President Joe Biden has requested $1.6 billion in aid from Congress to address “historic” cases of fraud related to government COVID relief programs.
Key Details
- Lawmakers from both parties support a more aggressive approach to handling pandemic-assistance fraud.
- The request includes $600 million to support federal watchdogs and law enforcement agencies in prosecuting “the most serious and sophisticated” instances of pandemic fraud.
- With the suggested funding, the Department of Justice’s COVID “strike force teams” would nearly triple in size, according to the White House.
- The White House added that one recently successful investigation led to the recovery of $286 million in stolen money.
- Another $600 million of the proposed funds would be dedicated to systems protecting against fraud and identity theft, such as improving analytics and detection software in government programs.
- Around $400 million would be set aside to assist victims of pandemic-related identity theft. Those affected may have long-term effects such as damaged credit scores and tax liabilities.
- In addition to requests for funding, President Biden’s plan also requests that the statute of limitations to prosecute pandemic fraud be extended. Currently, the statute of limitations expires in 2025. The extension would give government agencies more time to prosecute fraudsters.
Why it’s news
When distributing pandemic assistance funds, some guardrails that prevent fraud were lowered to distribute aid more quickly. However, this also allowed for an unprecedented level of fraud. An estimated $5 billion of “potentially fraudulent” pandemic assistance was issued by the federal government, Forbes reports. Around 57,000 loans worth $3.6 billion were released in August 2020, according to the White House.
The U.S. government distributed more than $5 trillion in aid to Americans during the pandemic. The influx of monetary aid was the largest ever distributed by the government in U.S. history. As agencies worked to assist struggling Americans quickly, other agencies monitoring for fraud struggled to keep up.
Since House Republicans regained majority control, the lawmakers have pushed to investigate pandemic-relief fraud. However, senior presidential advisor Gene Sperling told reporters that President Biden’s new focus on pandemic fraud is unrelated to pending Republican investigations into the topic, Reuters reports.
Sperling added that he plans to discuss President Biden’s plan with lawmakers this week.
Backing up a bit
Starting in February, the Republican-led Oversight Committee began its hearings on alleged pandemic relief fraud. In opening remarks, the committee chairman James Comer expressed that the committee will seek to identify where the billions of dollars went, what percentage was given to fraudsters and ineligible applicants, and what steps can be taken to prevent this situation in the future.
Comer stated his commitment to focusing the committee on its mission, which he says Democrats strayed from while they controlled the House.
“Today’s hearing is a first step in examining the massive waste, fraud, abuse, and mismanagement in COVID-relief programs,” he said. Comer recounted the relief efforts during the pandemic and accused Democrats of not providing enough oversight for funding.
“But with massive government spending comes opportunity for waste, fraud, and abuse. Unfortunately, Democrats conducted little oversight of the over $2 trillion spent under the CARES Act. They did the exact opposite. They spent another $2 trillion, but this time, with absolutely no protections or guardrails to prevent waste,” he said.
The Biden administration has pointed to Trump-era policies that they say allowed pandemic fraud to run rampant.
“During the pandemic, the previous Administration allowed 57,000 loans worth $3.6 billion to go out by August 2020, when all of them would have been flagged had the Trump administration SBA [Small Business Administration] simply checked them against Do Not Pay (DNP) databases,” the White House says in a press release.