Federal official warns $191 billion in covid unemployment aid may have been mis-spent

WASHINGTON — The U.S. government may have misspent about $191 billion in pandemic unemployment benefits, a top federal watchdog will tell Congress on Wednesday, as Washington continues to expose the massive and still-growing scale of waste, fraud and abuse directed at coronavirus relief.

The new estimate — calculated by Labor Department inspector general Larry D. Turner — is likely to spur House Republicans to step up their scrutiny of the roughly $5 trillion in emergency funds approved since the start of the crisis. .

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Turner plans to present the information at a hearing convened Wednesday by Rep. Jason T. Smith (R-Mo.), chairman of the House Ways and Means Committee, according to testimony previously shared with The Washington Post. In an earlier letter to the Biden administration, Smith expressed concern over “hundreds of billions of dollars” in pandemic-related waste — and promised a series of oversights.

“This highly anticipated hearing marks the beginning of the commission’s investigation into the magnitude, scope and severity of fraud in federal pandemic unemployment programs,” he said.

When millions of Americans suddenly lost their jobs in early 2020, Democrats and Republicans banded together to approve a historic expansion of the country’s unemployment insurance program. Their efforts — signed into law beginning under President Donald Trump — at one point added an additional $600 to workers’ weekly checks and offered new benefits to those who previously would not have been eligible for federal aid.

The money helped save the economy from its worst crisis since the Great Depression. But it also spawned an unprecedented wave of theft and abuse, as criminals seized on the government’s generosity—and its race to disburse aid—to charge state and federal agencies for huge sums.

On Wednesday, top watchdogs plan to tell the House Ways and Means Committee they still can’t calculate the total amount of federal covid aid subject to fraud and abuse. But Turner’s prepared testimony notes that the country’s misspending on unemployment benefits, in particular, may be much greater than previously known.

His new estimate — “at least $191 billion” in possible improper payments — is significantly more than the roughly $163 billion the government identified a year earlier. But as before, the figure is a projection that reflects fraud, as well as amounts wrongly paid to innocent Americans. Federal officials calculated it after examining unemployment spending, calculating a percentage of wrong spending, and applying that to the broader range of jobless aid during the pandemic.

But Turner’s prepared testimony said a “significant portion” of the money “is attributable to fraud.” He also noted that the “unprecedented injection of federal funds into the [unemployment insurance] program gave individuals and organized crime groups a valuable target to exploit.”

For Republicans, the hearing comes Wednesday a day after Biden touted his economic record at his annual State of the Union address — again pledging to seek new money and federal power to pursue criminals preying on the government’s help.

“Let’s now triple our anti-fraud forces to go after these criminals, double the statute of limitations for these crimes, and tackle identity fraud by criminal syndicates stealing billions of dollars from the American people,” Biden said. “For every dollar we put into fighting fraud, taxpayers get back at least 10 times that.”

Biden made a similar pledge in his 2022 State of the Union address, announcing that the Justice Department would engage a special pandemic-focused prosecutor to oversee his work. But the lawyer later named to the post – Kevin Chambers – left the job late last year. His acting replacement, U.S. attorney Michael Galdo, declined to testify at Wednesday’s hearing, the committee said. The Justice Department did not immediately respond to a request for comment.

The meeting still marks the Republicans’ latest scrutiny of federal pandemic aid as party leaders scramble to avoid wasteful spending and take political aim at the Biden administration. While they also voted for much of the money now at the heart of their criticism, GOP lawmakers have still focused their recent attacks on Democrats — who passed the final pandemic bill, the roughly $1.9 trillion U.S. bailout. , passed in 2021 over unanimous Republican opposition. .

Last week, the House Oversight and Accountability Committee held its own first-ever hearing on covid aid, when the panel’s chair, Rep. James Comer (R-Ky.), Blaming the Democrats for Not Enough Oversight. He promised there would be “many more of these hearings” and pledged that Republicans would “get to the bottom of the biggest theft of American tax dollars in history.”

In response, the top federal watchdogs pleaded with lawmakers to grant them new resources to help them detect and prosecute fraud targeting pandemic funds. But many of those requests have long been ignored on Capitol Hill, where lawmakers have argued over the political and economic legacy of their roughly $5 trillion in spending.

Smith, meanwhile, has similarly committed to ongoing oversight of federal pandemic funds and the agencies that oversee them. When he first convened his powerful new tax-focused committee in January, he promised that the new GOP majority “would not be shy about our duty to be accountable to the Washington Bureaucracy and the Biden administration.”

The top federal watchdogs, due before the panel on Wednesday, intend to point to a series of significant shortcomings that have plagued state and federal unemployment systems since the Trump administration. Many of the problems were documented by The Post in its year-long investigation called the Covid Money Trail.

Gene Dodaro, the comptroller general and leader of the Government Accountability Office, pointed in his prepared testimony to the outdated computer systems plaguing government agencies at a time when they were overwhelmed by a deluge of welfare claims. That opened the door for criminals to claim benefits on behalf of real Americans, evading government detection. His comments cited “substantial levels of fraud” in the unemployment insurance program estimated to have cost taxpayers about $60 billion.

To compound the problems, at the height of the pandemic, the US government chose not to require significant documentation from workers seeking benefits under the Pandemic Unemployment Assistance program. The initiative paid gig economy workers who would otherwise not have been eligible for normal unemployment assistance, but it also opened the door to a wave of fraud as Washington scrambled to get through the critical venture in record time.

“This, coupled with the continued weaknesses of the UI program and the challenge of processing historic volumes of claims, enabled criminals to cheat the programs,” said Michael Horowitz, Justice Department inspector general and chairman of the Justice Department. the Pandemic Response Accountability Committee, in its prepared remarks.

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