On Unemployment Benefit Fraud, Keep Going, DOGE

By Matt Weidinger of AEI.

"Last night the Department of Government Efficiency (DOGE) posted on X the following:

The figures clearly reflect improper payments, which the nonpartisan Government Accountability Office defines as “payments that should not have been made.” They also no doubt include fraud, which GAO defines as requiring “willful misrepresentation,” such as when criminals use the identities of the young and old and everyone in between to steal benefits.

But the $382 million DOGE uncovered sadly reflects only the tip of the iceberg when it comes to improper unemployment payments and fraud during the pandemic. As I noted recently in a National Review op-ed:

The basic facts of pandemic unemployment fraud are staggering and widely accepted. According to the nonpartisan Government Accountability Office, “The amount of fraud in unemployment insurance (UI) programs during the COVID-19 pandemic was likely between $100 billion and $135 billion.” The Department of Labor (DOL) inspector general testified that the estimated “low end” of improper payments (which includes but goes beyond fraud) is $191 billion, while private experts see a high end of $400 billion. The Joe Biden administration admitted that one of the most widely abused pandemic programs had an astonishing 36 percent improper payment rate.

That means what DOGE identified reflects less than half of one percent of what government experts and just one-tenth of one percent of what private experts have projected in fraud involving state and federal unemployment benefits during the pandemic.

For taxpayers, who might rightly ask whether we can get this money back, the latest news is not good. A Department of Labor Office of the Inspector General (OIG) report released last week spotlights improper payments involving widely-abused federal unemployment benefits (which states administered along with state-funded checks). The report finds that states have identified $36.9 billion in overpayments involving federal benefits—only one-third of the $118.1 billion in total overpayments it projects. “This indicates that approximately $81.2 billion of potential overpayments were not established and, thus, were not pursued for collection,” the report finds.

Naturally, what is not identified as an improper payment will not get recovered. The report doesn’t mention the far larger gulf between the $36.9 billion in identified federal overpayments and the broader $400 billion in fraud projected by private experts. And of that $36.9 billion in established overpayments, the report notes that states “waived more overpayments ($3.8 billion) than they recovered ($2.5 billion).”

Whatever the actual taxpayer losses may be, the report offers a depressing litany of reasons why so many overpayments occurred and so few dollars have been recovered, including:

• Federal unemployment benefits didn’t require confirmation of identity and prior employment: “The (Pandemic Unemployment Assistance) program was particularly vulnerable to fraud because the program initially allowed claimants to self-certify their eligibility for benefits without requiring verification of identity or evidence of employment or self-employment.”

• Antiquated information systems were a barrier: “One reason (state workforce agencies) did not use the mandatory recovery methods was that they had not made the necessary system modifications to allow them to perform recovery activities.”

• State and federal laws stood in the way of overpayment recovery: “Existing federal and state laws and regulations limit: (1) what types of overpayments can be recovered, (2) who can recover the overpayments, (3) when to collect the overpayments, and (4) how long overpayments can be recovered.”

This all reflects that, while DOGE’s latest findings are shocking, they simply provide more detail on what we already knew, which is far worse. That is, that during the pandemic hundreds of billions of dollars in unemployment benefits were wrongly paid in the name of prisoners, deceased individuals, people claiming benefits in multiple states, and many others. Domestic and international criminal gangs were behind much of the fraud. Rappers even crooned about how easy it was to rip off the system. And most of that is gone for good.

So keep going, DOGE. And in addition to providing more details on what was lost, work with Congress to require broader data matching and other process improvements to better ensure that in the future rightful claimants are paid in a timely fashion—and criminals seeking to defraud the system are not."