In their initial rush to respond to the COVID-19 pandemic, Congress enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was the first of several bills intended to help the economy withstand its impact.  In their hurry to get funds and assistance to the nation, members of Congress decided it was more important to get the money out then to ensure that it would go to only those who truly needed assistance.  This decision, which avoided the inclusion of some readily available and well-tested fraud preventions measures, made the programs included in the CARES Act ripe for fraud, and criminals quickly pounced.  Under the Democratic-controlled House of Representatives, oversight hearings were few and far between.  Under the new House Republican majority in the 118th Congress, oversight of COVID-19 spending  is a high priority, leading to a long overdue House Committee on Oversight and Accountability hearing on pandemic relief fraud was held on February 1, 2023.  The House Ways and Means Committee then held its own hearing on February 8, 2023.

At the Oversight and Accountability hearing, the programs that were discussed as the most susceptible to fraud were the Paycheck Protection Program (PPP), the Small Business Administration’s (SBA) Economic Injury Disaster Loan Program, and unemployment insurance (UI) programs that were run by state governments.  According to NBC News, estimates of fraudulent activity within these programs range from $87 billion to $400 billion.  Pandemic Recovery Accountability Committee Chair Michael Horowitz stated during the House Oversight hearing that the total fraud may exceed $100 billion. 

While the government has made some progress in recovering the fraudulent money, they will have difficulty recovering the money that was stolen by criminals outside of the U.S., which could be a substantial percentage of the total amount.  According to Secret Service Assistant Director of the Office of Investigations David Smith, the Secret Service has recovered more than $1 billion in fraudulent payments.  Government Accountability Office (GAO) Comptroller General Gene Dodaro of the stated, “the Department of Labor Inspector General is opening 100 new investigations each week and the PPP program has over 500 investigations underway.”

The hearing witnesses agreed that the main reason for the widespread fraud was the lack of proper security steps and coordination between the federal and state governments.  Many of the relief programs required very little documentation and applicants only had to self-certify that they were who they claimed to be.  This allowed criminals to rob the government blind with little to no effort.  For example, the Treasury Department’s Do Not Pay List, which is meant to be a resource for federal agencies to verify payment eligibility to individuals and businesses, was largely unused by government agencies leading to more than $3 billion from the CARES Act funding being paid by the SBA to people and businesses who the Treasury Department determined required further verification. 

In his opening statement for the February 8, 2023 hearing, Ways and Means Committee Chairman Jason Smith (R-Mo.) called the fraud committed through unemployment programs the “greatest theft of taxpayer dollars in American history.”  Department of Labor Inspector General Larry Turner wrote in his testimony that at least $191 billion in UI payments could have been improper payments.  This equals 21.5 percent of all UI benefits paid by the federal and state governments.  Some estimates for UI fraud have been as high as $400 billion.  Whatever the final amount becomes, it demonstrates widespread improper and fraudulent payments and highlights the importance of conducting thorough oversight of pandemic relief programs. 

Congressional oversight hearings are crucial to providing checks and balances on the executive branch agencies and helping to guide Congress on implementing more stringent safeguards on future assistance programs.  Congress should be a better steward of taxpayer money and ensure that taxpayer resources are not wasted or susceptible to fraud.  As Rep. Nancy Mace (R-S.C.) said during the committee hearing, “anytime the federal government spends trillions of dollars we should ensure its safekeeping regardless of who is in power.”  Much work remains to be done and additional oversight hearings should be held to fully grasp the scale of fraud in COVID relief programs.  The committee hearings are a crucial first step to understanding the size and scope of COVID-19 fraud and developing new procedures and processes across the federal government to ensure that this does not occur in both a future emergency like the pandemic or in the normal expenditure of tax dollars on a daily basis.