Top Republicans in the House are hoping to recover billions of dollars in wasted taxpayer funds by paying states to claw back fraudulent COVID-era unemployment benefits that went to scammers instead of people in need.
The bill comes just weeks after a federal watchdog testified that “at least” $191 billion was wasted on fake COVID unemployment claims. That finding followed a call from President Biden in his State of the Union address to “prosecute criminals who stole relief money” during COVID, a sign that the GOP has a chance of becoming law this year.
Despite Biden’s call, one sponsor of the bill, House Ways and Means Commtitee Chairman Jason Smith, R-Mo., said the Biden administration has done little to back up Biden’s words and that the Republican House needs to act.
Rep. Jason Smith, R-Mo., proposed a bill aimed at recovering lost COVID unemployment funds. (Bill Clark/CQ-Roll Call, Inc via Getty Images)
“At a time when Americans were suffering from government lockdowns, hundreds of billions were being stolen from those in need,” Smith said. “Yet the Biden Administration has ignored the rampant identity theft and fraud that’s left these people devastated.”
“It has kept itself and the American people in the dark about the size and scope of unemployment fraud that was stolen during COVID,” he said. “House Republicans are now turning on the lights after raising the alarm about this greatest theft of tax dollars in American history.”
Another sponsor, House Oversight and Government Reform Committee Chairman James Comer, R-Ky., said COVID theft “may be the greatest heist of American taxpayer dollars in history.”
Republicans say President Biden didn’t do enough to stop COVID unemployment fraud. (Alex Wong/Getty Images)
The two committee chairmen said some estimates say as much as $400 billion in fraudulent unemployment payments may have been made during the COVID pandemic, during which nearly $900 billion in relief payments went out.
Under their bill, state workforce agencies that manage federal unemployment benefits would be incentivized to pursue fraudulent claims – they would keep 25% of everything they recover, and let them use it at the state level to improve unemployment insurance integrity by hiring fraud investigators, boosting ID verification and other steps.
In early February, the Department of Labor’s Office of Inspector General told Smith’s committee that at least $191 billion in COVID unemployment benefits were lost to fraud, and likely more. That report said COVID created a “perfect storm” for fraud, as people were allowed to self-certify that they were eligible to receive Pandemic Unemployment Assistance (PUA), which went to millions of people who were not traditionally eligible for unemployment benefits.
CALIFORNIA, NEW YORK, ILLINOIS USED COVID-19 RELIEF FUNDS TO PUSH CRT IN SCHOOLS
A Labor Department watchdog said at least $191 billion was lost to fraud. (Tom Williams)
“The reliance solely on claimant self-certifications without evidence of eligibility and wages during the program’s first 9 months rendered the PUA program extremely susceptible to improper payments, including fraud,” Inspector General Larry Turner said.
The OIG found that the improper payment rate for unemployment insurance was about 10% before COVID but jumped to roughly double that during COVID.
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Other witnesses at Smith’s committee said state workforce agencies weren’t prepared to handle the rush of COVID-related claims, which contributed to fraud.
