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Recent Erroneous Extended UI Benefits Almost Match All Extended Benefits Paid after 2001 Recession and Terrorist Attacks

March 31, 2014

According to data from the Department of Labor, the U.S. has spent an estimated $26.0 billion in error on Federal extended Unemployment Insurance (UI) benefits since the temporary Emergency Unemployment Compensation (EUC) program was created in July 2008.  Given the record scale of the EUC program, this is in all likelihood the largest amount of misspending under any such temporary Federal program in U.S. history.  Incredibly, as the chart below displays, this massive amount of EUC misspending almost matches the entire amount spent on all extended UI benefits under a similar temporary Federal program created in the wake of the 2001 recession and terrorist attacks.  That prior program, called Temporary Emergency Unemployment Compensation (TEUC), spent a total of $28.5 billion on Federal extended unemployment benefits between 2002 and 2004.

Total TEUC Spending (2002-04) vs. Erroneous EUC Spending (2008-13)

Sources: Department of Labor, Temporary Extended Unemployment Compensation Data, FY2015 UI Outlook, and FY2012 Agency Financial Report; and

While the Federal government funds the EUC program, States actually operate the program and provide checks to recipients.  According to NASWA, which is the national association representing state UI directors, the Senate EUC extension bill would make matters even worse when it comes to States’ ability to accurately pay UI benefits in the future.  

Specifically, if the now-expired EUC program were revived as the Senate bill specifies, States would be required to determine whether EUC claimants had been searching for work during 12 or more weeks dating back to when the EUC program expired at the end of December 2013.  As NASWA put it in a letter to Senate leaders on March 19, 2014: “The backdating of EUC claims to December 29, 2013, would make it nearly impossible, in many cases, to apply a state’s weekly work search requirement, a key factor to determine eligibility for UI benefits and to avoid improper payments to claimants who are ineligible.”  A NASWA fact sheet states that as a result “[t]here may be a large number of EUC overpayments created by retroactively paying claims.”  Ultimately, unless States are simply told to ignore this work search requirement, which has been a staple of the UI program for decades, NASWA finds that “the potential for improper payments would be enormous.”
The data suggests the Federal extended benefits program has already misspent enormous amounts of taxpayer funds in recent years.  Reviving the program – especially if done retroactively as the Senate bill proposes — would only increase that erroneous spending.  Under the Senate bill that calls for an additional $10 billion in benefit spending, at least $1 billion would be new misspending, predominantly on “unemployed workers” who have already returned to work. 

Taxpayers deserve far better than that.