Federal Watchdog Reports Billions of Taxpayer Dollars Wasted in Unemployment Programs

By Emma Nitzsche 

 

The Government Accountability Office (GAO) said billions of taxpayer dollars were wasted through pandemic unemployment programs in the past year. The federal watchdog found that states and territories overpaid by $12.9 billion between March 2020 and April 2021.

 

The report claimed that states and territories during the first quarters of the pandemic “reported about $1.3 billion in overpayments identified as fraud across the UI programs. States have continued to identify overpayments in the regular UI and CARES Act UI programs, and some states have begun reporting data to [The Department of Labor] on recovered PUA overpayments.”

 

The Department of Labor (DOL) has money and resources to prevent fraud, but despite its efforts, the GAO uncovered rampant waste and abuse. According to the American Rescue Plan Act of 2021, the DOL was given $2 Billion to detect and prevent fraud. DOL Inspector General estimated that since March 2020, fraudulent unemployment benefits will be more than 10% of the $896 billion in benefits distributed. 

 

However, the GAO report said that the actual waste numbers are likely much higher. While 45 states and territories have reported some data, seven states have not yet reported on overpayments. The DOL admitted that it “is likely that states and territories have not yet reported substantial amounts of fraud overpayments, which could contribute to increasing amounts reported in the coming months.”

 

Separate from both the GAO and the DOL, ID.me, an online identity solutions website, estimated $400 billion in unemployment benefit payments have been fraudulent. If the number is correct, the improper payments will amount to nearly 50% of unemployment money. Both international and national criminals can scour the web for personal information that they use to impersonate claimants. With just a few personal details, anyone could file an unemployment claim and abuse taxpayer money.

 

The findings come at a time when many lawmakers are debating the longevity of the pandemic unemployment benefits. More than twenty-four states have opted out of the pandemic unemployment payments, and Congress is set to vote on renewing the program in September. Democrats argue that payments are still necessary as Americans recover from the pandemic. However, Republicans see the recurring payments as a deterrent from residents returning to work, resulting in widespread labor shortages corresponding with elevated unemployment. 

 

Over 30 Republicans sent a letter to the Department of Labor’s Office of the Inspector General requesting further investigations into the covid unemployment programs. 

 

“I am deeply concerned that American taxpayer dollars have gone to overseas foreign nationals posing as American citizens,” Rep. Dough Lamborn of Colorado said in a statement. “The Department of Labor must be thoroughly audited. We must determine the total amount of money that has been fraudulently distributed throughout the last two years.”