Federal official warns $191 billion in covid unemployment aid may have been misspent

WASHINGTON — The U.S. government may have misspent roughly $191 billion in pandemic unemployment benefits, a top federal watchdog told Congress on Wednesday, as Washington continues to uncover the vast and still-growing extent of the waste, fraud and abuse targeting coronavirus aid.

The new estimate — computed by Larry D. Turner, the inspector general of the Labor Department — galvanized House Republicans as they intensified their scrutiny of the roughly $5 trillion in emergency funds approved since the start of the crisis.

Turner presented the information at a hearing Wednesday convened by Rep. Jason T. Smith (R-Mo.), chairman of the House Ways and Means Committee, according to testimony shared early with The Washington Post.

Opening the inquiry, Smith described the problems plaguing unemployment insurance as the "greatest theft of taxpayer dollars in American history."

In doing so, Smith pledged additional oversight still to come: "The new Republican majority is turning on the lights," he said.

When millions of Americans suddenly found themselves thrust out of a job in early 2020, Democrats and Republicans banded together to approve a historic expansion of the country's unemployment insurance program. Their efforts — signed into law starting under President Donald Trump — at one point added an extra $600 to workers' weekly checks and provided new benefits to those who previously would not have qualified for federal help.

The money helped rescue the economy from the worst crisis since the Great Depression. But it also invited an unprecedented wave of theft and abuse, as criminals seized on the government's generosity — and its race to disburse aid — to bilk state and federal agencies for massive sums.

On Wednesday, top watchdogs told the House Ways and Means Committee that they still cannot compute the total amount of federal COVID aid subject to fraud and abuse. But Turner's testimony noted that the country's misspending on unemployment benefits, in particular, may be far greater than previously known.

His new estimate — "at least $191 billion" in possible improper payments — is significantly more than the roughly $163 billion that the government identified a year earlier. Like before, though, the figure is a projection that reflects fraud as well as sums erroneously paid to innocent Americans.Turner's prepared testimony said that a "significant portion" is "attributable to fraud."

New York’s Department of Labor has come under scrutiny in recent months over its own handling and reporting of unemployment fraud. In November, state Comptroller Thomas P. DiNapoli released the findings of an audit on the Labor Department that showed at least $11 billion in unemployment funds were lost to fraud in fiscal year 2020-2021.

That figure likely understates the total amount of fraud, though, as it does not include estimated fraud from temporary unemployment insurance programs paid for with federal dollars, the audit found.

Officials with the state Department of Labor did not respond to requests Wednesday seeking comment on Turner’s presentation. Labor Commissioner Roberta Reardon wrote in an op-ed for the Times Union of Albany in December that the fraud loss was closer to $4 billion and DiNapoli's methodology was "outdated and flawed."