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Rep. Walorski: There’s Too Much at Stake To Continue This Federal Practice of Pay and Chase

May 10, 2021

WASHINGTON, D.C. – With requests for a joint hearing going unanswered and Democrats refusing to consider reforming safety net programs, Republican Leader for the Worker and Family Support Subcommittee Rep. Jackie Walorski (R-IN) hosted a panel where Committee Republicans heard directly from industry experts.

In introducing the panel, Rep. Walorski said: “We cannot continue this federal practice of ‘pay and chase.’ There is too much at stake. Republicans on this Committee are developing a number of proposals to combat COVID unemployment fraud by strengthening program integrity and putting stronger measures in place as part of the eligibility process – up front – to protect Americans.”

PROBLEM: Because Democrats have turned a blind eye to vulnerabilities in their partisan unemployment programs, criminals and international cybercrime rings are robbing the American people to the tune of $60 billion and counting.

SOLUTION: Ways and Means Republicans have been sounding the alarm since last fall. This week, Committee Republicans will introduce the Combatting COVID Unemployment Fraud Act. Learn more about Republican’s fight against waste, fraud, and abuse here.

Rep. Walorski’s opening remarks as delivered appear below:

Good morning and welcome. I’m Jackie Walorski from Indiana’s 2nd district. Thank you for joining us today for this discussion.

We appreciate your participation in this roundtable to examine the ongoing problem of fraud in COVID pandemic unemployment programs.

I also want to thank my colleagues for joining today and helping to plan this meeting.

As Ranking Member of the Worker and Family Support Subcommittee, I take seriously my role to ensure the integrity and success of the programs we oversee.
Generous unemployment benefits put in place by the CARES Act, including the additional $300 federal supplement are discouraging work and making it hard for employers to hire – and they have become an easy target for criminals.

Unchecked unemployment fraud is delaying legitimate payments, diverting funds away from unemployed workers, and turning thousands of Americans into unwitting identity theft victims. This roundtable provides a forum for hearing from state leaders, employers, and victims to highlight the voices of those impacted.

In Indiana, since the beginning of COVID our state’s Department of Workforce Development has processed nearly 1.3 million claims for unemployment and the Department estimates 15% have been flagged for fraud indicators. I’m grateful to have Doug Swetnam from the Indiana Attorney General’s office with us to talk more about how the state is addressing this challenge.

As far back as last summer, multiple reports from the Department of Justice, the U.S. Secret Service and GAO have raised the alarm bells about widespread fraud resulting in billions being diverted. Criminal organizations, including international cybercrime rings, prison inmates, and opportunistic foreign actors are using stolen identities to falsely claim unemployment benefits.

The Department of Labor’s Inspector General estimates that more than $63 billion in unemployment benefits have been paid out improperly during COVID, with a significant portion attributable to fraud. This is roughly 10% of the total amount paid since March 2020. The agency’s initial pandemic audit and investigative work indicate program improper payments, will be higher, and could be as much as $89 billion.

Let’s pause to think about that – $63 billion a frightening number, larger than the entire budget of the Department of Homeland Security.

To make it worse, state efforts to combat cybercriminals have been hamstrung by lax program rules that allow self-certification and prioritize getting benefits out the door over making sure they are going to the right people.

With new reports of fraud surfacing daily, I’m concerned about the lack of oversight and action. Democrats extended COVID unemployment programs through September 6th, with no additional protections against fraud — and without having held a single hearing to determine how to prevent further fraud from occurring. This, despite repeated warnings about the vulnerability for abuse and calls for oversight hearings.

We cannot continue this federal practice of “pay and chase.” There is too much at stake. Republicans on this Committee are developing a number of proposals to combat COVID unemployment fraud by strengthening program integrity and putting stronger measures in place as part of the eligibility process – up front – to protect Americans.

Our proposal would emphasize identity verification and validation and increase state capacity to put in place digital identity proofing services. We need to make sure people are who they say they are BEFORE we give out benefits. It also includes a focus on recoupment and recovery of fraudulently paid dollars by clawing back dollars from criminals and increasing capacity for prosecution.

This problem of unemployment fraud has created an added burden that is placing undue stress on thousands of Americans when they can least afford it. I look forward to hearing from our guests today to help us find solutions. It’s time to act.

With that, I would like to introduce my guests. Following their remarks, I will turn to each of my colleagues. In order to make sure everyone has a chance to participate, I’m asking that remarks be limited to five minutes.

I would like to welcome Doug Swetnam, Pete Eskew, and Eva Velasquez. Thank you for your participation.