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The Latest Extraordinary Findings on Pandemic Improper Payments

Posted on Wednesday, July 19, 2023
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by Outside Contributor
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25 Comments
Pandemic

A recently released US Government Accountability Office (GAO) report benignly titled “A Framework for Managing Improper Payments in Emergency Assistance Programs” serves as a forward-looking guide for policymakers responding to future emergencies. It also includes a number of extraordinary facts about how badly government programs were abused during the pandemic.

The following highlights what GAO found:

1. The pandemic saw a large increase in government benefits fraud, and fraud is likely to be an ongoing challenge in future emergencies.

The COVID-19 pandemic saw an increase in the frequency and volume of identity-related fraud, particularly in the areas of unemployment insurance and assistance to small businesses, as well as sophisticated fraud schemes. These developments will likely continue to challenge future federal emergency assistance efforts. [Page 1]

2. Federal agencies reported over $500 billion in estimated improper payments during fiscal years 2021 and 2022, which omits some of the peak months of pandemic spending.

Federal agencies reported about $281 billion in estimated improper payments for fiscal year 2021… — and about $247 billion for fiscal year 2022. [Page 3]

3. Most government programs at risk reported improper payment rates of 10 percent or more.

For fiscal year 2021, agencies reported estimated improper payment rates of 10 percent or greater for 26 risk-susceptible programs and activities, which accounted for about 87 percent of the government-wide total of reported estimated improper payments. For fiscal year 2022, agencies reported estimated improper payment rates of 10 percent or greater for 17 risk-susceptible programs and activities… [Page 29]

4. As with other recent official estimatesthose improper payment figures are conservative estimates.

We have found that the federal government is unable to determine the full extent to which improper payments occur… [Page 4]

5. The legislative response to the pandemic bears some blame for rising fraud.

Legislation to address emergencies can also introduce new risks. For example, a state auditor noted that when CARES Act legislation expanded unemployment insurance payments to independent contractors, staff did not have the means to conduct traditional employment verification for them. Some independent contractors who realized the state had no way to verify their unemployment may have been able to fraudulently claim they were unemployed, contributing to improper payments. [Page 16]

6. Self-certification of eligibility is especially problematic.

We and others have repeatedly found that self-certification can increase the risk of fraud, which may ultimately reduce the total amount of funds available to eligible individuals and businesses. [Page 16]

7. Programs must do a better job using available government data to ensure benefits are protected.

Agencies should proactively identify data they may need to verify applicant identity and eligibility and resolve any barriers to accessing data before an emergency occurs, including entering into data-sharing agreements…For example, agencies can enter into Computer Matching Agreements, which permit federal agencies to conduct data matches with one another to establish or verify personal information. [Page 12]

8. Even verifying Social Security numbers proved a challenge during the pandemic, and the failure to do so resulted in billions of dollars in losses.

In January 2023, the Pandemic Response Accountability Committee identified $5.4 billion in potential identity fraud associated with 69,323 questionable and unverified Social Security numbers across disbursed COVID-19 EIDL and PPP loan program applications. The committee found that if SBA had been able to verify the accuracy of the Social Security numbers on borrower applications, it could have reduced the possibility of identity theft and ensured that benefits were paid only to eligible recipients. [Page 12]

9. Quickly paying benefits without verifying eligibility and then attempting to recover improper payments after the fact, often called the “pay and chase method,” is a recipe for disaster.  

States made advance payments to individuals followed by post payment verification audits, which increased opportunities for improper payments, including those resulting from fraudulent activity…One state official noted that relaxing this unemployment verification control cost the state hundreds of millions of dollars in improper payments. [Page 20]

10. Prepayment controls should be a priority and can help ensure benefits are paid both swiftly and accurately. 

Prepayment controls can help prevent improper payments by identifying potential fraud and control deficiencies early, and they generally offer the most cost-efficient use of resources. [Page 22]

Tools such as data matching can provide some assurance against improper payments, while potentially allowing for more timely payments. [Page 20]

In the end, GAO concluded that “applying lessons learned from past emergencies will help agencies build a foundation to quickly respond to and mitigate payment integrity risks in future emergencies.” That’s putting it mildly. The massive and still only partially understood scale of pandemic losses argues that taxpayer-funded programs must be better protected in the future, and that critical process should start now.

Reprinted with Permission from AEI.org – By Matt Weidinger 

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PaulE
PaulE
7 months ago

I’m shocked!…NOT!!!

Virtually every major, emergency spending initiative the federal government has done over the last 60 years or more has been rife with everything this GAO report has mentioned. Yet NOTHING, and I mean NOTHING, ever changes. That is by design. Anytime Congress fashions such a bill, the emphasis is always on “Get the money out there as fast as possible and worry about all this other stuff later”. So bills are written poorly. Much of the language is intentionally vague and left up to the various executive branch agencies to define as they see fit. The end result is ALWEAYS the same. Massive amounts of taxpayer dollars handed out to people who NOT receive it or to politically connected groups that then kick back a portion of the funds received to Democrat campaign coffers.

By the way, it isn’t much better at the state level. At least not in the Democrat run states, where handing out taxpayer dollars is the second most popular pastime to stuffing it in their own pockets. The GAO does a great job of tracking all this activity. It would be even better if they were empowered to go out and claw back all this money from those that collected it improperly, instead of relying on other agencies with little to no interest in doing so.

Jake
Jake
7 months ago

Where does the constitution allow handing out my money to individuals? That does seem to be “General Welfare” now does it?

Cathleen
Cathleen
7 months ago

Defund the government, they’re so inept!

Jeri
Jeri
7 months ago

Pandemic money was the greatest money laundering scheme in history. If I’m wrong please feel free to correct me.

Candace Gonzalez
Candace Gonzalez
7 months ago

Does this surprise anyone? California alone probably accounts for more than half of this.

Mike
Mike
7 months ago

Government benefits fraud, Oh please tell me it ain’t so!

John Bass
John Bass
7 months ago

It was George Washington who said “The last official act of any government is to loot the treasury.” He also said “Occupants of public offices love power and are prone to abuse it.” along with “But if the laws are to be so trampled upon with impunity, and a minority is to dictate to the majority, there is an end put at one stroke to republican government, and nothing but anarchy and confusion is to be expected thereafter.”
Some of my favorite quotes by our founding fathers concerning the republic are by Jefferson and Franklin. These men along with the other founders were truly wise beyond their years, and all of them had a strong belief in God. We need to revisit what the founding fathers had to say and start following the US Constitution again.
God save the USA.

anna hubert
anna hubert
7 months ago

Yes the pandemic was a fraud We were sold a bridge There is not one gov program that is not infested with fraud and fraudulent claims because no one is held responsible and accountable for the disastrous results or the fact that more harm than good is done What business could possibly survive such management Decades of money down the drain , homelessness is the crown achievement of giving people money for not working

caseyp
caseyp
7 months ago

Everybody knows that the scamdemic fund was purely to benefit the corrupt members of congress, their families, friends and pet projects.

JamesP.
JamesP.
7 months ago

Proud of my country, not so much the people currently running it into the ground. Very emberressed by them.

GTPatriot
GTPatriot
7 months ago

The other fact of life is that nothing will be done about it. The next give-away program will be just as crooked or more as “CARES”.

John Bass
John Bass
7 months ago

Great, awaiting for approval again. All I wrote this time was a couple quotes from George Washington…I can see where that may be dangerous these days and where I should be censored.
Give me a break man!

Dave
Dave
7 months ago

I have received 6 sets of Covid-19 test kits, none of which I requested. In fact, when I received the phone call, I ask that they not send the kits because I would never use them and would go to my doctor if I felt the symptoms. I cannot imagine the tax dollars wasted in this program. But, it’s not unlike every other unmanaged program that the Biden administration creates to chip away our economy. What tragedy these people are. We’ll be lucky to have a country left when these morons finish with it.

Gabe Hanzeli kent wa
Gabe Hanzeli kent wa
7 months ago

more criminal activities by the democrats.

Even if you hate every republican running you have to vote republicans because the democrats are always worse.

Tim Toroian
Tim Toroian
7 months ago

If an organization is caught leaders should be jailed. Or gelded.

M Pierce
M Pierce
7 months ago

Just like the federal government to pay money out with out verification of need. Billions of dollars spent to thieves. Who was in charge- no one

may
may
7 months ago

please do not share my information; it is not to be given to any organizations or persons. Thank you.

GTPatriot
GTPatriot
7 months ago

oh good grief. Another govt fraud incident ? There are more common than daylight. Please tell us something we don’t know. We ALL know that EVERY govt payout program is riddled with fraud. Whats more shocking is that at least some of the money got to those who really needed it.

Concerned
Concerned
7 months ago

And we thought voter fraud was a problem…

George
George
7 months ago

Predictable.

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