A September report from the Government Accountability Office found that between $100 billion and $135 billion in pandemic-era unemployment aid was given to fraudsters. That’s between 11 percent and 15 percent of all unemployment aid given between April 2020 and May 2023, or about one-seventh of the total.
The GAO found that the pandemic-era programs were more susceptible to fraud than the existing unemployment-insurance programs that states have in ordinary times. “The unprecedented demand for UI benefits and the urgency with which states implemented the new programs during the pandemic increased the risk of improper payments, including, but not limited to, those due to fraud,” the report says.
States administer unemployment aid with assistance from the federal government. The GAO report says states have so far reported $55.8 billion in overpayments, which includes fraud and other types of mistakes, and they have recovered only $6.8 billion of that. So states likely aren’t even close to identifying all the cases of fraud, let alone recovering the money that was lost.
The GAO has made 26 recommendations to the Department of Labor about how to improve unemployment-insurance programs since 2018. The DOL has implemented only ten of them, the report says. Four of the 16 that have not been implemented are about fraud prevention.
“The full extent of UI fraud during the pandemic will likely never be known with certainty,” the report says. The DOL accused the GAO of overstating the amount of fraud, but the GAO rebutted its claims and demonstrated the strong methodology used to obtain the estimate.
The DOL inspector general found earlier this year that $191 billion in pandemic-era unemployment benefits were improperly paid. Improper payments is a wider definition than the GAO used, and it includes fraud among other types of errors. “We did not estimate improper payments, but our findings are generally consistent with the DOL OIG’s statement regarding the significance of fraud in the UI programs,” the GAO report says.
The Biden administration was touting its “sweeping pandemic anti-fraud proposal” in March, and Biden promised in his 2022 State of the Union address to crack down on pandemic fraud. Yet little money has been recovered, and massive amounts were lost. And he’s ignoring the Senate to leave Julie Su as acting secretary of labor. Su, during her time as California’s labor secretary, oversaw an estimated $33 billion in unemployment fraud while eligible workers were put on waiting lists. During her time as acting secretary, she has blown off oversight requests from the House of Representatives.
Rather than get serious about massive pandemic-era benefits fraud, Biden is leaving in place an acting secretary who has already proven her incompetence and unwillingness to deal with it. And if the government can’t tackle cases of outright fraud and put a greater priority on designing programs to prevent it, the much harder task of cutting spending in a way that will shore up the budget in the long run seems out of reach.