The Washington PostDemocracy Dies in Darkness

Federal watchdogs ask Congress for long-delayed help to fight covid fraud

The requests offer an early test for House Republicans as they convene the first hearing of a top oversight panel that has pledged to investigate Biden

Rep. Jamie Raskin (D-Md.), ranking member of the House Oversight and Accountability Committee, and Chairman James Comer (R-Ky.) during a House Oversight and Accountability Committee organizational meeting Tuesday. (Jabin Botsford/The Washington Post)
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Top federal watchdogs warned Congress on Wednesday about the vast array of criminal activity targeting the U.S. government’s roughly $5 trillion in coronavirus aid, as they pleaded for new laws and money to help combat an emerging torrent of waste, fraud and abuse.

The new requests offered an early test for House Republicans, who assumed the majority in January on a pledge to investigate President Biden — even though much of the trouble that plagues pandemic spending dates back to the Trump administration.

Appearing before the House Oversight and Accountability Committee, three federal officials pointed to the staggering amount of money stolen from federal aid programs since 2020, while acknowledging that the U.S. government years later still does not know the full extent of its losses.

The suspected theft includes more than $5 billion in loans and grants to small businesses that used ineligible Social Security numbers, according to written testimony from Michael Horowitz, the leader of the Pandemic Response Accountability Committee (PRAC), whose new findings The Washington Post first reported this week. Another estimate — from the Government Accountability Office — raises the prospect that “improper payments” in two small-business programs alone may have exceeded $36 billion, on top of another $60 billion in potential fraud involving the nation’s unemployment insurance benefits.

Federal watchdogs also called on lawmakers to enhance their powers to collect and monitor data on pandemic aid spending, bring civil and criminal charges, and recover stolen taxpayer money. Offering his own warning, David Smith, a top investigative official with the Secret Service, told Congress that the sheer volume of theft is likely to saddle Washington with time-consuming, expensive legal work for “years to come.”

The political fate of those requests may depend on GOP leaders including Rep. James Comer (R-Ky.), who assumed the gavel on the House’s top oversight committee only weeks ago. Comer is set to preside this year over a roster of irascible conservatives who have made no secret about their plans to use their powerful new perch to take aim at the White House.

In his own opening remarks, Comer himself toed the line — swiping at Democrats for what he described as poor oversight in recent years, even as he promised to probe coronavirus aid fraud more fully.

“We will hold many more of these hearings on this important issue,” he said. “We owe it to the American people to get to the bottom of the greatest theft of American taxpayer dollars in history.”

In response, Rep. Jamie Raskin (Md.) — the top Democrat on the oversight panel — said the party actually had held seven hearings and completed numerous investigations to uncover misuse of covid aid funds when it controlled the House. While he expressed a desire to work with the GOP to ensure “government is effectively delivering on its promises to the American people,” he raised his concern that the hearing Wednesday was meant to “cherry-pick” facts and cast doubt on the “legitimacy” of federal pandemic spending.

The early political sniping nonetheless reflected the complicated legacy of the U.S. government’s roughly two years of stimulus spending in response to the coronavirus. Totaling more than $5 trillion — and approved, more often than not, with bipartisan support — the historic burst of spending helped rescue a country teetering on the fiscal brink.

The aid included generous weekly payments to out-of-work Americans, forgivable loans to cash-starved businesses and a torrent of additional aid to schools, hospitals, cities and states. For their efforts, lawmakers ultimately helped reverse rampant unemployment and rescue the economy from the worst crisis since the Great Depression.

But the speed at which Washington toiled to disburse the funding also opened the door to considerable waste, fraud and abuse, The Post found in a year-long investigation, the Covid Money Trail. Beginning in the Trump administration, a wide array of federal agencies relaxed their regulations and oversight, opening the door for malicious actors to obtain money they never should have been able to access in the first place.

The Small Business Administration, for example, struggled under Trump to manage a crush of applications for its roughly $1 trillion in total loans and grants, The Post uncovered. Its shoddy review process — flagged for years by its own inspector general — meant that the agency overlooked applications filed in the name of the dead, tied to foreign crime syndicates and submitted using fake Social Security numbers. And the SBA outsourced some of its oversight to unproven tech companies that later collected billions in taxpayer-funded fees while conducting inadequate oversight.

In other cases, Republican governors and other local officials also sought to channel federal coronavirus aid to a wide array of political pet projects — a prison in Alabama, immigration crackdowns in Florida and Texas and tax cuts in other states nationwide. Federal officials since have opened investigations into some of the spending, a share of which originated in the roughly $1.9 trillion American Rescue Plan adopted under Biden.

On Wednesday, many Democrats and Republicans affirmed a shared desire to root out abuse in federal pandemic aid programs. Sounding a bipartisan note, Rep. Nancy Mace (R-N.C.) said lawmakers should ensure the “safekeeping” of pandemic relief funds “regardless of who is in power.”

But politics still pervaded the hearing, as Republicans seized on myriad reports of waste to blast the Biden administration, largely ignoring the role Trump and other GOP policymakers played in enabling some of the abuse. Comer, meanwhile, signaled future hearings could focus on more delicate issues, including a plan to explore whether federal covid aid to assist schools promoted “divisive ideologies.”

The political undercurrent troubled some Democrats, including Rep. Alexandria Ocasio-Cortez (D-N.Y.), who took issue with the way Comer convened the hearing. She pointed to a series of demands that the chairman sent to California, New York and Pennsylvania — all Democratic-led states — seeking documents related to their handling of federal unemployment benefits. Citing similar fraud risks in GOP-led states — including Arizona, previously run by Republican Gov. Doug Ducey — that were not asked to submit records, Ocasio-Cortez described the GOP approach as “highly questionable.”

“The bipartisan nature of oversight is what gives it its power,” she said.

In the meantime, federal watchdogs reprised their pleas for more money — and a slew of legislative fixes — to pursue pandemic-related crimes. Many of these key offices, including the federal government’s inspectors general, remain underfunded by millions of dollars despite their repeated calls for help.

Gene Dodaro, the U.S. comptroller general and head of the GAO, said he hoped lawmakers could “put solutions in place” so that the next time it approves a tranche of emergency funds “that it’s done in a way that gets the funds to the people who need it and not allow this type of fraudulent activity to plague our national programs.”

In testimony, Dodaro pointed to the growing number of cases the government has brought since the start of the pandemic, including guilty pleas and convictions that involve more than 1,000 people and another 600 charges still pending. Over that period, the GAO has made a series of key recommendations to Congress to fight coronavirus aid fraud and prevent similar abuse in the event of a future crisis. Yet lawmakers have acted on few of them, including an outstanding request by the watchdog to make it easier for federal agencies to access Social Security death records — a key database that might have prevented criminals from obtaining taxpayer money in the name of the deceased.

Horowitz, meanwhile, urged Congress to give federal agents more time to find and charge suspects in cases involving stolen unemployment insurance benefits, since a key law used to prosecute those crimes sets a five-year statute of limitation — creating potential trouble in 2025. And he asked lawmakers to support the PRAC and its analytics work beyond the committee’s scheduled end in 2025.