House-Passed Reform Improves COVID-19 Unemployment Fraud Recovery Efforts
- BY FGA
NAPLES, FL – The Foundation for Government Accountability (FGA) applauds the U.S. House for passing the Protecting Taxpayers and Victims of Unemployment Fraud Act (H.R. 1163). Introduced by Ways and Means Committee Chair Jason Smith (R-MO), this legislation takes action to recover fraudulently paid COVID-19 benefits and prevent future fraud.
The Protecting Taxpayers and Victims of Unemployment Fraud Act allows states to retain 25 percent of recovered fraudulent federal pandemic unemployment assistance funds to use for improving their unemployment insurance (UI) systems. To be eligible for the funds, states must implement certain identity and eligibility verification measures that stop future payments to fraudulent actors. The bill also gives states up to 10 years to pursue the recovery of fraudulently obtained pandemic unemployment benefits.
“The name of this bill perfectly sums up what it achieves: protections for taxpayers and victims of unemployment fraud,” said Robin Walker, senior director of federal affairs at FGA. “Our nation had never before seen the levels of fraud that came out of pandemic-era policies. It is irresponsible and unbelievable that so little has since been recovered, that the truly needy and taxpayers who suffered because of this waste haven’t received so much as an admission of guilt by those who opened the floodgates, and that the Biden administration hasn’t made any serious efforts to prevent it from happening again. With this bill, that changes.”
During the COVID-19 pandemic, the massive influx of new enrollees on welfare programs spread resources thin and led to historic levels of fraud. Since the beginning, FGA research has highlighted the ways state and federal unemployment programs, including the destructive weekly bonus, have opened the door to fraudsters. In 2020 alone, fraudsters reportedly stole $36 billion in unemployment benefits—more than all legitimate unemployment spending in 2019.
The U.S. Department of Labor estimates that taxpayers will be on the hook for at least $191 billion in UI benefits that were improperly paid to ineligible or fraudulent claimants. Realistically, that number is likely closer to $400 billion. For more on how to strengthen UI program integrity, click here.
In his remarks before the House Rules Committee on his legislation, Chair Smith highlighted the inaction by the Biden administration on going after fraudsters, despite President Biden’s promise that “the watchdogs are back” in his first State of the Union Address. He also noted that this legislation includes reforms supported by the Department of Labor Inspector General, and in past budget requests from both President Trump and President Obama.
The Foundation for Government Accountability (FGA) is a non-profit, multi-state think tank that promotes public policy solutions to create opportunities for every American to experience the American Dream. To learn more, visit TheFGA.org.