The U.S. Government Accountability Office estimated this week that people who filed for unemployment insurance during the pandemic stole somewhere between $100 billion and $135 billion in benefits — just a portion of the estimated fraud across all federal pandemic programs.
An Associated Press investigation earlier this summer estimated that more than $280 billion in taxpayer-underwritten funding across all COVID programs was stolen — “the greatest grift in U.S. history,” as the news service termed it.
Federal officials repeatedly said that in an international health emergency it was most important to spend these unprecedented sums as quickly as possible. Accounting for whether the money was spent honestly and prudently, the growing body of evidence shows, was an afterthought.
Little of the fraud has so far been detected and reported by the states.
While the GAO’s low-end estimate of fraud is $100 billion just in the unemployment programs, all states combined have so far confirmed just $3.9 billion of that fraud over all of the pandemic unemployment insurance programs and another $1.4 billion in the regular unemployment insurance program during the pandemic, according to the report. Of the $3.9 billion in pandemic unemployment fraud, the states reported having recovered just $214 million — about 5%.
As in other states, fraud has been common in Wisconsin. Insurance investigators in the Badger State have identified $39 million in pandemic unemployment insurance fraud but through May recovered just $4 million of it, according to the report.
At the national level, the GAO’s estimated amount of fraud is as much as 25 times the amount of fraud so far reported. If that multiplier held for individual states, it’s possible that dishonest Wisconsinites — or con artists stealing their identities — scammed taxpayers for $1 billion in fraudulent unemployment insurance payments.
Jared Smith, one of the authors of the GAO report, told the Badger Institute to be careful with extrapolations by state. “We saw a lot of variability across states, and so it is difficult to say whether the national findings would be applicable to Wisconsin,” Smith wrote in an email exchange. “We did not perform this type of analysis at the state level.”
Initially, the federal government provided $600 per week on top of state unemployment benefits. This added benefit decreased to $300 per week in July 2020 before eventually tapering off altogether.
The U.S. Department of Labor did give states money to combat unemployment insurance fraud. Wisconsin, for instance, received $28.3 million, $1 million more than the amount of fraud identified through 2022.
While much of the GAO’s most recent report is devoted to outright thievery, a reader can be further discouraged by the scale of loss attributable to ineptitude at the Department of Labor.
As of May 1, states reported inadvertently making $50.5 billion in overpayments to legitimate filers who qualified for lower amounts than they received. The agency has since managed to retrieve just $5.6 billion of it, according to the report.
How much more the states will get back from people who weren’t eligible for what they received is left to the discretion of the states.
“Under the pandemic unemployment insurance programs,” the report says, “a state can waive the legal right to recover the overpayment, in limited circumstances, where the individual is not at fault and repayment would be contrary to equity and good conscience.”
Nowhere in the report is there a definition of equity or good conscience.
Mark Lisheron is the Managing Editor of the Badger Institute; Mike Nichols is President. Permission to reprint is granted as long as the author and Badger Institute are properly cited.