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The Labor Department’s Inspector General has updated its estimates of fraud in pandemic-era unemployment benefits, and it’s hard to know what’s worse: the shoddy systems that allowed crooks to bilk taxpayers, or the Biden Administration’s refusal to do anything about it.
The IG first alerted Labor to the scope of the problem with reports in February and June last year, identifying $16 billion in potentially fraudulent payouts to large and small operators of unemployment scams. A new IG memo last week identifies $30 billion more in fraudulent payments—for a total of $45.6 billion. That’s three times what the U.S. has spent to help Ukraine fend off Russia.
The various benefit scams are well-known, and the IG revised upward the tallies of each category. Individuals who fraudulently claimed benefits in more than one state got away with $29 billion. Con artists who used suspicious email services designed to hide identities have claimed at least $16 billion. Swindlers using the Social Security numbers of ineligible federal prisoners and dead Americans landed some $400 million more.
The IG blames the growing numbers on the Labor Department’s Employment and Training Administration (ETA), which is responsible for unemployment benefits. The memo says the IG in February 2021 identified high-risk areas and recommended ETA work with state agencies to develop fraud controls, as well as coax Congress to pass legislation requiring state agencies to cross-match high-risk areas.
Yet 19 months later, the memo reports, “ETA has not taken sufficient action” which “significantly increases the risk of even more [unemployment] payments to ineligible claimants.”
Labor is also rapped for failing to expedite new guidance requiring state agencies to hand over their unemployment-insurance data. The IG reports that some state agencies refused to supply the IG with records unless presented with a subpoena, while others waited months to comply with requests and then sent “unusable and incomplete” info. The refusal by states to cough up numbers, and Labor’s reluctance to force them, suggests the fraud problem is worse than even the IG suspects.
House Democrats continue to cover for the Labor Department’s failures. Republicans on the Ways and Means Committee this summer introduced antifraud legislation to track the flow of funds and fix the practices leaching the system. Democrats haven’t moved on it, and last week they blocked a GOP “resolution of inquiry” that would have forced the Administration to provide more specific information about the unemployment fraud.
Republicans estimate—based on Labor Department information—that as much as $163 billion of the $873 billion spent in pandemic-related unemployment benefits since March 2020 may be in error from either improper payments or fraud.
Even at the lower numbers this is one of the greatest taxpayer heists ever. The refusal by Democrats to investigate what happened and plug the leaks is an abdication of Congress’s duty to make sure government is competent. But their priority is sending more money out the door.
House Republicans are promising more “government accountability” if they take power next year, and this is one place to start.
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