Report: Loophole in $2 Trillion CARES Act Could See Money Sent to China
A loophole in the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act could send taxpayer funds to foreign workers in countries like China and Mexico, a new report says.
According to the Washington Free Beacon, the CARES Act does not place restrictions on how commercial airlines spend the $50 billion they were rewarded to help out with the cost of maintaining their planes.
According to a 2015 report by Vanity Fair, almost all major U.S. airlines “have shifted heavy maintenance work on their airplanes to repair shops” in foreign countries.
As of 2015, US Airways (which has since merged with American Airlines) and Southwest had maintenance done in El Salvador. Delta flew its planes to Mexico and United used a maintenance shop in China, Vanity Fair said.
The airlines chose to ship their maintenance work offshore to cut labor costs.
Although it is unclear if this data is still accurate in 2020, the Free Beacon reported that the CARES Act guidelines were not clear on what the airlines’ $50 billion bailout could be spent on.
The text of the bill outlines at least $32 billion to be used exclusively “for the continuation of payment of employee wages, salaries, and benefits.”
It adds that $100 million of the funds can be used “for costs and administrative expenses” associated with providing assistance for workers.
The airline industry has seen a dramatic downturn as it faces the impact of the coronavirus pandemic.
“Virtually every airline is parking planes,” Aviation Technical Services CEO Matt Yerbic told The Seattle Times.
“With the airlines in crisis, our work is at about 50 percent of where we thought we’d be in the next couple of weeks. It’s pretty ugly.”
However, the potential loophole in funding is being scrutinized as the Trump administration works to help Americans and businesses in need rather than rely on China.
It is still possible for Congress and the Trump administration to implement new rules for how the airline industry can use the funds, according to an industry insider who spoke to the Free Beacon.
“The CARES Act is all about saving American jobs, yet there is a real likelihood that airlines could accept this taxpayer-backed relief, then turn around and pay foreign companies and workers to service their planes overseas while at the same time, thousands of American aircraft maintenance workers lose their jobs and the American [firms] they work for risk going out of business,” the unnamed aviation industry source said.
“Thankfully, the Trump administration still has the authority to prevent this from happening as they provide additional guidance to airlines seeking relief in the days and weeks ahead.”
Yerbic added that it was important to take care of American workers first in an appearance this month on “The Hugh Hewitt Radio Show Podcast.”
“One of my missions … in all of this, whether it’s the aerospace and aviation or any others, is for — as the CEO of a business — for us to take charge of ourselves and say we can put American workers first, and bring them back to work as we start to fund this incredibly huge bill that is all about that,” he said.
