Joseph Kalt, a renowned Harvard University international political economist and professor, has devoted a major chunk of his work life to Indigenous economic development and tribal self-determination. So when he sees a president come into office with a “Marshall Plan for Indian Country,” his eyes and ears tend to perk up. His mind races with all the good that could be done, all the problems that tribes could fix if given the opportunity and right conditions — and money.
Like many, he continues to have high hopes for the major federal funding provided to tribes under the Biden administration’s American Rescue Plan Act (ARPA) pandemic programming.
That he and his Harvard Project on American Indian Economic Development team were compelled to release a tough policy briefing on Nov. 3 focused on the U.S. Treasury Department’s shortfalls in getting $20 billion to the tribes that need it most is not what he’d prefer to be doing.
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“All the words about equity, all are fine and they’re wonderful,” Kalt told Tribal Business News in a recent interview just before the paper was released. “But I’m feeling a little pessimistic.”
Not pessimistic because he thinks tribes won’t make the best of the situation, and not pessimistic because he thinks the problems at Treasury are unfixable.
Rather, he’s pessimistic because perhaps the upper echelons of the Biden administration — this administration with so many Native public servants already working in it — just isn’t getting the big picture. The administration is not understanding how its misfires on ARPA distribution formulas and compliance rules is causing millions of dollars worth of unhappiness in some quarters of Indian Country, not to mention in Congress, which holds the purse strings and keys to future tribal infrastructure monies.
“The reality is over the large picture, a national-level politician doesn’t have a lot of incentive to worry too much about the Native vote,” Kalt says. “And in particular, in a case like this, where’s that Native vote going to run to? It may not show up, but it’s not likely to run to the opposing party in large numbers.”
His hope hinges on “the good people” from Interior Secretary Deb Haaland on down: “You hope that they are close enough to make a difference in their urgings and in their support for recognition of the inequities that have been visited on Indian Country.”
In this wide-ranging interview, Kalt spoke with Tribal Business News about the Harvard Projects’ findings, what Treasury should have done differently and what’s next for the tribes that didn’t receive the large infusions of federal funding.
Your team’s ARPA research has been very interesting to look through. What are your top issues or concerns related to it?
Well, the top concern to me is, number one, for all of these tribes, that the funding not become just another round of federally funded boondoggles. And there are some tremendous shortcomings in the funding that threaten that. The deadlines on spending and committing monies make it very difficult for tribes to, for example, find the funding for very long-term maintenance and upkeep. Let’s say they do infrastructure projects. Modern infrastructure projects, whether they’re sewers or broadband or whatever, are pretty high-tech.
We need to find ways to enable tribes to build up the funding to allow them to put in place what I think would be a good idea, some kind of almost like endowment accounts, where they would be able to put money away to fund the long-term maintenance and repair and training and so forth that’s going to be required to maintain many of these projects that they’re undertaking. So that's one of my main concerns.
Have you been following whether tribes can invest their ARPA funds?
Yes. The Treasury Department has at best been ambiguous about how tribes can invest their ARPA funds before they’re put to use. We know Treasury has waived the federal requirement that any interest earned be remitted back to the federal government, which it does on its standard federal funding. But — and I say this because there’s ambiguity — it appears the Treasury Department is also continuing to prevent tribes from being able to invest rationally in balanced portfolios, instead requiring tribes to invest in insured accounts. That’s a recipe for keeping people poor. Any retired couple knows the way you get ahead in life is you invest in a balanced portfolio, and tribes aren’t even being allowed to do that. So those are two of the big concerns that I have.
Talk about the inequities created through Treasury’s tribal ARPA allocation formulas.
The formulas that have been used by the government to allocate these funds tied to enrollment and then to the number of tribal employees. Well, both of those (areas) we think should matter, but in addition, we think that the formula should have taken into account the impact of COVID on these tribes. There was a relatively straightforward way to do that, which we had tried to convince Treasury of, which was we know that the incidence of COVID infection enhances the incidence of having to fight the disease itself, having to make all the adjustments in the community to hold back the disease. They’re highly correlated with poverty and lack of income, lack of wealth.
So the failure to take that into account has resulted in, it seems to me, failure on the part of the federal government to recognize this funding, number one, was intended to be a rescue. That's part of the Act, the American Rescue Plan: A rescue from COVID and to help tribes get out of the COVID pandemic. They’ve missed a great opportunity to do that for the hardest-hit tribes.
Your team put out those recommendations ahead of time, before the formulas were announced by Treasury. But I haven’t gotten a sense from anyone at Treasury that they understood that their formulas were going to result in so much inequity.
Well, we wouldn’t be surprised if Treasury is a bit gun-shy. The CARES Act funding brought a deluge of litigation down on Treasury’s head. It feels like what Treasury did was say, ‘OK tribes: You certify your enrollment, you certify your employees, and then you’ll have only yourselves to blame in some sense.’ But that overlooks the reality again of missing the chance to cure really decades — in some cases, centuries — of economic deprivation that has plagued so many reservations.
You’re a good reporter. Go interview Treasury and figure out exactly why they did this.
I’m going to keep pushing them and pressing them on these questions.
We all ought to be pushing hard for some kind of Senate committee hearings or something.
When there were problems for tribes with the HUD funding formulas under the CARES Act and the resulting lawsuits and the ANC issues, it felt like there was a microscope on everything that was going on. Was that because it was happening during the Trump administration and people in Indian Country felt that some of the actors might not have had the best interests of Native America at hand?
Yeah. Maybe. It’s a little hard to say, because you can hear people complaining now under the Biden administration, too.
I have thought that from the beginning, Congress was making a mistake by loading this all onto the United States Department of the Treasury. Even well-meaning people at Treasury, they don’t have much experience with Indian Country. They are inexperienced in Indian Country, and an inexperienced agency to handle first the CARES Act and then the $20 billion of ARPA money. You can imagine, if I was at Treasury and had no experience in Indian Country, and the boss called me up and said, ‘Here, allocate $20 billion across more than 570 entities,’ I’d be a little bit of a deer in the headlights. I wouldn’t know quite what to do. …
Treasury is almost, not totally, but almost uniquely inexperienced. And it’s not surprising if they’re inexperienced, they’ll start casting around for life buoys — like, ‘Oh, HUD has some numbers, let’s use those.’ That kind of thing. So there isn’t necessarily malice behind this. Partly, I think that’s appropriate to conclude because there was a fixed pot of money to allocate in both cases, both under the CARES Act and the ARPA funding, and so it wasn’t like they were trying to stick it to Indian Country.
But from what I can tell, they had very little knowledge going in and little experience in the contours of tribal employment, the contours of tribal enrollment, the determinants of poverty, the determinants of COVID and its relationship to lack of income, lack of jobs, lack of funding on certain reservations. There’s just a lack of knowledge. I’ve always felt I was watching them cast around for something to hang their hats on. Ultimately, on ARPA, they went for the tribes’ own certified numbers. How could you complain about that? Well, we can complain if you’re leaving out crucial determinants of the need for the rescue.
With ARPA, how could Treasury have achieved better numbers?
I think it was appropriate to rely on tribes’ own enrollment and employment statistics. Now were those numbers manipulated or otherwise puffed up? Time will tell, but those things aren’t inappropriate to use. To me, the difficulty was that neither of those numbers does a very good job at getting at the very reason we have the American Rescue Plan Act, which was … the response to COVID. ‘Build back better,’ as President Biden says.
If you’ve seen our research, there’s research out there. It’s pretty clean, where you can see COVID rates in a couple of ways. One is, you know they’re related to poverty and the lack of income and jobs. The difficulty there is that tribes that have lots of employees often have lots of employees because they’re doing pretty well, and incomes are not stagnating or not far, far below national averages for average Americans, for example. So the employment statistics, in a sense, if you don’t have a counterweight that picks up the economic difficulties that many tribes have, then you tend to over-weight toward the well-to-do tribes, if you will. That’s not to say they don’t have needs, but we had a fixed pot of money, and you had to decide how to allocate it. There’s no question, even the very successful tribes had major needs, but there was no weighting that would have picked up the link between poverty and COVID.
These numbers were out there for Treasury to see?
We had provided data and a suggested methodology to use COVID infection rates, for example, using IHS data. I won’t go into the details, but basically, there was IHS data that could have been used, and there may have been even more finely-grained data that IHS publishes. IHS publishes by state and region, but it doesn’t get you down to the individual tribe. But a little elbow grease on the part of our federal government there might’ve been able to get pretty good data. We had suggested even rough-and-ready data would have been better than nothing in terms of picking up the links between the impact of the pandemic and the fact that the pandemic has hit hardest among the poorest of communities.
Do you think anything they’ve done by being gun-shy, ironically, might have opened them up to any legal issues on ARPA?
At the level of a basic formula — at least the way I think they could have devised a formula — it would have been pretty hard to attack. There are legal standards which recognize (that) in certain circumstances, agencies will not have perfect information. They will rely on imperfect information and they’re relatively insulated from litigation. They can’t be arbitrary or capricious, but certainly using IHS data on infection, COVID infection rates, or using something weighted toward measures of income and job creation on the reservations — that data is available. They would’ve been pretty hard to attack on that. Now, having said that, when you get down into the details and if you’re following the various consultations that Treasury has tried to do, we may yet see litigation on some of these things.
Some wealthier tribes were concerned after Treasury announced the formulas in May that the department might change them after getting pushback from some less wealthy tribes. Would it have been unjustifiable for Treasury to slow down with at least that second or third pot of ARPA funding, regarding the enrollment or the employment formulas?
I don’t want to duck your question … (and) I wondered about the same thing. There are of course deadlines in the act itself, and I know Treasury caught a lot of flack for how slow the final distributions of CARES Act monies were. And again, it’s not unreasonable to think that Treasury felt the pressure from the legislation itself and said, ‘Oh, God, we’ve got to get this money out.’
Having said that, during the CARES Act, Treasury seemed to be able to buy itself time. I thought, ‘Slow down, let’s try to have a reasonable discussion about this.’ Again, it’s interesting with Treasury not being very experienced in Indian Country, my sense has been they haven’t known how to conduct a conversation that would be particularly productive. Their consultation sessions tended to feature parties that didn’t generate a lot of meaty conversation or deliberation, at least in public. But that’s actually not a productive way. I teach at a school of government. That’s not actually a productive way to make policy. They need to find ways to slow down and talk to people seriously, gather information. Treasury, I think, took the safe route.
At public meetings, like the recent National Congress of American Indians conference, Treasury officials have been there, and they publicly presented, but they haven’t said much of substance on the kinds of issues you are raising.
I think, again, it’s being gun-shy about litigation. There are many, many details that individual tribes are asking Treasury about. I would not be surprised if they’re concerned that making a statement in public will be taken to be an official position of the Treasury Department. So then you’re going to end up talking in generalities and platitudes and not be able to give out detailed information. They seem to be using their website to announce their decisions and determinations on particularities of the spending. We have felt that Treasury should be forthcoming on many of these issues by basically setting up a system to issue their opinion letters so the people will have guidance, because if one tribe wants to know whether new water fountains at the basketball gymnasium come under water and sewer as ARPA defines it, well, there’s going to be several hundred other tribes that have similar questions.
Have you faced any pushback from tribes about putting this ARPA analysis out there because they feel that legislators might be less likely to give more funding to tribes if there is a perception some tribes are getting too much?
No, not yet. Perhaps it will come with the infrastructure bills. I’ve worried that exactly what you’re talking about may come to pass. Through the CARES Act and through ARPA, the tribes held their own in a good way in terms of being recognized as governments, number one: sovereigns, at least on a par with state and local governments. But I’ve worried with the infrastructure bill that lawmakers will say, ‘Oh, the tribes already got enough money under the CARES Act and ARPA.’ But I think the political environment around the pandemic and overall the press from you guys to The New York Times are doing a pretty good job of making it clear how hard Indian Country was being hit by the pandemic.
Do you think Treasury should establish an Office of Tribal Affairs?
Yes, I do. I think it’s important. But this kind of office, it seems to me again, we’d have to watch it. Does it turn into just another excuse or something? But at least it holds the potential for not losing the tribal perspective, the tribal voice, the tribal rights and in particular the tribal rights to self-determination.
Have you or anyone with the Harvard Native economic team been approached by Treasury to work on these issues with the department?
No one has.
Do you think it would be useful?
We would hope so. Yes. Our people carry an awful lot of expertise and reasonableness. We’re not the only organization, but obviously our organization has tried to stay on top of these issues. And we’re not coming from any particular (bias). … We don’t favor rich tribes or poor tribes. We’re trying to understand how to assist Indian Country at large.
Will poorer, more disadvantaged tribes ever be able to catch up?
Yes. Will they all? Probably not. It’s a dehumanizing stereotype to think that all tribes are going to do all great things. There will be some tribes who have trouble. Look at the 50 states: Some of them are run well, and some of them are a mess. We shouldn’t expect anything different out of the Native population. One thing in Indian Country, partly because of the shared history, partly because family is family and culture are such strong forces: You do get more commitment to the common good. You see these cases where vaccination rates are higher on certain reservations than anywhere else in North America. It’s because the tribe does get its act together because people do care about each other. But will that be the case in every tribe? Probably not. We have more and more of these tribes who seem to break out of the patterns of dependency, economic underdevelopment, all the social and cultural stresses that go with that — they break out from that. It’s clear it’s not just a big gaming tribe that does that. It’s not just the tribe in an urban area. We see very rural, historically poor tribes turn the corner, and it tells us it can be done.
This interview has been edited and condensed for clarity.
