’ve got people who’ve changed bank accounts. They simply couldn’t account for every single scenario.”

The IRS technology teams have been working remotely since the outbreak intensified. The IRS staff did manage to find a way to update the “Get My Payment” information once a day — an improvement over the usual once a week update to taxpayer information, two senior agency officials said.

“With tens of millions of payments, there are bound to be glitches,” said Chi Chi Wu, an attorney at the National Consumer Law Center. “If you want to blame anybody, blame Congress for not adequately funding the IRS and forcing them to deal with antiquated computer systems.”

Aneesh Chopra, the former chief technology officer for Obama, said the problems are deeply rooted in the government’s failure to modernize.

“This is very much a reminder of what life had been like a decade ago,” said Chopra. “The problems we highlighted then continue to permeate applications that are run at all levels of government.”

The IRS isn’t the only agency having challenges. The Treasury Department, undersecretary Steven Mnuchin, is working to oversee a sprawling rescue — including the IRS — even while its own senior ranks are depleted.

Treasury headed into the crisis with vacancies in more than half a dozen senior positions, some of whom would otherwise be playing key roles in processing the work, according to critics of the administration. Mnuchin does not have a chief of staff, for instance, or an under secretary for domestic finance, a role responsible for monitoring large changes in the U.S. economy. Mnuchin strongly disputed in an interview that he had allowed for key vacancies in the Treasury Department, pointing to a long list of officials in key positions, and saying Congress should move faster to confirm his appointees. Treasury has two deputy chiefs of staff.

Mnuchin personally reviews department news releases and informational pages, while also interacting frequently with lawmakers, Federal Reserve officials, the SBA, foreign banking ministers, and banking institutions such as the World Bank and International Monetary Fund, according to the people in close contact. On top of that, Mnuchin was also intimately involved much of this week in crafting the federal rescue package for the federal airlines.

With Mnuchin personally absorbed in implementing the first major bailout package, the administration has not made progress on an additional congressional package that both parties believe is necessary to dramatically increase the size of the loan program for small businesses.

“People will say I’m a micromanager and involved in lots of details,” Mnuchin said in an interview. “A lot of money has been allocated to us by Congress and I want to be involved in understanding the details.”

He added, “If I’m a bottle neck, I’m happy I’m a bottleneck — getting a lot done.”

Mnuchin was critical to sealing the deal over the stimulus last month, but in his absence progress another measure to expand funding for small businesses has been slow, according to multiple congressional aides. Mnuchin said in an interview he has continued to negotiate closely with Democrats this week on fixes to the small business program.

Democrats have demanded additional help for hospital workers and other concessions to increase small business lending. Republicans have resisted, though on Friday suggested a willingness to trade for more SBA funding.

The SBA has rapidly run out of money as businesses clamor for funds. The initial bill approved by Congress included about $349 billion in loans for the small business program, but within days it became clear the money would not last long, and the administration has already asked for an additional $250 billion.

As separate emergency loan program, meant as a bridge for small firms as they wait, was completely overwhelmed after receiving more than 3 million applications.

The unemployment safety net system, run by the Department of Labor and the states, has been equally deluged as more than 22 million Americans have been laid off or furloughed since Trump declared a national emergency on March 12.

Unemployment insurance is a federal program, but each state administers it for its residents. Many states were unprepared for the rush, which caused websites to crash repeatedly and people calling up to a hundred times a day to try to get through.

Many states have such outdated technology — which also rely on decades-old software — that their systems have struggled to make unemployment aid available for gig workers and self-employed workers who don’t normally qualify for money but were made eligible by the new law.

“Our systems are barely keeping up with the overwhelming volume,” said Phil Murphy, the governor of New Jersey, whose state has advertised a series of jobs recently seeking people proficient in old programming languages.

Florida has resorted to handing out paper applications and said this week it has a backlog of 850,000 applications. So far, the state has only sent money so far to 34,000 people.

Only four states — Iowa, Louisiana, Rhode Island and Texas — have actually started sending out any money to gig and contract workers, the Labor Department said.

Among those still waiting for their first check is Khalid Mahmood, 66, an Uber driver in Woodbridge, VA

Mahmood had been driving for the ride-hailing company to supplement his Social Security income, which by itself isn’t enough to cover his rent and other monthly bills, but had to stop as the coronavirus shuttered businesses statewide. Since then, he’s tried and failed to obtain unemployment aid.

“No records found,” Virginia’s site keeps telling him

“Most of my friends who are Uber drivers, they have had no money since the day they stopped working,” said Mahmood added, estimating they’ve been without a check for over a month now. “They are in a very bad situation.”

But even people who don’t have complicated situations aren’t getting aid.

Michael McCleary a longtime hotel concierge worker at a prominent Washington D.C. hotel applied for unemployment insurance March 20. At first the system said he had “unresolved issue” and would be contacted if more information was needed. He called the office daily to try to fix it. On Thursday he waited on hold for nearly three hours only to be disconnected.

At 2 a.m. Friday morning, he logged into the portal again to realize he had finally been approved — a month after he applied.

“I’m monitoring my bank account to make sure it goes through. It should be a matter of days before I get a direct deposit,” McCleary, 63, said. “There’s just so much uncertainty.”


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