During a Senate Committee on Small Business and Entrepreneurship hearing, Chair Joni Ernst (R-Iowa) addressed concerns about fraud in taxpayer-funded programs meant to support small businesses. She cited specific cases of abuse in COVID-19 relief efforts and the Small Business Administration’s 8(a) program, which is designed to assist socially and economically disadvantaged businesses.
Ernst described several instances where government oversight failed. She mentioned that some applicants for Paycheck Protection Program (PPP) loans used photos of dolls as identification, while others claimed to be over 115 years old and still received approval for loans totaling $333 million. One applicant even claimed to be 157 years old and was granted $36,000.
She also criticized the use of federal funds for projects unrelated to American small businesses, such as funding Iraqi Sesame Street through USAID. According to Ernst, improper payments by federal agencies reached $162 billion in fiscal year 2024.
Quoting from her remarks: “We’ve all heard Washington, D.C. referred to as the swamp, but these days, it is looking more and more like a pigsty.
“While Iowa small businesses keep their books neat and tidy and pinch pennies to balance their own budgets, they are the ones who are hurt when the government is sloppy and reckless with hard-earned taxpayer dollars.
“That’s why I made a promise to Iowans to make Washington squeal.
“For over a decade, I have been exposing egregious Washington waste with my monthly Squeal Awards.
“Some examples are too outrageous to believe.
“I am talking about bureaucrats approving PPP loans for applicants who used pictures of dolls for IDs.
“Imagine giving Barbie or Ken a taxpayer-funded loan.
“Not only that, but they also believed folks claiming to be over 115 years old were alive and well enough to be approved for 3,095 PPP and EIDL loans worth $333 million, including $36,000 to a 157 year old. That’s pure hogwash!
“But this is only the tip of the iceberg.
“Instead of boosting Main Street, millions of your tax dollars were wasted through USAID to fund Iraqi Sesame Street.
“And this one is unacceptable: Improper payments, or the government tossing cash into the wrong trough, have become commonplace.
“In fiscal year 2024, federal agencies shoveled out $162 billion in improper payments.
“The most frustrating part is how simple it is to stop this waste.
“A report by the Pandemic Response Accountability Committee found that $79 billion in potential COVID fraud could have been prevented if four basic questions were asked:
“One, is the applicant’s Social Security Number valid?
“Two, if valid, does the name connected to that number match the name on the application?
“Three, does the birthday match?
“And lastly, is the individual alive?
“Seriously, folks, that could’ve saved $79 billion right there.”
Ernst promoted her DOGE in Spending Act as a way forward. The bill would require verification steps such as confirming Social Security numbers and matching names with applications before disbursing funds. She said these measures could prevent most improper payments going forward.
She also referenced ongoing issues with pandemic-era relief funds being targeted by scammers six years after COVID-19 began. Ernst noted that her SBA Fraud Enforcement Act has advanced through committee but needs full Senate approval before becoming law: “Fraudsters snout-deep in pandemic-era shuttered venue and restaurant funds must be held accountable.”
The senator expressed frustration with USAID’s lack of transparency during previous administrations regarding spending details. She cited an example where a contracting officer was convicted after accepting bribes related to contracts under SBA’s 8(a) program—an initiative she described as long plagued by fraud despite numerous reforms over decades: “Unfortunately, the SBA’s 8(a) program has been a magnet for fraudsters since its inception.”
Ernst acknowledged recent efforts by Administrator Loeffler aimed at ending abuses within SBA programs: “It is refreshing to see an administration take fraud as seriously as I do,” she said. In addition to leading her own investigation into these issues and introducing legislation called Stop 8(a) Contracting Fraud Act—which seeks a pause on no-bid contracts until audits are complete—she urged other federal agencies adopt similar moratoriums on such contracts pending review outcomes.
The senator concluded by highlighting how fraudulent activities divert resources away from legitimate small businesses across Iowa and elsewhere: “When COVID fraudsters cashed in... thousands of deserving small businesses in Iowa were left out in the cold because funds had run dry.” She called for greater accountability so government contracting decisions would rely on eligibility rather than personal characteristics or connections.
