Breaking Down the House Oversight Hearing on Federal Pandemic Spending: A Prescription for Waste, Fraud and Abuse
The public policy response to COVID-19 is still having significant consequences on American families. Governors locked down entire states, destroying livelihoods and supply chains and setting children back in the classroom. Meanwhile, lawmakers in Washington churned out approximately $6 trillion in relief spending, which has since fueled the inflation hamstring household budgets.
A significant portion of that $6 trillion went to lockdown relief programs such as enhanced unemployment benefits and PPP loans. Unfortunately, like most enormous sums of government spending, these programs proved exceedingly vulnerable to waste, fraud, and abuse. A Department of Labor report estimates that at least $163 billion of $873 billion in pandemic unemployment spending was improperly spent, attributing a significant portion to fraud. An inspector general report found that the Small Business Administration may have approved over $78 billion in improper PPP loans. Some studies put the number of improper/fraudulent loans at $117 billion.
It is no surprise that the new House Republican majority is taking action to investigate how these funds were spent and root out massive waste, fraud, and abuse. Tuesday’s House Committee on Oversight and Accountability hearing on Federal Pandemic Spending: A Prescription for Waste, Fraud, and Abuse gave members a chance to ask questions and investigate the misuse of COVID-19 funds.
A refreshing change from the days of investigating an NFL football team and pet collars, the House Oversight Committee is doing meaningful work under new Chairman James Comer (R-KY.). Rep. Pat Fallon (R-Texas) pointed out that some estimates project the level of fraud in COVID-19 funds at $560 billion, yet the last Congress did not hold one full Oversight Committee hearing on that fraud.
Republicans made a point to highlight how staggering that $560 billion number is. Rep. Lauren Boebert (R-Col.) went as far as to point out that the United States federal government has reportedly been defrauded of more money in the last two years than the entire 2022 tax revenue of England, Italy, Mexico, Ireland, Greece, Israel, Canada, Poland, and Brazil combined. Freshman Rep. Anna Luna (R-Fla.) then joined in to spotlight how President Joe Biden continued to approve COVID-19 spending without the necessary guardrails to make sure the money went where it was needed to go.
The purpose of the House Oversight Committee is to hold our government accountable. Unfortunately, the committee has ignored that responsibility in recent years. It’s time for Congress to get back to work and push back on the waste, fraud, and abuse of the federal government. Investigating the hundreds of billions of dollars in misspent COVID-19 relief funds is a great place to start.
Who were the Witnesses?
Assistant Director, Office of Investigations
United States Secret Service
Chair, Pandemic Response Accountability Committee
Inspector General, U.S. Department of Justice
Comptroller General of the United States
United States Government Accountability Office
What are members asking?
Below are some notable interactions between members of the committee and the witnesses.
Chairman James Comer (R-Ky.)
COMER: “Mr. Dodaro, by the end of 2020, Congress had already passed five laws containing more than $3 trillion in COVID Relief Funds. More than $1 trillion had been flagged by GAO as at risk for waste fraud abuse. Inspector generals and law enforcement officials were already highlighting concerns about covid relief money flowing to criminals and other ineligible recipients instead of Americans in need. And the economy was improving. Nevertheless, Democrats insisted on $1.9 trillion more covid relief spinning through the American Rescue Plan Act (ARPA), putting those funds at risk and theft and the economy at risk of massive inflation and recession. So, sir, did we lose funds included in the American Rescue Plan to fraud, and were additional improper payments made at the ARP after the ARP was passed?”
DODARO: “Yes, the improper payments estimate, for example, in 2022 was the first year that the paycheck protection program and the Economic Injury Disaster Loan program made improper payment estimates. That was about $29 billion for PPP and about $7 billion, over $6 billion for the idle program. We had urged that those improper payments be made earlier, in 2021, but they didn’t make those estimates…”
COMER: “What could Congress have done to have prevented this?”
DODARO: “That’s one of my legislative recommendations from GAO, is that any new programs over a hundred million dollars, not billion, a hundred million be designated immediately because of this past problem, to be susceptible to improper payments, and therefore make an estimate in the very first year of the program. Right now, the improper payments estimates only have to be made two or three years after a program’s already started. It’s too late. And some of these temporary programs, they’re all done. And so Congress can and should have that as a requirement to be put in place.”
Rep. Paul Gosar (R-Ari.)
GOSAR: “You bring up mandated regular reporting aspects is a big key, and Congress has dictated a lot to you, but Congress hasn’t done their fair share either. So when you look at the National Emergencies Act, there’s a requirement that congress meet every six months to have a detailed report instead of synopsizing this all over a year or a year and a half. It would be better to have these numbers on a basis over six months having accounted for it. Would you agree with me, Mr. Horowitz?”
HOROWITZ: “Yes. I think more regular reporting would be helpful, and part of that is getting the data information from agencies to the public to Congress in a timely fashion.”
GOSAR: “There are estimates of $560 billion of fraud in the COVID 19 funds. Do you, do you, do you agree with that, Mr. Dodaro?”
DODARO: “It will be a while before the full extent of fraud is known. As I mentioned in my statement, and there’s been over a thousand people have pleaded guilty or been convicted, there’s 600, over 600 charges still pending against people. The SBA (Small Business Administration) IG (inspector general) has 536 active investigations right now. The Department of Labor IG is opening up a hundred new cases every week. So this is gonna go on for a while. There are definitely indications of widespread fraud. But it’s impossible to estimate right now what the full extent will be. Time will have to unfold, and these investigations will have to be undertaken because the definition of fraud is willful representation, misrepresentation to get something of value that’s adjudicated through a court or some other judicial process.”
Rep. Gary Palmer (R-Ala.)
PALMER: “Do we know the full amount of improper payments from COVID funds?”
DODARO: “There are estimates that have been made on the unemployment insurance area in 2020. The estimate was improper payments was $78 billion, up from about $9 billion in 2020. And then there was another $18.9 billion of improper payments reported by the unemployment insurance program for 2022. And that was a 22% error rate. And the year before was 18.9 error rate prior to the pandemic, it was about 9%. And the PPP and idle areas combined at about $36 billion.”
*$132.9 billion of improper payments in total
Rep Andy Biggs (R-Ari.)
BIGGS: “Is there any money not expended in any of the COVID relief packages that you’re aware of?”
DODARO: “As of November, 2022, there’s about $157 billion unobligated funds.”
Rep. Lauren Boebert (R-Colo.)
BOEBERT: “…Can any one of the witnesses today give me the name of one administrator, one director, a supervisor that was fired, demoted, or put on leave because they failed to keep hundreds of billions of dollars from being stolen from the American taxpayers?”
WITNESSES: Each answer no
BOEBERT: “Thank you. I didn’t think so. And that’s pretty insane. $560 billion we’re projecting and we have hundreds of billions of dollars lost, causing massive inflation. 70% of the money, according to the CEO of Lexisnexis Risk Solutions, ended up lining the pockets of crime syndicates in countries like China, Nigeria, Russia, and not a single person in charge of distributing that money has been held accountable. So here’s how badly the American taxpayer was conned. The United States federal government has reportedly been defrauded of more money in the last two years than the entire 2022 tax revenue of England, Italy, Mexico, Ireland, Greece, Israel, Canada, Poland, and Brazil combined. The American taxpayers have one question. How the heck were these bureaucrats so dang incompetent that they were being scammed out of 35 million every hour for nearly two years?”
Rep. Anna Luna (R-Fla.)
LUNA: “President Biden continued to approve COVID spending with no guardrails in place to make sure that money was going where it was intended to go. We have seen the federal government spending and distributing to illegal immigrants the same illegal immigrants, mind you, that did not take or pass the health screening process for legal immigrants to come here. And in addition to that, they did not pay into our taxpayer system. I would like to submit the graphic into record. We can see that the City of Chicago is sending $71 million for financial assistance for underserved communities such as undocumented residents. The state of Washington is handing out $340 million in grant payments for illegal immigrants who are not otherwise eligible for federal stimulus. And the city of Boston is sending $1 million in direct cash transfers to illegal immigrants who are unable to receive federal covid benefits. This rewards a dangerous process incentivizing people to come here illegally, where some have estimated that a shocking 60% of Latin American children who cross the border, largely because they’re seeking the American dream and understand some of the benefits people offer in this country are caught by cartels, exploited for child pornography and drug trafficking. These are not cherry picked facts or distorted figures. This is actually happening. My question is for Mr. Horowitz, if illegal immigrants are prohibited from federal public benefits, then why are they allowed to receive federal covid dollars from programs like the American Rescue Plan?
HOROWITZ: “I would have to go back and look at each program and how eligibility determinations were made, and who was eligible. I’m happy to follow up with you and provide information to you. We are looking at anybody who’s ineligible. Frankly, we don’t break it down between the categories of as to why. So we’re looking for people who are ineligible. We’re working with our law enforcement partners on that. Whether you are here legally, not here legally, you really own the business, or you never owned a business, we’re gonna follow up and pursue that.
You can view the full hearing here.