[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                    HEARING ON THE GREATEST THEFT OF
                      TAXPAYER DOLLARS: UNCHECKED
                           UNEMPLOYMENT FRAUD

=======================================================================

                                HEARING

                               BEFORE THE

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION
                               __________

                            FEBRUARY 8, 2023
                               __________

                            Serial No. 118-2
                               __________

         Printed for the use of the Committee on Ways and Means
         

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                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
53-008                   WASHINGTON : 2024                     


                      COMMITTEE ON WAYS AND MEANS

                    JASON SMITH, Missouri, Chairman
VERN BUCHANAN, Florida               RICHARD E. NEAL, Massachusetts
ADRIAN SMITH, Nebraska               LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania             MIKE THOMPSON, California
DAVID SCHWEIKERT, Arizona            JOHN B. LARSON, Connecticut
DARIN LaHOOD, Illinois               EARL BLUMENAUER, Oregon
BRAD WENSTRUP, Ohio                  BILL PASCRELL, Jr., New Jersey
JODEY ARRINGTON, Texas               DANNY DAVIS, Illinois
DREW FERGUSON, Georgia               LINDA SANCHEZ, California
RON ESTES, Kansas                    BRIAN HIGGINS, New York
LLOYD SMUCKER, Pennsylvania          TERRI SEWELL, Alabama
KEVIN HERN, Oklahoma                 SUZAN DelBENE, Washington
CAROL MILLER, West Virginia          JUDY CHU, California
GREG MURPHY, North Carolina          GWEN MOORE, Wisconsin
DAVID KUSTOFF, Tennessee             DAN KILDEE, Michigan
BRIAN FITZPATRICK, Pennsylvania      DON BEYER, Virginia
GREG STEUBE, Florida                 DWIGHT EVANS, Pennsylvania
CLAUDIA TENNEY, New York             BRAD SCHNEIDER, Illinois
MICHELLE FISCHBACH, Minnesota        JIMMY PANETTA, California
BLAKE MOORE, Utah
MICHELLE STEEL, California
BETH VAN DUYNE, Texas
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio
                       Mark Roman, Staff Director
                 Brandon Casey, Minority Chief Counsel
                                 ------                                

                         C  O  N  T  E  N  T  S

                              ----------                              
                                                                   Page

                           OPENING STATEMENTS

Hon. Jason Smith, Missouri, Chairman.............................     1
Hon. Richard Neal, Massachusetts, Ranking Member.................     3
Advisory of February 8, 2023 announcing the hearing..............     V

                               WITNESSES

Gene Dodaro, Comptroller General, Government Accountability 
  Office.........................................................     4
Larry Turner, Inspector General, Department of Labor Office of 
  the Inspector General..........................................    39
Michael Horowitz, Chair, Pandemic Response Accountability 
  Committee......................................................    69

                    MEMBER QUESTIONS FOR THE RECORD

Member Questions for the Record to and Responses from Gene 
  Dodaro, Comptroller General, Government Accountability Office..   447
Member Questions for the Record to and Responses from Larry 
  Turner, Inspector General, Department of Labor Office of the 
  Inspector General..............................................   451

                   PUBLIC SUBMISSIONS FOR THE RECORD

Public Submissions...............................................   454

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                     THE GREATEST THEFT OF TAXPAYER
                    DOLLARS: UNCHECKED UNEMPLOYMENT
                                 FRAUD

                              ----------                              


                      WEDNESDAY, FEBRUARY 8, 2023

                          House of Representatives,
                               Committee on Ways and Means,
                                                   Washington, D.C.
    The committee met, pursuant to call, at 10:02 a.m., in Room 
1100, Longworth House Office Building, Hon. Jason T. Smith 
[chairman of the committee] presiding.
    Chairman SMITH. The committee will come to order.
    Today's hearing has been a long time coming. For more than 
two years, Republicans have been sounding the alarm about the 
greatest theft of taxpayer dollars in American history: the 
massive fraud perpetrated in the unemployment insurance program 
that skyrocketed with the COVID-19 pandemic. While many 
Americans who actually qualified for these benefits were left 
struggling to reclaim their benefits and their identity, 
upwards of tens of billions of taxpayer dollars had been 
stolen.
    The unemployment benefits passed in the CARES Act came at a 
time when millions of Americans were losing their jobs 
overnight, as government shut down businesses and ordered 
people to stay at home. Livelihoods were ripped away. There is 
no question, folks needed help, which is exactly why Congress 
should have protected this program and those who needed it 
against the criminals who exploited it to commit fraud.
    UI fraud is not a victimless crime. For example, a Utah 
woman lost her job after a cyber criminal stole her identity, 
bank account information, and weekly benefit check. Many more 
Americans have stories just like hers. Unemployment insurance 
met to help them get through temporary joblessness was stolen. 
Their most sensitive information compromised by criminals, 
while Democrats in Washington turned a blind eye.
    In addition to run-of-the-mill thieves, international crime 
rings took advantage of our national crisis. Law enforcement 
busted several rings that made off with millions, often using 
Americans as money mules to launder money offshore. The Biden 
Administration's Department of Labor's inspector general 
believes significant fraud played a role within its estimate, a 
new estimate, $191 billion in improper payments.
    The range of estimates alone is sufficient reason for 
today's hearing. ID.me, an identity verification company hired 
by many states, estimated an astounding $400 billion, $400 
billion, in fraud. That suggests thieves may have stolen almost 
half of the $878 million taxpayers spent on unemployment 
insurance. The White House itself acknowledged that tens of 
billions were made in improper payments. They estimate $104 
billion lost.
    More recently, the Government Accountability Office 
released its own report, making an early estimate that at least 
$60 billion went to criminals. In just one example of fraud, 
one example of fraud, one individual was able to file an 
unemployment claim in 29 different states, and received over 
$500,000 in fraudulent benefits.
    With these varying estimates, it is clear that the Biden 
Administration and Congress are in the dark about the size and 
scope of the greatest theft of taxpayer dollars in American 
history.
    The new Republican majority is turning on the lights. We 
tried when we were in the minority. As early as 2020, 
Republicans raised the alarm about fraud based on red flags 
from the Department of Labor's inspector general and the Secret 
Service.
    As the evidence of fraud escalated, I am sorry to say that 
Democrats continued to turn a blind eye. They ignored two 
requests from House Republicans on this committee to hold an 
oversight hearing just like the one today. Democrats blocked a 
congressional resolution to get answers about what the 
Department of Labor knew about funds going to international 
crime rings. Democrats even voted to end the identity 
verification requirements and phase-outs of emergency UI 
programs they had previously supported in December of 2020.
    Republicans proposed amendments to protect taxpayers and 
those who needed to get unemployment benefits. Democrats 
rejected them outright. Instead, they unilaterally extended 
unemployment benefits in their so-called bailout bill. They did 
this, even as most businesses had already reopened at a time 
when the Congressional Budget Office projected the economy to 
return to pre-pandemic levels of growth by the middle of 2021, 
and unemployment to steadily decline without any further 
stimulus spending.
    The Biden Administration has been asleep at the wheel. In 
his last State of the Union, the President bragged about 
appointing a chief pandemic prosecutor 14 months into his 
Administration. That position has sat vacant for months. The 
Biden Administration then changed the rules to make it easier 
for states to sweep potential cases of fraud under the rug.
    Those with their identities stolen weren't the only 
victims. Democrats' unrestrained COVID unemployment insurance 
programs fueled a labor shortage that punished American 
families and small businesses, and denied individuals the 
paycheck and dignity that came from a job. Just two days ago, 
small business owners in West Virginia shared with this 
committee their struggle to find workers because Congress made 
a government check more valuable than a job.
    One of our highest responsibilities as legislators is to be 
good stewards of the American people's hard-earned tax dollars. 
This hearing is so important and, sadly, long overdue. I look 
forward to hearing from our witnesses today on exactly what the 
Biden Administration is doing, and what Congress should have 
done and must do to go after criminals and make right this 
multi-billion dollar wrong.
    Chairman SMITH. I am pleased to recognize the gentleman 
from Massachusetts, Mr. Neal, for his opening statement.
    Mr. NEAL. Thank you, Mr. Chairman, and I want to say a word 
of thanks to our witnesses today.
    So as Joe Friday might have said in a different age, ``just 
the facts,'' because that is what we intend to focus on this 
morning.
    On March 11th of 2020, Dr. Fauci gave his warning as to 
what was coming. Within 3 months, 20 million Americans had lost 
their jobs. That is the reality. Today, not only have all those 
jobs been returned, but, just as importantly, there are still 
11 million jobs that go unanswered every day in America. Just 
the facts.
    I know, I helped write this legislation, and I didn't write 
it with just Speaker Pelosi. I wrote it with Secretary Mnuchin 
in the room over eight days. Much of this legislation was 
written by the previous Administration.
    So just the facts: $849 billion of unemployment insurance. 
Of that number, it is estimated that 7.1 percent was 
fraudulently spent. We do not, on the Democratic side, defend 
fraud. We want the Justice Department, we want our witnesses 
today to pursue aggressively any of that criminal element that 
did what they did. But let us not conflate the need for 
unemployment insurance with what happened during the course of 
the pandemic.
    Twelve million jobs have been created under President 
Biden, 517,000 last month. And the unemployment rate in America 
is now 3.4 percent. So the Paycheck Protection Program worked. 
The unemployment insurance program worked. The relief that we 
gave to hospitals where people were in the hallways on 
ventilators, it worked.
    So when I asked Secretary Paulson, a Republican who 
couldn't have been any more cooperative in helping us to devise 
the program, or we asked Secretary Mnuchin, or we asked 
Secretary Rubin, Secretary Yellen, and Secretary Lew as to how 
to proceed, they gave us the advice to get cash into the hands 
of the people at the bottom of the economic scale who really 
need it.
    So, what did we do? We devised an initiative to make sure 
that the community bankers were in the middle of it, because 
they had good credit histories with the people that needed the 
money.
    How about the idea of what we were able to do with the 
credit unions and CDFIs? What we did overwhelmingly worked. And 
to pick on people today, of the 20 million who lost their jobs, 
and to suggest that they stayed home during the pandemic--the 
number of women who have not come back to the workforce because 
they couldn't find childcare, those are the issues that the 
committee should be focused on this morning.
    Nobody condones fraud. We want those to be pursued who 
participated in a criminality that relates to fraud. But the 
idea that there is a massive number of people staying home 
because they can collect unemployment insurance? Tell that to 
the members of the AFL-CIO and the trade unions that had to 
stop construction jobs during the course of the pandemic. Tell 
that to the hospital workers who came to work exhausted every 
single day to make sure that we got past the pandemic.
    If the reporters who covered the early stages of the 
pandemic, when they pointed out the issues, they said early on, 
``oh, China is doing a great job.'' I don't think anybody who 
looked back in the last six months would say that China did a 
better job than the United States.
    Then we used the example of what a great job New Zealand 
was doing compared to the United States. The prime minister 
just stepped down last week, the approval rating 39 percent.
    We restored the jobs that were necessary in America. It 
should be a banner of success that we are celebrating this 
morning, Republican and Democrat.
    But just another key phrase here to point out. Much of the 
unemployment insurance was passed out during the Trump 
Administration. That is a fact.
    The idea once again that there is this group that is out 
there in America that doesn't want to work because they can 
secure unemployment benefits in Florida, $250 a week in 
unemployment insurance, that is nonsense.
    And the other part of this I think is important. 
Unemployment insurance is like a trampoline. You hit it on the 
downside, and you bounce back up into the mainstream of the 
American economy. And that is precisely what has happened.
    So, from our witnesses today, we hope that they will 
outline precisely what it is they are doing to secure charges 
of criminality, but understand in terms of proportionality what 
really happened here. Overwhelmingly, the American economy 
rebounded because of what we did. And much of it, by the way, 
came in this committee, and most of it unanimously. It was 
passed through the doors of this room.
    So I am proud of what we did, and I hope the focus today is 
going to be on the role that unemployment insurance made in 
making sure that people could keep the lights on, turn the heat 
on, and make it to the grocery stores to buy the sustenance of 
what they needed every single day.
    As I started, and we will conclude, just the facts this 
morning.
    Chairman SMITH. Thank you----
    Mr. NEAL. Thank you, Mr. Chairman.
    [Applause.]
    Chairman SMITH. Thank you, Ranking Member. I will now 
introduce our witnesses.
    Thank you all so much for taking your time out of your busy 
schedules for being here.
    Gene Dodaro is the comptroller general of the United 
States.
    Larry Turner is the inspector general of the Department of 
Labor.
    And Mr. Michael Horowitz is chair of the Pandemic Response 
Accountability Committee, and the inspector general of the 
Department of Justice.
    Mr. Dodaro, you are recognized for your opening statement.

   STATEMENT OF GENE DODARO, COMPTROLLER GENERAL, GOVERNMENT 
                     ACCOUNTABILITY OFFICE

    Mr. DODARO. Thank you very much, Mr. Chairman. Ranking 
Member Neal, members of the committee. I am very pleased to be 
here today to talk about the uninsurance--unemployment 
insurance program during the pandemic.
    The program helped millions of Americans in need, but there 
was widespread fraud that occurred. And I would like to focus 
my opening remarks today on three reasons why I believe that 
happened.
    Number one, neither the Labor Department nor the states 
were prepared. In 2016 we worked with this--with the Congress 
to pass the Fraud Reduction and Data Analytics Act. That was 
intended for Federal agencies to be prepared to prevent fraud 
in the first place, which is the most effective way to deal 
with this issue. The Labor Department, like many Federal 
agencies, were slow to implement these framework principles 
that GAO had outlined on best practices in the Federal 
Government. Therefore, they were not as prepared as they should 
have been before the pandemic.
    States had antiquated IT systems. Many of them had known 
this, some of them dating back decades. And also, right before 
the pandemic, the unemployment rate was very low, so the 
staffing levels of the state employment agencies were low. So, 
they weren't as prepared, either.
    We made recommendations to the Labor Department. They 
haven't implemented those fully yet. They are beginning to work 
on them, but they need to fully implement our recommendations, 
and be in accordance with the law.
    Secondly, the urgent need to get the money out led to 
trade-offs that limited the ability of the government and the 
states to achieve the accountability and transparency 
objectives of the legislation Congress intended. This was due 
to allowing people to self certify their result--their 
eligibility for programs; eliminate or reduce the need for them 
to provide supporting documentation for their claims of 
eligibility; reducing the waiting time that was normally in 
place at the states before they provided the first unemployment 
check.
    Now, Congress rectified these issues in December 2020, when 
they passed the Consolidated Appropriations Act, and then 
required more documentation for eligibility determinations. The 
states started taking corrective measures. But this was too 
late; hundreds of billions of dollars had already been spent. 
And while they are welcome, and they need to be fully 
implemented, and congressional oversight is needed to make sure 
this happens, they were not taken as early as possible in the--
into this--reduce the susceptibility to fraud.
    And as a result of these trade-offs, self-certification in 
particular, these programs were more susceptible to fraud than 
they would have been otherwise during the program.
    Lastly, third, I would--there was an improper payment 
problem before the pandemic occurred in the unemployment 
insurance program. The rates often were in double digits in 
terms of improper payments. These are payments that should not 
have been made, or were made in the wrong amounts. And there 
was also fraud in the unemployment insurance program ahead of 
time, as well.
    Both of these should have been harbingers to alert the 
Labor Department and the states that they needed to take 
stronger measures, particularly with the huge amount of claims 
that occurred during a period of time.
    As Ranking Member Neal mentioned, you know, millions of 
people became unemployed at the same time. This really has 
happened in our economy, where so many people have applied for 
uninsurance and been out of jobs in almost every sector of the 
economy during this period of time. So, more measures should 
have been taken.
    Now, we have made recommendations in many cases to have 
this underlying improper payment problem--and it doesn't happen 
just in the unemployment insurance program, it happens in 
Medicare, Medicaid, and 86 different programs across the 
Federal Government's activities. But it was there, it should 
have been dealt with. And if we can't deal with the Federal 
Government and the states level to reduce improper payments in 
normal times, then you are bound to have problems when there 
are emergencies, and there will be future emergencies, and so 
people need to get prepared.
    So, I would urge this committee to continue their oversight 
to make sure the labor departments and the states take action 
on our recommendations so that we are much better prepared next 
time to deal with these emergency situations.
    So, thank you very much, Mr. Chairman and members of the 
committee. I would be happy to answer questions at the 
appropriate time.
    [The statement of Mr. Dodaro follows:]

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    Chairman SMITH. Thank you, sir. Thank you, sir.
    Mr. Turner, you are now recognized.

  STATEMENT OF LARRY TURNER, INSPECTOR GENERAL, DEPARTMENT OF 
        LABOR, OFFICE OF THE INSPECTOR GENERAL (DOL-OIG)

    Mr. TURNER. Thank you. Good morning, Chairman Smith, 
Ranking Member Neal, and distinguished members of the 
committee. Thank you for the opportunity to testify today.
    Although the OIG oversees all DoL programs, my testimony 
today focuses on our oversight of the unemployment insurance 
program. The views expressed in my testimony are based on the 
independent work of the OIG, and are not intended to reflect 
DoL's position.
    Mr. Chairman, the OIG remains committed to assisting DoL 
and Congress in improving the efficiency and integrity of the 
UI program. In our view, strengthening the program to prevent 
and detect fraud are key objectives to ensuring that unemployed 
workers quickly receive needed benefits, while safeguarding 
taxpayer dollars.
    For many years, the OIG has highlighted significant 
concerns with DoL and states' ability to deploy UI benefits 
expeditiously and efficiently, while ensuring integrity and 
adequate oversight. The pandemic compounded these challenges, 
creating the perfect storm.
    As the OIG reported, states were not prepared to process 
the historic volume of claims, resulting in significant delays. 
And this reliance on claimant self-certification rendered the 
PUA program extremely susceptible to fraud, and the 
unprecedented infusion of Federal funds gave fraudsters a high-
value target to exploit. That, combined with the ease of 
identity theft and system weaknesses previously identified by 
the OIG, allowed criminals to defraud the program.
    DoL recently reported an annual improper payment rate of 
21.52 percent for fiscal year 2022. When applied to the 
approximate 888 billion in benefits paid during the pandemic, 
we estimate that at least 191 billion in pandemic UI payments 
could have been paid improperly, with a significant portion 
attributable to fraud.
    Indeed, following the passage of the CARES Act, fraud 
against the UI program exploded. Since April the 1st, 2020, the 
OIG opened more than 198,000 UI investigative matters. This 
represents 1,000 times the increase in the volume of our UI 
work.
    The OIG took immediate action to respond to this crisis. 
Less than a month after the CARES Act was passed, we issued an 
advisory report identifying initial areas of concern for DoL 
and the states to consider. Since then, we have released 
several additional reports.
    We also hired additional investigators, strengthened our 
data analytics program, and worked with DoJ to create a 
National UI Fraud Task Force.
    We leveraged our CIGIE and PRAC resources, implemented 
outreach and education with the states, and collaborated with 
the PRAC, DoJ, and the Secret Service to recover fraudulent 
funds.
    We also engaged with international law enforcement partners 
to pursue transnational organized criminal groups.
    The OIG efforts have resulted in more than 700 search 
warrants executed, and 1,200 individuals charged with UI fraud. 
These charges have resulted in more than 500 convictions, 
11,000 months of incarceration, and $905 million in 
investigative results.
    We also identified $45.6 billion in potentially fraudulent 
UI benefits paid in 4 high-risk areas.
    In response to our recommendations, DoL instituted efforts 
to improve the UI program. However, several OIG recommendations 
remain unimplemented regarding OIG's access to UI data, state 
staffing and IT modernization, guidance and assistance to 
states, and controls for improper payments.
    Mr. Chairman, I want to take a moment to highlight three 
challenges impacting our work.
    First is access to UI data. For many years, the OIG has 
requested access to data proactively to monitor the program. 
Given the magnitude of the issues we saw at the start of the 
pandemic, we took the unprecedented step of issuing IG 
subpoenas to all 50 states, territories, and jurisdictions. The 
data allowed the OIG to identify billions in potential fraud. 
However, the subpoena process took months, and delayed our 
ability to detect fraud.
    Second, the statute of limitations associated with the 
pandemic UI fraud will start to expire in early 2025. UI crimes 
often include complex schemes that require significant 
resources and time to investigate. As such, we recommended last 
year that Congress extend the statute of limitations from 5 to 
10 years.
    Third, our work is being impacted by resource limitations. 
The OIG received $38.5 million to oversee the close to 1 
trillion in expanded programs. However, most of the funding 
will be fully expended by fiscal year 2024. Combined with more 
than expected fiscal year 2023 appropriations, our funding is 
not sufficient to maintain the level of oversight deployed 
during the pandemic.
    Mr. Chairman, thank you for your opportunity to testify 
about our overseeing the UI program.
    I also want to thank the dedicated OIG employees who worked 
tirelessly to accomplish the oversight mission.
    I look forward to answering any questions you or members of 
the committee may have. Thank you.
    [The statement of Mr. Turner follows:]

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    Chairman SMITH. Thank you, sir.
    Mr. Horowitz, you are now recognized.

    STATEMENT OF MICHAEL HOROWITZ, CHAIR, PANDEMIC RESPONSE 
                ACCOUNTABILITY COMMITTEE (PRAC)

    Mr. HOROWITZ. Thank you, Chairman Smith, Ranking Member 
Neal, members of the committee. Thank you for inviting me to 
testify today.
    The PRAC was created by Congress to provide independent 
oversight of the approximately $5 trillion in pandemic relief 
spending, and to help coordinate and support inspector general 
oversight. Working with our local, state, and Federal oversight 
partners, including the comptroller general and IG Turner, we 
are helping to reduce fraud in pandemic programs and hold 
accountable those who have stolen from them.
    We are also advancing transparency through our website: 
PandemicOversight.gov, by allowing the public to use 
interactive tools to see how their money is being spent. 
Indeed, on PandemicOversight.gov the public can find a 
spotlight section detailing the over $800 billion on--spent on 
pandemic unemployment insurance programs, and includes an 
interactive map on state reporting of their program integrity.
    The PRAC raised concerns about pandemic unemployment 
insurance program integrity shortly after the first programs 
were adopted. In June 2020 we convened stakeholders in a 
virtual listening forum to hear from state workforce and 
unemployment agency leaders about the massive increase in UI 
claims, resulting in a strain on their systems and the need for 
greater Federal-state cooperation on data sharing. We have 
worked closely with our state and local counterparts on these 
issues, including providing them with regular briefings and 
fraud alerts.
    In December 2021, we issued a capstone report that can be 
found on our website that shares 4 common challenges that 
states faced in managing the pandemic unemployment insurance 
programs.
    First, programs faced severe staffing shortages as claims 
surged. Between March 14 and April 18, 2020, weekly 
unemployment claims increased from about 225,000 to 5.3 million 
when the unemployment rate reached 15 percent, the highest 
recorded rate since 1948.
    Second, the claim surge exposed existing internal control 
weaknesses.
    Third, complex and varying fraud schemes increased as the 
amount of Federal funding grew.
    Fourth, states experienced challenges verifying eligibility 
because of outdated IT systems and the mass influx of claims.
    Then, last year, we surveyed state workforce agencies and 
released a best practices report that can also be found on our 
website. Among the best practices that we believe should be 
replicated are increased use of cross-matching of data between 
state agencies; improved coordination between SWAs and state 
and Federal law enforcement, local IGs, and state auditors; 
more effective use of enterprise risk management; increased IT 
modernization efforts; and the use of advanced data analytics 
to build multi-layer fraud defenses, including identity 
verification tools.
    Indeed, the PRAC itself has developed an advanced data 
analytics platform to help us oversee pandemic spending. The 
sophisticated work of our data scientists has been instrumental 
in identifying improper payments and fraudulent activity. Just 
last week we issued a fraud alert highlighting the use of over 
69,000 questionable Social Security numbers to obtain $5.4 
billion in pandemic loans and grants, as well as the importance 
of identity verification tools. We recently received pandemic 
UI data, and we will be using our analytics capabilities to 
search for potential fraud across these programs.
    We are also focusing on efforts to address identity theft, 
a huge problem that grew exponentially during the pandemic.
    In addition, we launched a fraud task force to enable us to 
better coordinate OIG investigations, including those involving 
UI fraud, to exchange information about fraud schemes, and to 
share resources.
    We also participated in the Justice Department's COVID-19 
Fraud Enforcement Task Force, and have detailed a PRAC analyst 
to work on the National Unemployment Insurance Fraud Task 
Force.
    Finally, I would like to mention three legislative 
priorities for the PRAC.
    First, Congress should extend, as IG Turner mentioned, the 
statute of limitations from 5 to 10 years for pandemic-related 
unemployment insurance fraud, as the Congress did last year for 
PPP and EIDL fraud.
    Second, Congress should raise the jurisdictional amount in 
the program remedy--in the Program Fraud Civil Remedies Act 
from $150,000 to $1 million, so IGs can more effectively pursue 
lower-dollar frauds.
    Finally, Congress should make permanent the PRAC's data 
analytics platform. We need, on behalf of the taxpayers, that 
sophisticated tool to prevent and detect fraud.
    Thank you for the committee's support, and I look forward 
to answering your questions.
    [The statement of Mr. Horowitz follows:]

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    Chairman SMITH. Thank you for your testimony. We will now 
proceed to the question-and-answer session, and I will begin 
first.
    Mr. Dodaro, your agency released an estimate of at least 
$60 billion in UI fraud, which I think we can all agree is 
scratching the surface of this problem. I know our committee, 
Congress, and surely the American people would appreciate GAO 
continuing to investigate with your resources and size and 
scope of the UI fraud. And you all have made such a commitment 
to do so.
    When should this committee expect to receive an updated and 
more expansive review of UI fraud from GAO?
    Mr. DODARO. Yes. First I want to make clear that the $60 
billion estimate, as we have reported, is the low end, the low 
estimate. We are working on a higher-end estimate right now. We 
should have something available in--later this summer to 
discuss with the committee. We are taking two approaches. One, 
we are doing some modeling approaches, and we also might need 
to take a sample of transactions.
    Part of the problem has been there has been not even an 
improper payment rate yet for the pandemic unemployment 
insurance program, which we think--and others--that has a 
higher level of susceptibility to fraud.
    So later this summer we should have those estimates 
available.
    Chairman SMITH. Okay. And will you commit to coming to this 
committee and requesting assistance, should you have any 
challenges getting information from the Biden Administration 
about UI fraud?
    Mr. DODARO. Absolutely.
    Chairman SMITH. Thank you, sir.
    Mr. Horowitz, last year, in his 2022 State of the Union 
address, President Biden announced the creation of a chief 
pandemic prosecutor to serve as director for COVID-19 fraud 
enforcement, and to lead criminal and civil enforcement 
activities. The DoJ announced in March 2022 that Associate 
Deputy Attorney General Kevin Chambers would serve in that 
role.
    My understanding is Mr. Chambers left the role in December, 
and the position is being temporarily filled by an acting 
director. We invited the acting director to this hearing, but 
he declined to show up.
    Besides the apparently vacant role of the chief pandemic 
prosecutor, DoJ also runs the National Unemployment Insurance 
Fraud Task Force. But we have been unable to get the agency to 
share any updates on what the task force is doing.

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    So, what is the relationship between and what coordination, 
if any, exists between the Pandemic Response Accountability 
Committee, the DoJ's chief pandemic prosecutor, and the 
National Unemployment Insurance Fraud Task Force?
    Mr. HOROWITZ. So there is several interactions.
    First of all, we have been a member of the Justice 
Department's task force since it was created. We attend their 
regular meetings, we participate in the meetings with about 30 
other law enforcement agencies to make sure we are coordinated, 
and to make sure cases are handled as we and our IG partners 
are developing information.
    As I mentioned in my opening statement, we have also 
detailed one of our pandemic response accountability analysts 
to the task force that deals with national unemployment 
insurance fraud to support that effort. And we are doing all 
weekend with our resources to support it.
    I would have to refer you to the Justice Department for 
comment about when they plan to fill the vacancy. I do know 
that the deputy is the acting chair of it.
    Chairman SMITH. Okay. Since we could not get them to come 
and testify, do you have any insight as to what DoJ is doing to 
identify and recover fraudulently paid unemployment benefits?
    Mr. HOROWITZ. I do know, from our work with them and my 
work as Justice Department inspector general as we refer cases 
to the prosecutors around the country, that they are moving 
forward with them.
    I think one of the challenges the Department is having and 
prosecutors are having, frankly, is triaging them and--given 
the resources available and the surge in cases that you have 
heard about from IG Turner, as well as we know from the SBA IG 
on PPP and EIDL-related fraud. So, I think that has been one of 
the challenges.
    One of the reasons we have asked for an increase in the 
Program Fraud Civil Remedies Act jurisdictional amount is 
because of our concern that lower-dollar frauds may not make it 
through that thicket for prosecution. And we at least want to 
make sure we can recover the money for the taxpayers.
    Chairman SMITH. All right. Any insight into whether the 
Biden Administration has any plan to appoint another chief 
pandemic prosecutor, given that--the President's prominent 
announcement last year at the State of the Union? Or was that 
just a talking point in 2022?
    Mr. HOROWITZ. As I sit here, they have not consulted me--
and I wouldn't expect them to--on their plans.
    I would expect that to happen, and I would be happy to get 
back to you, Mr. Chairman and the committee, with any data or 
information you need from them if you haven't received it.
    Chairman SMITH. I appreciate all the information.
    I now recognize the ranking member, Mr. Neal, for questions 
--
    Mr. NEAL. Thank you, Mr. Chairman.
    So back to the facts. The unemployment rate, as Mr. 
Horowitz pointed out, in the height of the pandemic was 15.4 
percent. As of last Friday, it was 3.4 percent. I think 
unemployment insurance worked.
    Let me give you another number with facts: $849 billion, 
$60 billion--we know it is an estimate--that is 7.1 percent 
that is alleged to be fraud at the moment. We have members of 
the former U.S. attorney's offices here. They know how long it 
takes to present these cases. So as professional as this 
testimony has been, and we are indeed grateful for it, I am 
disappointed that we didn't hear from any of our hard-working 
people who relied upon unemployment insurance to keep their 
lives afloat.
    From that perspective, we know that state administrators 
and workers, they dealt with a 3,000 percent increase in UI 
claims. That paints a much more complicated picture.
    Let me read a note from Meredith, a MomsRising member from 
western Massachusetts: ``UI, with the stimulus, has saved our 
family. It is something we never imagined we would need, but we 
both worked as administrators in education, one of us for study 
abroad companies and another finding ourselves out of work for 
no fault of our own but the pandemic and having a young 
daughter. We are extremely mindful of every penny, and we are 
worried about the coming months, not knowing when and if we 
will secure jobs. But we want to pay our mortgages as we have, 
and our car payments, our food, and our medical care. Please 
understand we live modestly, more than most people will ever 
know, and always been responsible, financially. Our home is 
small, and one of the least expensive in our town. This is the 
first time in our lives that we ever could imagine the 
possibility of not being able to pay for basic expenses. It is 
profoundly stressful. For now, at least UI, with the stimulus, 
ensured that we were able to pay our mortgage, our car 
payments, our insurance, our food, and for essential family 
services.''
    Mr. Turner, let me say how much I appreciate the work that 
you and your staff have done in trying to bring about criminal 
fraud rings to justice. Your work is putting criminals behind 
bars, and returning the money they stole from the Treasury. Let 
me ask you about paying for the good work that you do.
    We provided immediate funding and support through the CARES 
Act and then ARPA, and I know that work is ongoing. You asked 
for $120 million from your office, and you received only $97 
million in appropriation for fiscal year 2023. I will ask you 
in a moment if that is correct.
    And last night, Joe Biden indicated that he intends to be 
assertive and aggressive with criminal referrals from the 
Justice Department.
    Certainly, the proposal that we offered was not what was 
agreed to in Congress in the final package.
    Mr. Turner, could you talk about the impact of your work, 
and what members of this committee should be doing to support 
your goals?
    Mr. TURNER. Well, one of the things that we try to do with 
our work is to make sure that the funds that were going towards 
their program is actually being used, and gets down to the 
correct recipient.
    So, for instance, the $888 billion that goes towards that 
program, our goal is always to make sure that we conduct audits 
to make sure that it is getting there effectively and 
efficiently, and in a timely way, and provide oversight, 
independent oversight by our investigators, to ensure that they 
can deter any kind of fraud that may be taking place.
    Mr. NEAL. Thank you, Mr. Turner. And I know that, based 
upon the Justice Department, what U.S. attorneys do, seldom 
does a would-be criminal or an individual who is suspect, if 
ever, walk into a U.S. attorney's office and say, ``Hey, could 
you bring me up to date on what you are doing with me?'' That 
really doesn't happen, does it?
    Mr. TURNER. No, it takes a lot of hard work on the part of 
our investigators to actually go out and find the culprits.
    Mr. NEAL. In sophisticated criminal rings, they clearly 
tried to outsmart the system regularly. So it takes the Justice 
Department and the good work that U.S. attorney's offices do 
across the country considerable time in breaking down this 
criminal activity. Is that correct?
    Mr. TURNER. Yes. The more complex fraud is, the harder it 
is to capture. For instance, I think someone mentioned earlier 
about money mules. Money mules is one of the more complicated 
schemes that are out there. And so it takes some time and some 
investigative work to get to those--to get to the bottom of 
those investigations.
    Mr. NEAL. Thank you, Mr. Turner.
    June 2020. The unemployment rate, as Mr. Horowitz pointed 
out, was 15.4 percent, 20 million people had lost their jobs. 
The unemployment rate, as reported last Friday after the noting 
of all those jobs being created, is now 3.4 percent. Much of 
what we did really worked, and I take great professional and 
personal satisfaction from acknowledging there was no book on 
the shelf for what we were doing. And overwhelmingly, we got 
the American economy back on its feet.
    Thank you, Mr. Chairman.
    Chairman SMITH. I want to thank the gentleman from 
Massachusetts, and I now recognize the vice chairman of the 
committee, Mr. Buchanan of Florida.
    Mr. BUCHANAN. Thank you, Mr. Chairman. I want to thank our 
witnesses for being here today. I am glad we are finally 
focusing on this crisis, which has been a magnet for theft and 
boondoggle for taxpayers' dollars.
    In total, GAO has found at least $60 billion stolen funds. 
The DoL put the number as high as $191 billion improper 
payments, with a significant amount due to fraud. Outside 
experts estimate as high as $400 billion. So, it is something 
we clearly need to focus on, and figure out how to do it 
better.
    Mr. Dodaro, let me ask you. In Florida, I can tell you it 
was a disaster. There were so many dollars coming in, we 
weren't prepared. We had low unemployment rate at the time. We 
didn't have the capacity, didn't have the people, didn't have 
the equipment. It was like the F troop. Our office is getting 
hammered, everybody was getting hammered in our state.
    What are--where are we at today if we have another crisis 
and we have got to be able to move dollars quickly? Because 
obviously, nobody can imagine--when you talk about $800 
billion, no matter how you put it out there, we don't have that 
kind of capacity. And obviously, it might not be that--such a 
big number, but as a result of that we ended up with 300 or 400 
or 200--pick a number--in fraud taxpayer monies out the door.
    So give us your thought. What are we doing today to try to 
fix that, so it is not as bad?
    And hopefully, states are getting additional money, they 
are going to invest some of the dollars, excess dollars they 
have got, to make sure that we can minimize this in the future.
    Mr. DODARO. I think we are slightly better prepared, but 
not fully prepared for the next crisis. A number of our 
recommendations at the Labor Department have been not fully 
implemented yet. I think states are trying to make 
improvements. There have been some improvements that have been 
made, but they have all been ad hoc. There hasn't been a 
systematic approach to doing this led by the Labor Department 
in conjunction with the states. And I think that is needed.
    Now, to make sure that Congress continues to focus on this 
issue, you know, I added the unemployment insurance program to 
a list of high-risk areas that we keep for the Congress and the 
Administration to focus on. There are 38 areas on the list now, 
and I am due to come up with an update across government soon. 
But I added the unemployment insurance area.
    There are problems also----
    Mr. BUCHANAN. I only--I got a couple other questions.
    Mr. DODARO. Okay, go ahead.
    Mr. BUCHANAN. Let me get back to you.
    Mr. DODARO. Yes.
    Mr. BUCHANAN. Mr. Horowitz, let me mention, in terms of 
organized crime, organizations outside the U.S. We have got, 
obviously, some in the U.S., out of Africa, and different 
parts. Not just this, ID and identity theft and everything 
else.
    Where is that at today? And my thought is, how much do you 
estimate, and what can we get back that is--you know, it is one 
thing in different states, but looking at Africa and different 
countries around the world, they are taking advantage of the 
circumstances, as well.
    Mr. HOROWITZ. Yes, Congressman, you are exactly right. We 
have--one of the biggest challenges we have is following the 
fraud that occurred through overseas gang activity and 
fraudsters. The Secret Service reported that they have seen 
that occur through entities in Nigeria, China, Russia, other 
locations. That will be our biggest challenge----
    Mr. BUCHANAN. What is that dollar amount? Do you have an 
estimate, or any thought of it? A range?
    Mr. HOROWITZ. I don't. And one of the reasons I don't, 
Congressman, is that is among the hardest fraud to find, to 
track, and figure out, because it is through overseas networks. 
It is a challenge.
    I was a former Federal prosecutor. The process by which 
getting that evidence is very challenging.
    Mr. BUCHANAN. I have got one more question for Mr. Turner.
    Mr. Turner, let me ask you. They claim, 70 percent of 
businesses, if they could find workers they could do more 
business. That is the mindset, at least, in Florida. I think I 
have heard that around the country, they can't get workers. 
Where are we at today in terms of getting people back to work? 
Because there are--you do hear--I have heard a lot of it, where 
people say, ``Well, I don't want to go back to work. I got 
another six weeks of unemployment.'' But what is your sense of 
where we are at today on that?
    Mr. TURNER. We have done some work in that area, and part 
of what we found out is that there have been instances of where 
people have not gone back to work. And we have asked the 
Department, which has put out a policy to address that and have 
that information reported to the states when it occurs.
    Mr. BUCHANAN. Yes, I just want you--I will get you the 
survey, but 70 percent of companies--small business I focus on 
primarily, small to medium-sized businesses--claim they--if 
they had more workers, they could do more business. So, it is a 
great opportunity for them. So, anything we can do to encourage 
people getting back to work, setting the incentives up 
properly, would be really appreciated.
    Thank you, and I yield back.

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    Chairman SMITH. I want to thank the gentleman from Florida, 
and now I recognize the gentleman from Texas, Mr. Doggett.
    Mr. DOGGETT. Thank you, Mr. Chairman.
    Three years ago, with this devastating COVID-19 pandemic, 
there were millions of Americans who found themselves not only 
in a public health emergency, but an economic emergency. 
Through no fault of their own, a sudden termination of their 
paycheck, they found themselves jobless and unable to meet 
basic needs. Almost overnight, it was a necessity to get access 
to unemployment insurance to save their families from collapse.
    I think it is very appropriate, Mr. Chairman, that this 
committee exercise its oversight responsibilities to safeguard 
taxpayer dollars from thieves and fraudsters.
    Such fraud is hardly limited to the unemployment insurance 
program. Indeed, I have never found a line item for waste, 
fraud, and abuse in the Federal budget, but I have found fraud 
committed and challenged and prosecuted for everyone from 
defense contractors to pharmaceutical companies. Indeed, this 
very week the New York Times reported that three of the five 
largest Medicare Advantage insurance companies in the industry 
have been accused of fraud by the Justice Department.
    But what we don't need is selective interest in fraud that 
seems to be more focused on the unemployment insurance program, 
which is vital to our country and our families, than about 
fraud which occurred in it. Indeed, that selective enforcement 
was apparent with the very first piece of legislation that our 
Republican colleagues offered this year, when they seemed to 
have so little interest in fraud in our tax system that they 
enacted legislation to undermine law enforcement, even though 
it added $114 billion to our deficit.
    I believe that, as we consider this program, we have to 
consider not only the way the program was administered--and it 
needed to be administered with less misconduct--but also the 
people that were helped by that program and the challenges that 
they face. An example is a fellow that my office helped in 
Austin, Bill Tarabula. And Bill is a parking attendant in 
Austin. And when all the events shut down at the city 
facilities, he lost his job. He contacted my office in March of 
2020, and it wasn't until August of 2020 that we were finally 
able to get him the assistance that he needed.
    The administration of the program--and there has been focus 
on what the Department of Labor might have done better under 
the Trump Administration and the Biden Administration. But the 
administration of the program in Texas was a disaster. The 
program was under-staffed. When it was apparent that the 
program was not up to the task, it failed to add staff. I had 
people that would set their alarms at 2:00 or 3:00 in the 
morning, because they were told that was the only time that 
they could get through to get unemployment benefits, and they 
couldn't get through.
    So, it is not a surprise to me that Texas, that failed so 
significantly to meet the needs of worthy people, was not doing 
its job on the fraud side, either.
    I believe that, Mr. Dodaro, you have outlined things that 
could have occurred and prevented some of this fraud. Because 
while the prosecution is important, it never gets back all the 
dollars that are lost that should be avoided through 
prevention.
    Now, of the many steps that you recommended ought to happen 
to prevent unemployment fraud in the system at the Department 
of Labor, did the Trump Administration implement any of them?
    Mr. DODARO. Not fully at all. In fact----
    Mr. DOGGETT. Yes----
    Mr. DODARO [continuing]. We did a survey across government, 
and the Labor Department reported to us that they were familiar 
with the fraud framework, but they were not at a mature level. 
When we went in and looked, and did more detailed work, we 
found they were way short of implementing best practices to 
prevent fraud.
    Mr. DOGGETT. And in the Biden Administration I believe that 
not all of your recommendations have been fully implemented 
yet, but haven't there been a number of additional resources, 
additional dollars that were provided through the American 
Rescue Plan Act to try to see that we address this problem?
    And in addition to acknowledging the funds that have been 
allocated, what do you feel is the most important step the 
Biden Administration Department of Labor should take to try to 
see we never have this happen again?
    Mr. DODARO. Yes. The Labor Department has put some guidance 
out, some tools that have been available. They have established 
an identity verification approach, and provided some grants to 
states, but they haven't--all of those have been ad hoc. There 
hasn't been a systematic approach.
    What we call for is designating a fraud entity full-time to 
focus on this, do fraud risk profiles, develop an anti-fraud 
strategy, and then to evaluate how well it is working, and then 
continuously make improvements.
    The nature of fraud changes dramatically, and you need to 
stay abreast of what is going on, and we need to prevent this. 
As you point out, you--this is a cultural shift that we have 
been trying to advocate across government. Because when people 
think of fraud in the past, they think of the inspector 
generals or GAO or others to catch the crooks. But you don't 
catch everybody, and you don't certainly recover all the money.
    The only way to effectively deal with this is to prevent it 
up front. And when you have more technology available now to do 
cross-matches, to use different tools that are available, you 
should be able to get the money out quickly, but also safeguard 
the Federal fisc.
    Mr. DOGGETT. Thank you very much.
    Chairman SMITH. I want to thank the gentleman from Texas, 
and now I recognize the gentleman from Nebraska, Mr. Smith.
    Mr. SMITH of Nebraska. Thank you, Mr. Chairman. Thank you 
to our witnesses. This is a very timely conversation that I 
will say should have happened some time ago, but did not.
    But in February 2022, the Biden Administration issued 
guidance allowing states to forgo due diligence and fact-
finding for large volumes of suspicious unemployment claims, 
potentially involving billions of fraudulently-obtained 
taxpayer dollars. The guidance provides multiple loopholes for 
how states may apply blanket waivers of recovery of 
overpayments.
    For example, a state may accept without challenge that an 
individual who responded ``no'' to being unemployed, partially 
unemployed, or unable or unavailable to work is entitled to a 
waiver of recovery of overpayments, with no determination as to 
whether the individual was truthful in their response. This 
potentially allows those perpetrating fraud within the UI 
system to continue, and leaves hundreds of thousands of 
unresolved claims involving stolen identities belonging to 
identity theft victims, including first responders, government 
personnel, and school employees.
    Mr. Chairman, I would like to submit for the record a 
letter that Ways and Means Republicans sent to the Department 
of Labor on February 18th, 2022, nearly a year ago, requesting 
an immediate stay of the effective date of this guidance, and 
an explanation of how the Department would ensure the guidance 
would not undermine existing investigations.
    Chairman SMITH. Without objection, so ordered.
    [The information follows:]

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    Mr. SMITH of Nebraska. Thank you. In their response to our 
letter, DoL said that the guidance was developed in response to 
requests from states, which were ``seeking greater efficiencies 
in the use of limited government resources. States noted that 
it was taking a significant amount of time and resources to 
process waivers on a case-by-case basis for overpayments.''
    DoL also responded that the guidance specifically 
instructed states that they may not waive overpayments due to 
fraud. This response was far from reassuring. In fact, DoL's 
response increased my concern regarding this waiver policy, 
which is still in place today, because it suggests that states 
were dealing with a backlog of suspicious claims, and DoL 
provided an easy opportunity for them to forgo the 
investigation and fact-finding needed to know whether they were 
fraudulent in the first place. It further eliminated any 
incentive for states to track down fraud.
    This action is particularly reckless in light of White 
House estimates the Federal and state UI program had a 22.2 
percent improper payment rate for fiscal year 2022.
    Mr. Turner, my question is for you. One of the questions we 
asked in our letter was whether DoL consulted with your office 
before issuing this guidance. Given the OIG's work on ensuring 
recovery of taxpayer dollars, I would like to understand how 
your work will continue, now that this guidance is in place 
and, in particular, any impact on your ability to initiate and 
conduct investigation and prosecution of fraudulent activity in 
pandemic unemployment programs.
    My understanding is that this is part of your revised 
pandemic oversight plan.
    Mr. TURNER. Thanks, Representative. Let me just say we do 
plan on doing some work on fiscal year 2023 to review that 
policy. It was a policy the Department made. It was a policy 
that was a programmatic decision, which we do not have any 
oversight of at that point.
    Because that was their decision as--independence, we have 
oversight at the end of the day. But they did consult--they did 
not consult with us. They made us aware that this is what they 
were doing with the policy. And so, because we could not advise 
them, we did make it a point to take a look at that, because we 
do believe that there is a possibility that fraud could take 
place, although they did tell us that they were going to put a 
waiver out. And we expect to take a look again before the year 
is out.
    Mr. SMITH of Nebraska. Okay, thank you. And how many of 
these waivers have been issued, and is DoI collecting the data 
at all, or is it just not ending up where it needs to go?
    Mr. TURNER. At this point we do not know how many waivers 
have been issued, as far as across the country. But that is why 
that work is so important as we take a closer look at it.
    Mr. SMITH of Nebraska. And so, I mean, there is no way to 
know up until this point?
    Mr. TURNER. Well, we were asked to take a look at it. I 
think, last fiscal year, and we decided to put that on our 
audit plan this year. So, in the spring we are going to take a 
look and find out just the extent of the problem.
    Mr. SMITH of Nebraska. Okay, I thank you.
    And Mr. Chairman, I hope that, you know, in light of the 
circumstances of COVID, and I think well-intended efforts on 
the part of this committee and, you know, this Administration, 
the previous Administration, everyone involved at the time, 
that we can avoid the bad things that happened previously.
    I worry that, after last night's speech, we are in a worse 
place perhaps than ever before in terms of what we need to do 
and what we need to accomplish working together.
    Thank you, I yield back.
    Chairman SMITH. I couldn't agree more, Mr.--Representative. 
The taxpayers deserve that.
    I am pleased to recognize the gentleman from California, 
Mr. Thompson.
    Mr. THOMPSON. Thank you, Mr. Chairman, and I want to thank 
the witnesses for being here today and for the great work that 
you do in your public service.
    As was stated, starting in March of 2020, the spread of 
COVID-19 crippled the global economy. We lost 22 million jobs 
in this country, 2.7 million of those from my home state of 
California, 22 million lives disrupted, 22 million individuals 
wondering how they were going to pay their bills or put food on 
the table, as Mr. Neal's constituent letter gave credence to.
    In response, Congress acted in an unprecedented bipartisan 
manner to quickly deliver desperately-needed relief to 
families, workers, and businesses across all of our 
communities. This included a temporary payment increase for 
unemployment benefits, and emergency relief for small 
businesses such as restaurants. It is estimated that these 
measures kept more than 5 million people out of poverty in 
2020, and 6 million more in 2021. Because of what we did, our 
constituents were able to pay their rent, purchase groceries, 
and keep the lights on.
    And these dollars were spent locally, multiplying across 
the community, keeping businesses open. This support provided 
vital--support proved vital to our communities and foundational 
to our economic recovery. Because of our efforts, by July 2022 
all jobs lost during the pandemic had been recovered. And just 
last Friday, the Bureau of Labor Statistics reported that the 
unemployment rate was 3.4 percent, the lowest since 1969.
    Sadly, my Republican colleagues are using today's hearing 
to smear a critical benefit to American workers, rather than 
propose any sort of agenda or idea on their own to address 
these issues.
    Fraud happened. No one is disputing that, and no one on 
this dais supports fraud. I think fraud is bad, and we should 
go after it in this case and in any other instance. But my 
Republican colleagues seem more interested in disparaging the 
underlying program.
    Every single House Republican voted against the $2 million 
for states and Federal agencies to fight fraud and recover 
those taxpayer dollars that we are talking about today. These 
are the very tools that enabled our witnesses today to do their 
good work, to crack down on this fraud. It is important. 
Unfortunately, this sounds less about Republicans preventing 
fraud and more about them, as I said, disparaging a program 
that kept millions of families afloat, and provided a powerful 
stimulus to our economic recovery.
    Mr. Dodaro, during the pandemic, unemployment insurance 
gave 8,665,000 Californians, including thousands of my 
constituents, a critical lifeline by keeping them out of 
poverty until it was safe to return to the workforce. What did 
the dozens of high-quality research studies GAO reviewed say 
about the effect that providing UI benefits during the pandemic 
had on our economic stability?
    Mr. DODARO. Yes, we looked at 30 empirical studies that 
have been done and found that it was very helpful. The 
conclusion of the studies was it was very helpful for 
supporting the economy, keeping the problem from getting worse, 
and actually providing a lot of assistance to individual people 
to, as has been mentioned, pay rent, health care, et cetera.
    Mr. THOMPSON. Thank you very much.
    Mr. Horowitz, you said something in your statement that 
really caught my attention. You said it is your desire, your 
mission, your agency's efforts to hold accountable these people 
that defrauded our government and took this money.
    I have yet to see many programs where--private or public 
sector--where fraud isn't in existence. And we see--you can 
walk across the parking lot out here in the Capitol and see 
where the bricks that they put in when they remodeled don't 
match, and they are all chipped. I was at the board in El Paso 
last week, and I saw where the contractor who built the wall 
didn't put cement in the iron pilings, and they are able to cut 
right through them.
    Are you going to be able to hold these fraudsters 
accountable and get back a lot of this money?
    Mr. HOROWITZ. Congressman, you are right. When you have 
programs, no matter what the program is, you are going to find 
fraud.
    There were several things with the various pandemic 
programs that exacerbated it, like self-certification and, as 
we have talked about, lack of preparedness, given what 
occurred, when it occurred, and how it occurred.
    Having said that, we are using every tool Congress has 
given us--and you have given us a number of important tools--to 
go after fraud. We are going to use criminal tools, we are 
going to use civil tools, administrative tools, suspension, and 
debarment. We are going to use all of those.
    It is very important, though, that some of those be 
enhanced, as I mentioned, with the extension of the statute of 
limitations----
    Mr. THOMPSON. I understand. Thank you for the work, thank 
you for your answer, and good luck.
    Mr. HOROWITZ. Thank you.
    Chairman SMITH. I want to thank the gentleman, and I am 
pleased to recognize the gentleman from Pennsylvania, Mr. 
Kelly.
    Mr. KELLY. Thank you, Mr. Chairman. Thank you all for being 
here today.
    You know, so this hearing is supposed to be about fraud. We 
can't do anything unless we get away from policy and talk about 
politics, because we always got to play this game about who 
struck John. In the meantime, hard-working American taxpayers 
are the ones that put all this money into this system that was 
stolen from them.
    Can any one of you--Mr. Dodaro from Monessen, Pennsylvania, 
home of the Greyhounds--can any of you tell me what the amount 
of the fraud is?
    Mr. DODARO. We have estimated in the unemployment insurance 
area, at the low end, $60 billion. We are working on a higher-
degree estimate.
    We are also trying to--and this has never been done 
before--do an estimate as to the total amount of fraud across 
the entire Federal Government. And we are working on that. 
Maybe later this year we will have an estimate if we can have 
comfort in it.
    Mr. KELLY. So just a ballpark, you are saying 60----
    Mr. DODARO. Well, it is $60 billion, at a minimum, and just 
in the unemployment insurance area.
    Mr. KELLY. Okay, so it is, you know, a billion here, a 
billion there. Pretty soon it gets really heavy.
    Mr. Turner, any--just give me an idea what the amount of 
fraud is.
    Mr. TURNER. We have estimated it to be about $76 billion, 
and that is based on the latest data that we received from the 
Department.
    Mr. KELLY. Okay.
    Mr. TURNER. The Department had 8.5 as the fraud rate that 
they just released based on $888 billion for the program. So, 
we believe, at the low end, it is $76 billion.
    Mr. KELLY. Seventy-six billion?
    Mr. TURNER. Yes.
    Mr. KELLY. That is with a B. Okay.
    Mr. Horowitz.
    Mr. HOROWITZ. Congressman, what I have said before is, with 
all of the investigations we have ongoing, as well as the 
overseas work we still have to do, it is way too early for us 
to give an estimate. What I have said is I am--it is in the 
tens of billions of dollars. You have heard these numbers.
    Mr. KELLY. Yes.
    Mr. HOROWITZ. It won't surprise me if it exceeds $100 
billion. And as we go along over the next several years, we 
will get a better sense of exactly the scope of the fraud.
    Mr. KELLY. Okay. Well, the real intention, I think, of the 
meeting today, which our chairman pointed out, is we wait too 
long to look into what is happening with hard-working American 
taxpayers' money.
    Every--all this fraud lands on the same shoulders that it 
always lands on, and that is our taxpayers. And I get so fed up 
to come into meetings where all we do is point fingers about 
who struck John, and never come up with the answer to what the 
hell are we doing to fix this.
    Nobody in the private sector would run a business this way, 
and I am constantly baffled by the people who own this, why 
they are not outraged.
    I am not blaming any of you for what you are doing. I think 
you get in here every day--Mr. Dodaro, I still wonder, why are 
you spending so much of your life doing all this? You are 
dedicated to it, and I get that. But when we have these 
hearings, what the hell? We are talking about--we are up to our 
neck in alligators, and we are trying to find out who was 
supposed to drain the swamp. In the meantime, this is being 
funded by people who get up every day, some working two jobs 
and their wife helping out, working another job to put food on 
the table and a roof over their head.
    We have so many huge problems with this business model, and 
we know that nobody in the private sector could possibly run a 
business like this, because they can't borrow endlessly, or 
they can't print it if they need it. This is an irresponsible 
model that continues to burn through hard-working taxpayers' 
pockets, and we are sitting about--is it a Democrat problem or 
is it a Republican problem? Damn it, it is an American problem.
    Mr. Dodaro, you wanted to----
    Mr. DODARO. Yes. I continue to pursue my public service to 
be the taxpayer's friend.
    Mr. KELLY. God love you.
    Mr. DODARO. At GAO we return $145 to every dollar spent on 
us over the last five years, on average.
    Mr. KELLY. Yes, yes.
    Mr. DODARO. This is a problem, regardless of the 
administration. In a few months I will be--have worked at GAO 
for 50 years. I have seen this problem over a period of time.
    [Applause.]
    Mr. DODARO. Thank you. I hope to make it.
    Mr. KELLY. Yes, you are going to make. You are from around 
the Pittsburgh area, and we are tough.
    Mr. Dodaro. But I have--and in my statement today--10 
legislative suggestions----
    Mr. KELLY. Yes.
    Mr. DODARO [continuing]. For Congress.
    First of all, in any new program or an increase in spending 
over 100 million, $100 million, it ought to be immediately 
susceptible to improper payments, given the problem we have. 
Right now, programs can be in operation two or three years and 
never estimate the amount of improper payments. This just 
doesn't make sense. And some of these programs will fully 
expire before you even know early on.
    And I have got other legislative solutions. So, there are 
things Congress can do to make this better.
    Mr. KELLY. You know what? First of all, I have run out of 
time. Thank you for what you have done with your life. It is 
just incredible, the service you have been to the American 
people.
    I would tell my colleagues; I don't care if you wear a red 
shirt or a blue shirt. Start thinking about wearing red, white, 
and blue, and stop pointing fingers at each other.
    I know I am going beyond what you have given me, Mr. 
Chairman, but if we don't stop what we are doing right now--and 
look, let's fix the model, instead of trying to figure out who 
it is that dropped the ball. You know, and we can't do it, 
because every two years we come up for election, and we got to 
make sure that we can still get that one more vote than who we 
are running against, as opposed to let's fix this damn thing.
    Okay, Mr. Dodaro, thank you. Mr. Turner, thank you. Mr. 
Horowitz, thank you for coming here, and thank you for what you 
are doing. You guys are incredible. Thank you.
    Chairman SMITH. Representative, when you were talking about 
the hard-earned taxpayers and small business owners, it made me 
think of Ashley Bachman, our--one of our witnesses at our 
hearing on Monday in West Virginia. She was asked the question, 
``If you operated your business like Washington, what would 
happen?'' And Ms. Ashley Bachman said, ``We would have to close 
our doors down.'' And that is from a real small business owner, 
and a real American.
    Mr. KELLY. Yes, you know----
    Chairman SMITH. So, based on your testimony, it made me 
think of that.
    Mr. KELLY. Yes, yes, thank you. But I am a small business 
owner. I--third generation, and I remember one time we were 
talking about Tax Cuts and Jobs Act. I made the comment that it 
was four times in my life that I didn't pay any taxes at all, 
and the rest of the committee looked at me and said, ``Well, 
how the hell did you do that?'' I said, we lost money that 
year.
    Chairman SMITH. That is right.
    Mr. KELLY. So, if you have a model that works, you use it.
    But I really do, I am imploring all of us. It is not about 
red and blue. It is not about Rs and Ds. It is about the people 
who elected us to come here and act in their best interest. So, 
I appreciate this. We have so much to look into and so much to 
get done, because we are accountable to so many people who just 
fund this incredible model.
    So, Mr. Chairman, thank you. Witnesses, thank you so much.
    Chairman SMITH. Thank you.
    Mr. KELLY. I really appreciate you being here.
    Chairman SMITH. Thank you, Representative. I would like to 
recognize the gentleman from Oregon, Mr. Blumenauer.
    Mr. BLUMENAUER. Thank you, Mr. Chairman. I think this is an 
extraordinarily valuable hearing and exercise to give us a 
sense of what the challenges are. And frankly, it has been an 
amazing reminder for me of what we were going through during 
that fraught period.
    I was going to my office at 7:00 in the morning, trying to 
deal with people who were desperate because they couldn't crack 
the unemployment system. And that, frankly, we--all hands on 
deck for that. These people were in danger of losing their 
business, losing their homes. They were frantic that they 
couldn't get through. Now, this was a state failure. The 
Federal Government gave money. Texas wasn't the only state. I 
heard this around the country. You probably had that experience 
in your office, dealing with desperate people.
    And so, this hearing helps us set the context, and is a 
powerful reminder for me of what we were going through, being 
overwhelmed by demands, a 3,000 percent increase in 
unemployment insurance claims. That is the reality that we were 
facing. On balance, I think I am appalled at the amount of 
fraud that occurred. But given the urgency, trying to help 
desperate people, I understand why we were there.
    The question is, how do we make sure that we are no longer 
there?
    Mr. Dodaro, you mentioned that you gave recommendations to 
the previous Administration, and couldn't find, in the midst of 
this, that they were moving forward.
    I agree with Mr. Kelly. I am not interested in pointing 
fingers one way or another. But I do think it is important that 
we don't lose track of the hard work of oversight, that we claw 
back every dime that we can, and that we are prepared for the 
next contingency, because it is coming. We know that. And we 
can learn from those valuable lessons.
    I think it is important, however, to put some of these 
things in context. My friend, Mr. Kelly, wondered how the 
business model continues the way we are doing it. I would like 
to offer one other area. There is 6--there is $468 billion to 
$600 billion a year of taxes due and owing that we are not 
collecting. It is up to $7 trillion over the next 10 years. 
There is no business in your district that would sustain losses 
on that order of magnitude with the accounts receivable, with 
the accounts receivable. We know where that fraud--it is fraud, 
cheating, breaking the law--is. It is interesting that higher 
earners like partnership income, proprietorship income, rental 
income--non-compliance can reach 55 percent.
    Now, I hope that the indignation that we are expressing 
towards a program that was meant to save desperate people, that 
that can be transferred to an area of much greater loss. There 
are some people that think maybe we ought to threaten default 
on the national debt because they are concerned about deficit 
spending. This is up to $7 trillion. That is not new taxes, it 
is not cutting programs. It is collecting money that is due and 
payable to the Federal Government, and it is keeping faith with 
the hard-working majority of people who actually pay their 
taxes.
    So, I hope that we keep this spirit of concern for 
oversight and economy, and zero in on the people who cheated 
the Federal Government on unemployment insurance. But I hope 
there is still an air of indignation about the far greater 
source of lost revenues from, primarily, rich people who forget 
to declare their income. That is even more important, and this 
is an ongoing loss of revenue, 500, $600 billion a year that is 
lost.
    Mr. Kelly, we can't keep doing business if we are not 
collecting money that is due and payable. That is not keeping 
faith with small businesspeople that you represent or I 
represent. So, I hope we can make this a constructive effort on 
oversight, but that we have a broader sense of responsibility 
and reclaiming lost revenue.
    Thank you. I appreciate your indulgence.
    Chairman SMITH. Thank you, Representative. I recognize the 
gentleman from Arizona, Mr. Schweikert.
    Mr. SCHWEIKERT. Thank you, Mr. Chairman.
    Mr. Turner, I appreciated reading over your testimony, but 
I could really use your help in--and I know there is unknowns 
here. So, your number of either fraudulent or missed payments, 
was that number--what, I was seeing $198 billion was the 
estimate?
    Mr. TURNER. A hundred and ninety-one.
    Mr. SCHWEIKERT. Okay, 191. And if the program was about 
$800 billion, so your number is--about 20 percent of all the 
payments that went out essentially got tagged in some fashion 
or other of being a mispayment or being fraudulent.
    Mr. TURNER. That is correct.
    Mr. SCHWEIKERT. First off, how comfortable are you with 
that 198--or, excuse me, 191, I want to make sure I quote you 
properly. It is--what is the model in your head, from your 
researchers, that say that number could be more? Or is it less?
    Mr. TURNER. Well, I believe that is--we believe that is the 
low end, and we believe that number could be more, because that 
does not include the PUA, which dealt with the self-
certification in the first nine months.
    Mr. SCHWEIKERT. Okay, you beat me to my punch line, so--you 
take away my shtick. But there is where I want to go. What is 
their--let's go on the--way outside of the tail on the curve.
    Mr. TURNER. Okay.
    Mr. SCHWEIKERT. What do they think it could be, total?
    Mr. TURNER. I have no way of knowing that. I know the 
Department----
    Mr. SCHWEIKERT. Is it potentially double?
    Mr. TURNER. I have no way of knowing that. The Department 
is planning on putting out the rate for the PUA at the end of 
the year.
    Mr. SCHWEIKERT. Okay.
    Mr. TURNER. And so that would give us a better 
understanding of what the number may look like.
    Mr. SCHWEIKERT. You see, one of the things that angers me 
in our hearing right here--and we are all sinners here--is I 
never want this to happen again. And I wish we would have a 
much more detailed conversation of, okay, so we see a couple 
hundred billion dollars, mispayments, we believe a substantial 
number of that is fraud, and the number could be substantially 
higher than that. How do you do it?
    At some point--and I am going to ask from my inspector 
general and others, send me a little chart. Send me a booklet. 
Send me something so I can understand. How is the fraud 
committed?

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    I actually want to understand down to the mechanics the 
syndicates that flooded when--my wife, who was running a fairly 
large surgery center in Scottsdale, Arizona was getting dozens 
every day of unemployment claims for people who had never 
worked at her surgery center. It was particularly interesting 
when she got an unemployment claim for herself, when she is 
running the surgery center. She brought that home, and thought 
that was actually--she wanted me to fix it.
    And I am just losing my mind because the numbers of folks 
we had calling us saying, ``I am running a business, and I am 
getting unemployment claims dramatically more than the number 
of employees I have ever had,'' is that buying data sets off 
the dark web? Is that the Office of Personnel Management data 
breaches?
    Where did they get the--first, the data sets? Did they 
write bots that automatically kept filling out applications?
    Then, when the checks went out, how did they get people to 
actually get those addresses, collect the checks?
    How do they convert those checks to cash? How did that cash 
actually turn into bitcoin or something else? How did it get 
offshore?
    Help us understand the mechanisms in the fraud, because if 
we are going to stop it, I know we have two things--and forgive 
me for rambling, a lot of coffee today--I understand much of 
what we look at, we need a revolution of the data, and this is 
the data from the IRS, to this and that. We need to understand 
that data is actually the solution.
    But I also want to understand how the criminal networks 
stole billions and billions from our people. I mean, am I 
asking something--it is too difficult?
    Mr. TURNER. No, you are not. Actually, it was a combination 
of a lot of things you mentioned. But it all mostly starts with 
stolen identification.
    When self-certification took place the first nine months, 
there was no kind of verification required to say that you 
deserved those payments, and that was part of the problem the 
IG notified the Department about, because we sent an alert memo 
out. We said we also briefed the members----
    Mr. SCHWEIKERT. But Mr. Turner, I am less concerned about 
the bureaucracy telling this person, telling that person. I 
am--right now want to understand the mechanism.
    If--I had my state unemployment offices, and we had made it 
so they had access to commercial data sets. I mean, commercial 
data sets out there know what type of ice cream I used to eat, 
and my favorite flavor. You know, they have--our ability to say 
we are going to do red light-green light, bounce off the types 
of data out there, is it is our failure to understand the 
technology that is all around us because we are still promoting 
archaic systems?
    Mr. TURNER. Well, let me give you a better example that 
would probably help clear this up.
    So, for instance, stolen Social Security numbers, a lot of 
time you can buy them on the dark web for $0.05. And so, a lot 
of this is multi-state claims that have been filed. In one case 
we had an individual file in 42 different states, and they are 
getting that money back in terms of debit cards. So, it is cash 
to them, and that is hard to kind of keep track of.
    And so, over time, when you start getting organized crime 
and street gangs involved in this, those numbers multiply.
    Mr. SCHWEIKERT. That--Mr. Chairman, thank you for your 
patience with me. I think it would be fascinating, either from 
Oversight Committee or full committee, I would love to bring in 
some of the perpetrators of the crime, you know, who have been 
convicted. You know, we have done it before. Bring them in, sit 
them in here, say, ``Tell us how you stole billions of people's 
money,'' and we understand what the hell is really going out 
the--on--in our neighborhoods.
    Thank you, Mr.----
    Mr. TURNER. And if I could just add one thing, Mr. 
Chairman, I will give you an example how that took place. For 
instance, we identified $45.6 billion--million dollars--billion 
dollars, I am sorry, in potential fraud. And it happened 
because they sold the Social Security numbers of deceased 
individuals, federal inmates, multi-claims, and suspicious 
emails. And that was potentially what took place. And we shared 
that information with the states.
    Mr. DODARO. Mr. Chairman, if I might ask for an indulgence?
    Chairman SMITH. Very quickly.
    Mr. DODARO. For years I have been trying to get Congress to 
pass legislation to allow the Treasury Department to get the 
total Death Master File from the Social Security 
Administration. I was finally successful during the pandemic to 
do the data matching that should have been done beforehand to 
prevent people from--deceased people from receiving payments 
and allowing people to exploit this.
    I am still making a recommendation to expedite that because 
Congress gave three years before it became effective. And it is 
only permanently in place for----
    Chairman SMITH. All right----
    Mr. KELLY. I can buy that data right now on my laptop.
    Chairman SMITH. Mr. Schweikert----
    Mr. KELLY. I mean, it exists right now.
    Chairman SMITH. Yes----
    Mr. DODARO. Not the complete one.
    Chairman SMITH. We need to move on. Thank you very much. 
Let's recognize the gentleman from New Jersey, Mr. Pascrell.
    Mr. PASCRELL. Thank you, Mr. Chairman. Mr. Chairman, 
today's hearing on the monumental and lifesaving investments we 
have made during the pandemic, it is important.
    My friend from Arizona, could it--I agree with much of what 
he has said. But we are not going to throw out the program, it 
seems both sides are saying in between words, because there is 
fraud in the program. But you need to do something about it to 
get rid of the fraud.
    No one up here is advocating fraud, stealing, breaking the 
law. So, we change it. We presented changes in the original 
program that we are talking about today. We know who voted for 
it and we know who voted against it. Just remember that.
    I think Congress acted decisively and in a bipartisan way 
in the face of an historic crisis to keep America safe. Our 
unemployment, our aid kept families together and saved lives. 
That is a big deal.
    More than 1.5 million Garden Staters--New Jersey folks--
received unemployment benefits from March 2022 to September 
2021. It stopped mortgage defaults. It kept the electricity on, 
believe it or not. It put food on tables and in children's 
stomachs.
    In March 2021 we passed the American Rescue Plan. Where 
were we? Because the crisis continued. It included unemployment 
and strong enforcement protections. President Biden used those 
protections to prosecute frauds. You either voted for it, or 
you voted against it, or you didn't vote. States recovered 
nearly $100 million. Enforcement was working.
    Republicans claim to care about misuse. I agree, we should 
all. But every Republican Congress voted for the Trump-Mnuchin 
plan that did not have fraud protections, and every Republican 
voted against our fraud protections. It is the record. You 
can't change that every other day, or show us a different 
perspective of it. You either did it or you didn't do it.
    Our plan kept people alive, one of the most successful laws 
ever enacted. Last month our economy added over half-a-million 
jobs. Job growth is at a 40-year high. You have heard the 
chairman--the ranking member--say that many times. Unemployment 
is at the 54-year low, and the Biden economy isn't doing so 
bad. Every job lost during the pandemic was recovered. All our 
economic output lost is regained. Our pandemic measures 
exceeded expectations. We emerged stronger than any other 
country.
    You know, the problem of inflation did not happen--I want 
to announce this--did not only happen in the United States of 
America. Thank you.
    I am happy to work together to ensure Federal dollars are 
spent and spent well. Frauds need to be held accountable and 
prosecuted. But this hearing isn't about fraud. This hearing is 
about shaming workers and lying about our strong economy. You 
didn't one moment last night choose to recognize that.
    The truth is our actions saved lives and saved the American 
people. And I say, Mr. Chairman, that this is a very good 
hearing, because not only are we bringing some facts out today, 
both sides, but we go back into the history of the program we 
are talking about and looking at those facts.
    And I yield back to the chairman.
    Chairman SMITH. I want to thank the gentleman.
    I want to remind the committee that this hearing is about 
fraud. It is clearly not about shaming any worker. In fact, 
every dollar going to fraud is a dollar that did not go to 
those who needed it. And that is our responsibility, as Members 
of Congress, to make sure that taxpayers' dollars are going to 
the right places. So, it is clearly about fraud.
    I am pleased to recognize the gentleman from Texas, Mr. 
Arrington.
    Mr. ARRINGTON. Thank you, Chairman. Thank you, witnesses.
    I have heard repeatedly comments from my colleagues that no 
one here on the committee is advocating for fraud. I agree. I 
don't think fraud is acceptable to a single Democrat or 
Republican.
    But if we are going to talk about the facts, the fact is 
there was $1 trillion still unspent from the previous COVID 
relief package that was bipartisan. There were several 
bipartisan relief packages that we worked on together. And the 
Democrats, my colleagues, went alone with $2 trillion. And the 
facts are we repeatedly, repeatedly warned them about not 
including guardrails, the ounce of prevention that would be the 
cure for pounds--tens, if not hundreds of billions of dollars--
in improper payments and fraud and waste. And they did not 
heed. Not a single amendment.
    I mean, we must have had hundreds of amendments. Not one 
amendment was taken. I understand their commitment, and I 
understand the extenuating circumstances. And I, quite frankly, 
understand the need for speed and some of the mess that comes 
with that. But we were way down the road from needing to rush 
something, when we had $1 trillion still unspent, and we had 
learned from the previous mistake of paying people too much, 
where they were, literally, perversely incentivized to stay at 
home and off the payroll. That was a mistake, but it wasn't 
acknowledged. It wasn't included in our counsel, and that was a 
huge mistake.
    And there weren't guardrails so that we could get ahead of 
this on the front end. We knew there was a lot of money, and we 
knew that, with 150 some-odd billion dollars in improper 
payments already, as has been discussed, this was going to be a 
disastrous waste of taxpayer money. That is poor stewardship. 
It just is.
    So, there is a saying that used to be on a sign outside of 
our former head football coach's office at Texas Tech, the 
great Mike Leach. And it said, ``You are either coaching it or 
allowing it to happen.'' It is a statement of accountability. 
You are either coaching it directly, or you are indirectly 
allowing it to happen.
    So yes, I don't think that you, any of my colleagues on the 
other side of the aisle, advocate for fraud. But they allowed 
it to happen, and they didn't take our common-sense counsel 
because they wanted to jam a partisan bill, no matter how good 
their intentions were, through the process, and taxpayers have 
paid mightily.
    Were people helped? Sure. I am certain they were. You can't 
throw $1 trillion, almost, at a problem and not help somebody, 
for heaven's sakes. That is not the question. The question is, 
are we acting as leaders of the greatest country in the world, 
and as stewards on behalf of the greatest people in the world? 
The answer in this regard is no, we failed.
    I am sure my party has had their shortcomings along the 
way, and I will try to readily concede when we do. That was a 
failure on your part. Let's not repeat it. For heaven's sakes, 
can't we agree on just that fact, if we are concerned about 
facts? The facts are that we turned the trampoline into a trap, 
and the safety net into a hammock because of these policies.
    I got 43 seconds. The debt is amassing at an alarming rate. 
A crisis related will be catastrophic. Mr. Dodaro, you know 
that as well as anybody on this dais. We have to recoup this 
money. Every year I hear the same numbers. We got to get our 
arms around the 150 or the 160. In 2021, it was $280 billion. 
But nothing ever happens. What are we going to do to recoup 
America's hard-earned money so that we can help reduce the 
spend, bend the debt curve, and save this country from a much 
bigger crisis than what we have experienced even in the 
pandemic, and maybe even any crisis to date?
    And I took all the time, but if he would just--Chairman, if 
you would indulge Mr. Dodaro just to make a quick response?
    Chairman SMITH. Proceed, please.
    Mr. DODARO. Congressman Arrington, I have said for a long 
time and written that the Federal Government is on an 
unsustainable long-term fiscal path. I recommended that we put 
a plan in place to have guardrails, a debt-to-GDP ratio, some 
kind of framework for guiding future decisions.
    I have also recommended changes to the--how we set the debt 
ceiling issue. I think that there is a better way to do it at 
the time revenue and expenditure decisions are made in the 
beginning that avoids a potential cliff crisis.
    I have also said that we have problems on both ends of 
revenue. As was mentioned earlier, we have got a tax gap 
exceeding $400 billion that is not coming in. It should be, 
under current tax law. We are sending out 200 billion that 
shouldn't be sent out.
    And so, we have got a lot of problems. We have got a lot of 
recommendations to deal with these issues. And I think these 
implementation issues of current policies can be done a lot 
better and more effectively to protect the taxpayers and to 
deal with our long-term deficit and debt issues.
    Chairman SMITH. Thank you. I thank the representative. I 
recognize the gentleman from Illinois, Mr. Davis.
    Mr. DAVIS. Thank you, Mr. Chairman. As I listened to my 
friend from Texas, I was reminded of a saying that the Panthers 
used to use, and that was: ``you are either part of the 
solution or you are part of the problem.''
    Between February and May 2020, Illinois lost almost 1.8 
million jobs, with over half-a-million workers left jobless in 
the Chicago area alone. Our swift bipartisan response to pass 
the CARES Act prevented unthinkable hardship for millions of 
people in Illinois and tens of millions across the nation.
    No one should get away with criminal fraud, which is why I 
was proud to help provide the Biden Administration and the 
inspectors general with dedicated fraud-fighting resources in 
the American Rescue Plan, resources that led to over 1,500 
defendants being criminally charged, and the recovery of 
billions of dollars.
    The actions of these criminals should not distract from the 
fact that pandemic unemployment insurance kept an estimated 
five million people a year from falling into poverty, met 
revenue and customers for businesses that were still open, 
allowed workers at high risk COVID to stay safer during a 
pandemic that disproportionately killed Black and Brown people.
    My staff and I took thousands of calls from constituents 
who needed help. The Chicago economy relies a great deal on 
tourism, hospitality, and the arts, all of whose workers needed 
pandemic unemployment benefits to survive.
    I am disappointed that we do not have the opportunity today 
to hear from workers who relied on UI during the pandemic. So 
let me just share a story from Bonnie in Chicago, and here is 
what she said: ``We are a dual freelancer home in the theater/
TV industry, with two children. We had to file unemployment for 
the first time in our lives. Our industry is shuttered for the 
foreseeable future, with no end in sight. And with the huge 
unemployment rate, nobody has even called us for an interview, 
let alone a job offer. Without the extra boost, we would be 
unable to cover the mortgage, pay our bills, our health 
insurance, which is all out of pocket, or keep our kids fed. I 
think we qualified for something paltry, like $500 a month in 
unemployment, which covers virtually nothing, with the high 
cost of living in Chicago.''
    I am deeply proud that the pandemic unemployment assistance 
provided relief during a crisis, and I reject this Republican 
concern for fraud when they remain silent when the Trump 
Administration failed to implement GAO's anti-fraud 
recommendations, and when they opposed the anti-fraud funding 
that this committee's Democrats secured.
    Mr. Dodaro, in the Rescue Plan, we put $2 billion in there 
to help states by giving grants to them. Could you measure what 
this program actually does, and what it did?
    Mr. DODARO. The program is intended to help with--combat 
fraud, also to look at ways to make sure there is equity in the 
program, to deliver customer service, more timely payments.
    We also found some disparities in the amount of payments 
that were going to different racial groups, and we are, in our 
continuing ongoing work, going to be looking specifically at 
what the two billion was used for, and we will be reporting to 
the committee.
    Mr. DAVIS. Thank you very much. Congratulations on your 
long tenure.
    And, Mr. Chairman, I yield back.
    Chairman SMITH. Thank you, Representative. In regard to the 
$2 billion that the gentleman from Illinois just mentioned 
about, I actually asked my Department of Labor in the State of 
Missouri to ask if it worked. And I would like to submit for 
the record this letter that she presented.
    It says more--one of the lines in it says, ``More recent 
funding opportunities, such as the Equity and Tiger Teams 
grants, provided limited flexibility to address program 
integrity and ongoing fraud prevention strategies.
    Without objection, I would like to put it in the record.
    So ordered.
    [The information follows:]

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    Chairman SMITH. I would like to recognize the gentleman 
from Oklahoma, Mr. Hern.
    Mr. HERN. Mr. Chairman, thank you for hosting this 
important hearing. It has been a long time coming.
    Let me be clear that unemployment fraud is not a new issue. 
However, no one here can deny that since the start of the 
pandemic the number of fraudulent claims has skyrocketed. I 
know I am not the only one here who has experienced this 
firsthand.
    Now, I first shared my story during a roundtable hosted 
last year by my Republican colleagues on this very topic. From 
their lack of action, it is increasingly evident that the 
Democrats, my Democratic colleagues, are--still aren't grasping 
the scope of this issue. So let me show you.
    So, this right here is a box, a 27-pound box that I had my 
staff go dig out of storage, had my folks back home dig out of 
storage. And it represents, from March 2020 to April 21, 789 
fraudulent claims on an employee base of 324 employees that my 
family business had happen to them, just 14 months. And yes, as 
the ranking member said, this was prior to the current 
Administration. But that should make it all the more important 
of why we need to investigate the fraud that is going on across 
America.
    The American taxpayer does not care who is in the White 
House. They want to know where their taxpayer dollars went, and 
did it go to not any Americans at all, did it go to places like 
India and elsewhere around the world, as we knew what went on?
    These 789 fraudulent claims were of people that never 
worked for me, ever, in 25 years of business had never worked 
for me. And had we not done due diligence on every single 
claim, they would have been paid out.
    Now, I will tell you, when you look at this, we also had 
people who had been continuing to work that got 1099s saying 
they were not working. And yet we still do not want to have an 
adult conversation about what really went on with hundreds of 
billions of dollars of fraud across this country in the UI 
program.
    And so, when we talk about this, I really want to get to 
the idea and the thought of why we can't have and why we 
haven't had--I think some of you have mentioned this--that the 
closer we can do this--and I know that one of you all mentioned 
that we should have these conversations while we are doing the 
programs, and recognize that when you are really just passing 
out hundreds of billions of dollars, some would argue trillions 
of dollars, in the time that has happened to us in the last 24 
to 30 months, that we have the propensity, and when it is 
fairly mandated, that we are going to have fraud.
    We should acknowledge that, and we should do our job--it 
shouldn't be political, it should be bipartisan--to sit down 
and talk about where this fraud is that.
    Now, I will tell you that we know that this unemployment 
insurance system is deeply flawed. It has been around since 
1935. People have figured out how to beat the system. It has 
happened. We see it. This is a testament to it. Anybody is more 
than welcome to look at it. You can't take pictures, because it 
has Social Security numbers on it, but you can take a look at 
them and see what we are talking about.
    You know, when we look at the issue that we talked about 
with workers not working, it is a fact that we know that we 
send out hundreds of billions of dollars, incentivizing people 
beyond the time when some states were going back to work, with 
no discernible difference in the outcome of the COVID pandemic. 
And yet people in the State of Oklahoma were funding fraudulent 
claims in places like California and New York--and no offense 
to my friends, but that is where the largest amounts of--just 
from the sheer population--the fraud occurred. And I have to 
answer to my friends and my constituents back home in Oklahoma 
why it is okay that the United States Congress cannot hold a 
hearing on fraud, and they have to continue to have their 
taxpayer dollars being paid out in fraudulent claims.
    Mr. Turner, what motivation do states have to mitigate 
fraud, when the burden of loss falls on the Federal Government?
    Mr. TURNER. Well, first, I think there is an incentive. And 
part of what the Department is trying to do is also offer up a 
policy of getting a five percent return on when fraud is 
pointed out, and have that fraud returned back. So, I think 
that is part of the incentive I know the Department is trying 
to do, and we concur with that, that has been part of their 
recommendations, because that would help them pursue it a 
little more vigorously.
    Mr. HERN. So, in following up to that, what has been done 
to hold the most negligent states accountable, so that the 
hard-working people of states like Oklahoma aren't paying the 
price?
    Mr. Turner. Well, I think the Department has really reached 
out to all states, in trying to hold them accountable. I mean, 
with our work, we really don't care what state someone is in. 
But when there is fraud that occurs, and once it is identified, 
we work with our law enforcement partners around the country to 
try to address it.
    Mr. HERN. Any reforms you see we should be doing so that we 
don't have this happen again?
    Mr. TURNER. Well, here is the biggest problem, in my 
opinion. The biggest problem is that, as the OIG, we make a lot 
of recommendations. And if you look back over the history, even 
10 years ago, some of the recommendations that came up this 
time are the same problems that went unaddressed, whether that 
be our antiquated IT systems or whether it be lack of staff 
training. Those are things that we have identified.
    And with this new program that was out with PUA, there was 
some states that--the officers were not trained properly or 
didn't know, and in some cases they waived that requirement 
because there was a lack of understanding of how the process 
worked.
    Mr. HERN. I would like to thank the witnesses, and I yield 
back.
    Chairman SMITH. Thank you, Representative. I would like to 
recognize the gentlelady from the State of California, Ms. 
Sanchez.
    Ms. SANCHEZ. Thank you, Mr. Chairman, and good afternoon to 
the gentlemen on our panel. I want to thank you for your 
testimony today.
    How to stop fraud is a very important issue, but so equally 
important is how to provide help to families during a once-in-
a-century pandemic. Mr. Dodaro, did you receive unemployment 
insurance at any point through the pandemic?
    Mr. DODARO. No, although I would----
    Ms. SANCHEZ. Okay.
    Mr. DODARO [continuing]. Note for the record someone filed 
a claim in my name.
    Ms. SANCHEZ. Okay, I am just asking if you did.
    Mr. DODARO. And the GAO people----
    Ms. SANCHEZ. The question was whether you did or not.
    Mr. DODARO. Okay. [Laughter.]
    Ms. SANCHEZ. Thank you.
    Mr. DODARO. All right.
    Ms. SANCHEZ. Thank you.
    Mr. TURNER, did you receive unemployment insurance at any 
point through the pandemic?
    Mr. TURNER. No, I did not.
    Ms. SANCHEZ. Thank you.
    And, Mr. Horowitz, did you receive unemployment insurance 
at any point during the pandemic?
    Mr. HOROWITZ. No, I did not.
    Ms. SANCHEZ. Thank you, gentlemen. I asked that question 
because it is increasingly apparent that this panel is missing 
a critical perspective: someone who actually did receive 
unemployment insurance after losing their job. Republicans 
refused to hear from working families who received this 
critical earned benefit when they had nowhere else to turn.
    Throughout 2020, my district office was inundated by 
constituents desperate for a helping hand. Many of them 
contacted my office as a last resort, saying they were about to 
forgo food, rent, or their mortgage payments after losing their 
job. When my colleagues and I worked across the aisle to 
unanimously pass the CARES Act, we got pandemic relief out the 
door as fast as possible.
    Was it perfect? No. But we wanted and needed to help folks 
survive. And you know what? It worked. At the start of the 
pandemic, one of my constituents reached out to my office. She 
was an older woman who had just lost her job and was caring for 
her mother in hospice. Her UI benefits were the only source of 
income that allowed her to keep the heat on for her dying 
mother. Without this Federal money, she, along with about five 
million more people, would be living below the Federal poverty 
line.
    This critical lifeline also disproportionately helped older 
Americans, less educated workers, and Black and Brown workers.
    The point is that Federal unemployment insurance during the 
pandemic was overall a major success. Again, was it perfect? 
No. But it kept families fed, it kept families housed, it 
allowed my constituent and her mother to continue living in 
dignity.
    We had to act fast. And no, we were not always surgical in 
what we did, but we learned from our mistakes. But today my 
Republican colleagues want to highlight the program's 
shortcomings, particularly fraud.
    After the passage of CARES, the GAO made several anti-fraud 
recommendations to the Trump Administration. President Trump 
failed to implement any of these basic safeguards, placing 
American tax dollars at risk.
    My Democratic colleagues and I worked to address the 
criminal activity, while recognizing the vulnerabilities in our 
state UI systems. The reality was that the agencies were 
chronically underfunded and under-staffed. UI agency workers in 
my home state of California went from working 8-hour days to 
14-hour days, 7 days a week. Democrats worked to close that 
resource gap.
    Through the American Rescue Plan, we dedicated fraud-
fighting resources, while ensuring we were not harming critical 
benefits for American workers. As a result, the Biden 
Administration has already prosecuted over 1,500 defendants who 
are accused of fraud.
    Again, not a single Republican voted in favor of these 
fraud-fighting provisions. Now they want to use the first 
hearing of this committee in power to talk about the problem 
that they initially refused to solve.
    We cannot discredit a critical earned benefit that 1 in 4 
American workers legitimately needed in 2020. So, let's not 
allow the action of criminals to distract us from the fact that 
pandemic UI saved millions of American families.
    And before I close, I would ask unanimous consent, Mr. 
Chairman, to enter into the record a letter from the American 
Federation of County, State, and Municipal Employees, which 
represents many of the dedicated state employees who worked 
overtime and more to pay workers UI benefits that they needed 
during the pandemic. They were not allowed to be heard at 
today's hearing, so I hope that all of my colleagues will read 
their letter and listen to the voices of the workers that they 
represent.
    Chairman Smith. Without objection, so ordered.
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    Ms. SANCHEZ. Thank you, and I yield back.
    Chairman SMITH. Thank you, Representative. I would also 
like to thank the representative for highlighting why it is so 
necessary that we have numerous future oversight hearings to 
look at how we can make sure the integrity of the programs this 
committee has jurisdiction over to continue to operate 
appropriately and fairly.
    I would like to recognize the gentleman from Georgia, Mr. 
Ferguson.
    Mr. FERGUSON. Thank you, Mr. Chairman. And I would just 
like to point out that this is, in fact, our second hearing 
that we have had, not our first. And I think there were so many 
members on the other side that did not attend the first hearing 
that maybe it just slipped their mind. So, I will just point 
that out.
    I also want to address the insinuations that we have not--
you know, that we are going after the individual citizen here. 
This--listen, this was a huge program. We sent out money. This 
place, D.C., decided to shut down the country, and we knew we 
had to do something to help our fellow Americans. And we did. 
But then we went back to the well again when it was unneeded. 
And when we had an opportunity to put guardrails on it, we 
failed to do so.
    Now, I just think that is where we need to recognize and we 
need our colleagues on the other side to get serious about the 
oversight, and quit coming after Republicans when it is not 
right. So I get that off my chest.
    Mr. TURNER, in this program I think you said $191 billion 
in estimated fraud. Is that right?
    Mr. TURNER. That is correct.
    Mr. FERGUSON. All right. And you have recovered $105 
million of it?
    Mr. TURNER. No, I didn't say we had recovered 105. We 
actually, as far as the Labor OIG, we have $905 million that we 
have not recovered, but monitored results.
    Mr. FERGUSON. A hundred and five million? Is that--I am----
    Mr. TURNER. No, 905 monitored results. And what that is, is 
there may be court cases or admin or civil resolutions to some 
of that, and some of it takes time to actually see that the 
funds----
    Mr. FERGUSON. All right.
    Mr. TURNER. Yes.
    Mr. FERGUSON. So, of those cases, what do you--how much do 
you anticipate recovering? What is a good estimate? Do you have 
any idea of what that may be?
    Mr. TURNER. Let me make sure I understand your question.
    First of all, let me just clarify. It is $191 billion that 
we say is improper payment. And there are--76 of that is what 
is expected to be the fraud rate.
    Mr. FERGUSON. Okay, 76 is----
    Mr. Turner. Yes.
    Mr. Ferguson. Okay, I just--I am trying to get--make sure I 
have got the numbers right----
    Mr. TURNER. All right.
    Mr. FERGUSON [continuing]. On there. Okay. And you said you 
have exhausted all of the funds that Congress allocated to you 
for those efforts. Did you--did I hear you say that correctly?
    Mr. TURNER. No, you didn't hear me say that, but we are on 
the verge of doing that, the----
    Mr. FERGUSON. On the----
    Mr. TURNER [continuing]. $38-and-a-half million that the 
Labor OIG was given for oversight. Yes, we are close to 
exhausting those funds.
    Mr. FERGUSON. Okay. So, then there was another $2 billion 
that went for fraud prevention. Is that--am I right on that 
number, as well? And we----
    Mr. TURNER. I think you may be talking--are you talking 
about the $2 billion?
    Mr. FERGUSON. Let me refer that--$2 billion?
    Mr. DODARO. Yes, there was $2 billion that was given. It 
could be used for fraud, it could be used for customer service, 
it could be used for these Tiger Teams that went in. So, it was 
multiple uses that----
    Mr. FERGUSON. Okay.
    Mr. DODARO [continuing]. That was that amount of money, 
yes.
    Mr. FERGUSON. All right. It just seems like the amount of 
money we are spending on that isn't getting a really good 
return on investment, overall, okay, if you--the way I look at 
it. All right. So, we have got to be more efficient in that.
    Now, we have talked an awful lot about fraud, okay? And as 
we have said, all Republicans and Democrats up here, I think 
everybody in America except the people committing the fraud are 
against fraud. But there is a whole other part here, which is 
improper payments, okay?
    Now, we have been going after fraud, but we haven't really 
talked about the improper payments. And one of the things I 
would like to hear very briefly from you today about is the 
improper payments. How did that happen? Why did it happen? And 
has anybody been held accountable there?
    We talk about holding the criminals who committed fraud 
there, but what about the ineptness of a bureaucracy that is 
just simply not doing its job, and issuing out hundreds of 
billions of dollars in improper payments? Because, again, 
improper payments, as the chairman said, a dollar that goes to 
the wrong spot is not a dollar going to the right spot.
    So, in some regard--I don't know that we have got so much a 
Republican or Democrat problem, I am--we may have a bureaucrat 
problem, because it has gone on for two administrations.
    So how does--how do the improper--what is the biggest 
problem with improper payments? How are you going to fix it? 
And who is going to be held accountable for that, Mr. Turner?
    Mr. TURNER. So again, part of the--let me just clear what 
improper payment is, so everybody will be on the same page. 
Your improper payments are whenever a benefit is paid 
incorrectly. That could be the amount, or it could be 
overpayment, underpayment, or else it could be going to the 
wrong person. So that is the improper payment. And fraud is a 
subset of improper payments. So, I just want to make sure that 
I clear that up.
    And as far as what we are doing, we are having our audit 
work to take a look at that. I mean, we have had 11 audits that 
we have completed throughout the pandemic. We have another 17 
that are ongoing, and we have 3 that are in the works. So, we 
are taking a look at that, and that is how we are holding the 
Department accountable.
    Mr. HOROWITZ. Can I----
    Mr. FERGUSON. I am out of time. But if the chairman will 
grant Mr. Horowitz a----
    Mr. HOROWITZ. Can I just----
    Chairman SMITH. Proceed.
    Mr. HOROWITZ. Briefly on that point, I think one of the 
things that is important to keep in mind--I know Mr. Dodaro 
speaks about this a lot--these are--we are only talking about 
54 programs being managed by 50 states, the District of 
Columbia, and 3 territories.
    It is very important to include in this discussion the 
National Association of State Workforce Agencies and state 
auditors. They are the ones on the front line, because states 
are doing it differently across the country. Some are doing 
better than others. I think it is very important, as we think 
about this program going forward, how much control should be at 
the Federal level; how much should be decentralized, as it 
largely is, to the states; and how do we figure out what states 
are doing better than others, and using that model to increase 
the compliance rates and reduce improper payments across the 
country.
    Mr. FERGUSON. Thank you. I yield back, Mr. Chairman.

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    Chairman SMITH. Thank you, Representative, and I also 
appreciate your attendance at both of our hearings this week, 
the first, and today being the second.
    Mr. FERGUSON. It was an honor and a pleasure, sir.
    Chairman SMITH. Thank you. I would love to recognize the 
gentleman from New York, Mr. Higgins.
    Mr. HIGGINS. Thank you, Mr. Chairman.
    So, $5 trillion in pandemic relief was approved under two 
programs that included expanded unemployment and the Paycheck 
Protection Program. Both of these programs were signed into law 
by both Republican and Democratic Administrations.
    So, Mr. Dodaro, you have been an employee of the Government 
Accountability Office for almost 50 years.
    Mr. DODARO. Yes.
    Mr. HIGGINS. And you have been comptroller general for 13 
years?
    Mr. DODARO. I am working on that.
    Mr. HIGGINS. Acting two years before that.
    Mr. DODARO. That is correct.
    Mr. HIGGINS. Okay.
    Mr. DODARO. Next month it will be 15 years since I have 
been in the job.
    Mr. HIGGINS. And as the Comptroller General of the United 
States and head of the U.S. Government Accountability Office, 
it is a $5 trillion bureaucracy. Where is your focus, 
primarily, as head of that agency?
    Mr. DODARO. Yes, we focus on the entire full breadth of the 
Federal Government's responsibilities, you know, everything 
from IRS to the Defense Department, all the agencies.
    Now, we work closely with the inspector general community 
to make sure that we are coordinating and making efficient use 
of our resources.
    Mr. HIGGINS. How much time over the past 36 months, on a 
percentage basis, has been spent on waste, fraud, and abuse 
under those two programs, Paycheck Protection and expanded 
unemployment?
    Mr. DODARO. We have issued at least 10 reports on those 
individual areas. We spent a lot of time on the Paycheck 
Protection Program, the Economic Injury Disaster Loan program, 
both at SBA. We have added that to our high-risk list that I 
mentioned earlier, as well as the unemployment insurance----
    Mr. HIGGINS. So, I presume, in your 50 years, you have 
never seen anything of this magnitude as it relates to your 
office's responsibility to promote the integrity in the 
expenditures of those dollars.
    Mr. DODARO. This has been the largest package in American 
history, the rescue package, in American history.
    I became acting comptroller general during the global 
financial crisis, so I was around for the $700 billion to 
unfreeze the credit markets, the American Recovery and 
Reinvestment Act before that Hurricane Katrina. This has been 
the largest one, ever.
    Mr. HIGGINS. Okay. The unemployment insurance program--so 
2020 it was $174 billion, 2021 was $115 billion, and 2022 was 
$24 billion. How bad was the fraud and abuse relative to the 
benefit?
    I mean, can you formulate a cost benefit analysis in your 
own head about, you know, a lot of money went out, certainly 
fraud is something that neither party is supportive of, and is 
very intent on eliminating to the extent that it is possible, 
so----
    Mr. DODARO. Yes. The way I look at it, from an oversight 
standpoint, is that there was great benefit to all these 
programs, but there could have been even greater benefit had we 
stopped the improper payment and fraud area, particularly in 
the loan programs, because there is only a certain amount of 
money.
    Mr. HIGGINS. Yes.
    Mr. DODARO. So other people were denied the loans, they 
were denied assistance.
    Mr. HIGGINS. Right.
    Mr. DODARO. In the unemployment area, everybody that was 
legitimately there got paid--not everybody on a timely basis.
    Mr. HIGGINS. Right.
    Mr. DODARO. But--so that is the way I look at it.
    Mr. HIGGINS. So nearly 50 years of service.
    You know, the greatest way to reduce unemployment 
expenditures at the Federal and state level would be a 
reduction in the Federal unemployment rate, which is today 3.4 
percent, which is the lowest rate since 1969. That is 54 years. 
It is pretty incredible.
    But you also spoke at the outset of the infrastructure that 
exists or does not exist at the state level. It seems as though 
the Federal Government needed to do something quickly. We were 
all in an emergency mode, not a lot of time to structure a 
program, including the infrastructure that was necessary to 
administer that program in an efficient way, reducing to the 
fullest extent possible fraud and abuse.
    So, is it fair to say that the majority of the 
responsibility for the fraud and abuse is associated with the 
antiquated systems throughout the various states that we forced 
to administer this program?
    Mr. DODARO. The antiquated systems were certainly a big 
part of the problem. But, as my colleague, Mr. Turner, noted, 
states had been on notice for years about that program. I know 
New York State, the deputy comptroller said that they had been 
on notice since 2010.
    Mr. HIGGINS. Right, but--I get that. But----
    Mr. DODARO. Yes.
    Mr. HIGGINS. They were on notice to do something about 
their antiquated systems. This is like, you know, 
responsibility on steroids. The unemployment rate reached 
nearly 14 percent.
    Mr. DODARO. No, I understand. The states were overwhelmed. 
That was for sure.
    But I think it goes to the incentive question. You know, in 
normal times this is state money that is collected from taxes 
put on employers in that state. And they knew that there was 
fraud. They knew there were improper payments. So, in my 
opinion, looking back on this from an oversight standpoint, 
they bear some responsibility for not being better prepared.
    Now, whether they would have been prepared to deal with the 
overwhelming issue brought by the pandemic is an open question.
    Mr. HIGGINS. I yield back. Thank you.
    Chairman SMITH. Thank you, Representative. I recognize the 
gentleman from Ohio, Mr. Wenstrup.
    Mr. WENSTRUP. Thank you, Mr. Chairman, and I want to thank 
you all for being here today. I appreciate your time. I am glad 
we are having this hearing to examine, really, the 
unprecedented levels of fraud in the pandemic unemployment 
programs.
    You know, I often think about our job here, and in 
situations like this I think of the song, America the 
Beautiful, where we are--we ask God to help us mend our every 
flaw. And I think this is a perfect example of us trying to do 
that.
    Mr. Turner, thank you for clarifying today, too, the 
difference between improper payments and fraud itself. And $191 
billion, I believe, is what is reported out from DoL.
    You know, in my home state of Ohio, it is estimated $1 
billion may have been paid in fraudulent unemployment claims 
from March 2020 to June 2022. And the problem is so rampant 
that our own governor, Mike DeWine, and his wife Fran, and our 
lieutenant governor, John Husted, were notified that fraudulent 
claims had been filed in their own names. It went that far. So, 
it is a widespread problem. It harms Americans that it was 
designed to help. And obviously, we don't want that. That is a 
given.
    So many of my Republican colleagues have been committed to 
protecting Americans who have been victims of this fraud. In 
fact, when this committee was in markup for the American Rescue 
Plan, I offered an amendment to require the IRS to implement a 
hold harmless process for those taxpayers whose 1099Gs are 
flagged as unreported income, if those taxpayers believe they 
are victims of identity theft or fraud, such that no penalties 
or interest would accrue against them.
    This amendment was objected to by my colleagues on the 
other side of the aisle. At that time Ranking Member Neal 
promised that, if I withdraw my amendment, we would work 
together to address this issue. Unfortunately, it hadn't ever 
happened.
    And, Mr. Chairman, with your consent, I would like to 
submit a copy of my amendment on that for the record.
    Mr. KELLY [presiding]. Without objection.
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    Mr. WENSTRUP. And so, I will say that, despite not really 
investigating the root cause of the frauds during the pandemic, 
we saw the Department of Labor has distributed $2 billion in 
the American Rescue Plan to detect and prevent fraud, promote 
equitable access, and ensure the timely payment of benefits 
with respect to unemployment compensation programs. The 
Department of Labor has yet to provide a full accounting of how 
this funding has been used.
    I think we need to circle our wagons there, and the only 
available information that I have seen shows DoL has only used 
18 percent of those funds for fraud identification and 
recovery. So, Mr. Turner, do you have any data currently on how 
many taxpayers had their identity stolen to claim IU [sic] 
benefits fraudulently?
    Is there any tracking the IRS does to aggregate information 
from the Form 1099G about the amount of taxable unemployment 
benefits that were flagged by states or individuals as 
fraudulent?
    I think it is an important piece of the puzzle, so if you 
could help me there I would appreciate it.
    Mr. TURNER. Yes, we are--this is still early in the stage. 
We are still gathering the data on that.
    Mr. WENSTRUP. Okay.
    Mr. TURNER. But it is part of our plan. We hoped to do that 
this year, but because of constraints we have pushed it off to 
next year. But we do have plans to do so.
    Mr. WENSTRUP. I appreciate that. As soon as we can, that 
would be helpful information for us.
    The State of Ohio has been able to recover more than $390 
million in unemployment benefits. And despite the work being 
done by the Ohio Department of Job and Family Services, and our 
participation in the National Association of State Workforce 
Agencies, Ohio is not receiving any portion of the funding they 
have recovered, the majority of which are pandemic unemployment 
assistance and Federal pandemic unemployment compensation 
funds.
    So, they are really trying to do their work. You know, 
states like Ohio are making investments in fraud recovery and 
prevention efforts as they continue to recover these fraudulent 
payments. I think we should be working to incentivize their 
investments in these recovery efforts.
    Mr. Turner, what thoughts do you have on policy 
recommendations that would incentivize states to pursue the 
fund recovery work?
    And you may have mentioned this earlier, and I apologize if 
I am asking a question again.
    Mr. TURNER. Not a problem. That is one of the 
recommendations that the Department of Labor have. And we 
concur with that recommendation. We think anything that would 
incentivize and help people more--be more interested in 
recovering those funds is a great move.
    Mr. WENSTRUP. What would you suggest that incentive look 
like?
    Mr. TURNER. Well, five percent, I think, is what they are 
proposing.
    Mr. WENSTRUP. Okay.
    Mr. TURNER. And we would agree with that. The only caveat 
that we would add on that is that it be returned back to the UI 
program, the administration of it.
    Mr. WENSTRUP. Okay, thank you.
    Mr. Chairman, with your consent I would like to submit a 
letter from Ohio Governor DeWine to the Secretary of Labor, 
Martin Walsh, for the record.
    Chairman SMITH [presiding]. With no objection.

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    Mr. WENSTRUP. Thank you. I yield back.
    Chairman SMITH. Thank you, Representative. I would like to 
recognize the gentlelady from the State of Alabama, Ms. Sewell.
    Ms. SEWELL. Thank you, Mr. Chairman.
    To be clear, none of us want waste, fraud and abuse in any 
government program. We all were sent here to be good stewards 
of taxpayers' money.
    I also want to just say that the facts are that we dealt 
with a once-in-a-generation pandemic, and that there were lots 
of Americans, vulnerable Americans, who were left more 
vulnerable because of this pandemic. In my state of Alabama 
alone, 532,000 Alabamians were spared from economic disaster 
because of the work done by this committee and the House of 
Representatives in the early months of COVID-19.
    The American Rescue Plan provided many states' unemployment 
offices the necessary resources to ensure that funds got out 
the door in a timely fashion to those facing the most dire 
economic and health scenarios imaginable at no fault of their 
own.
    I will never forget the sight, the sight of family after 
family lining up in cars to local charities and to churches and 
to pantries to have food loaded into their cars. And do you 
know why I will never forget it? Because I was bagging and 
loading lots of those groceries each and every time I was at 
home. These people were people who, two weeks ago, earlier, 
when the pandemic started, had jobs and no fear of losing the 
roof over their heads. And then, all of a sudden, they had 
friends and neighbors turning to them, offering them assistance 
to just get by.
    I didn't want my families to just get by. I wanted them to 
get back on their feet. The actions taken by the Ways and Means 
Committee in a matter of weeks ensured that millions of my 
constituents not only got by, but were able to pay their 
mortgage, make their mortgage payments, as well as to fill 
their kitchen cabinets.
    While facing a crisis like this none of us have 
experienced, we do know that fraud did occur. But as all of you 
have said over the course of the last few hours, this was not 
something that was just sprung upon us.
    As you said, Mr. Dodaro, as comptroller, you understand 
that we--that the states were not prepared. You said that. And 
I can tell you, from firsthand experience in the state that I 
represent, Alabama was not prepared.
    But because we gave them resources in the CARES Act and the 
American Rescue Plan, they got prepared. And as they got 
prepared, it took time. They were, you know, learning how to 
ride the bicycle as the bicycle was going down the road, and 
there were problems with it.
    But I also know that, Mr. Chairman, it is not fair to talk 
about the system without actually having on this panel workers 
who worked in these state agencies to be able to talk in 
earnest about what went on in those state agencies.
    I also note that we did give money. We gave money back when 
this pandemic first got started. And the Trump Administration 
did not put together an anti-fraud program that would help 
prevent this.
    Now, I know that fraud will happen in any program, but I 
guess my question to you is what can we do to make sure that 
states are more prepared, and actually assist in finding those 
fraudsters that are out there?
    I know that so many of the folks that work in these 
departments of labor in the states are good, earnest people who 
are trying to do their job. They just need more resources, more 
people in order to do that, and better systems. So, what can we 
do, as a prophylactic measure, to really help address the lack 
of preparedness in state agencies?
    Mr. DODARO. The first thing I would suggest is that--I 
mentioned earlier the Fraud Reduction and Data Analytics Act 
that Congress passed in 2016. That only applies to Federal 
agencies, it doesn't apply to the state agencies. So I think, 
if you would apply it to the state agencies and encourage and 
incentivize them to implement a comprehensive anti-fraud 
strategy on a continual basis, which would be effective 
throughout the whole period of time, that would be the number-
one thing.
    The number-two thing is, if in future emergencies there are 
measures, if they have that in place, there should be not as 
much of a need or a need at all for Congress to allow self-
certifications. That, I think, helped tie the hands of the 
states a bit, because they weren't allowed to ask for 
documentation and support.
    So those two things would allow them to be prepared--manage 
the normal program much better, and be prepared for 
emergencies.
    Ms. SEWELL. Mr. Chairman, I would suggest that we really 
should have had state administrators on this panel, as well as 
workers who worked in this area, that that would have given us 
a more broader view about what we can all do to help prevent 
fraud in the future.
    Thank you, and I yield back.
    Chairman SMITH. I thank the representative. Like I said 
earlier, this is just the first of many oversight hearings. The 
reason why we are doing it this way is because we didn't have 
any in the prior two congresses, and so we are glad that we are 
at least starting.
    I would love to recognize the gentleman from the State of 
Illinois, Mr. LaHood.
    Mr. LaHOOD. Thank you, Mr. Chairman. I want to thank the 
witnesses for your valuable testimony and service here today. 
Mr. Chairman, I want to thank you for holding this hearing and 
making this a top priority for our new majority. It is so vital 
that we do this.
    And I want to--I know it has been referenced, but it has 
been frustrating that this is the first hearing we are having 
on this. As everybody knows, COVID began, you know, in the 
spring of 2020. And obviously, we have been concerned about 
fraud in this space for the last two years. But this is the 
first hearing we are having. And it is not for a lack of 
trying.
    I just want to reference two letters that at the time our 
Republican leader, Mr. Brady, sent to this committee asking for 
a hearing. March 12th, 2021, we write to the chairman 
requesting an immediate--schedule an oversight hearing on the 
Ways and Means Committee to investigate reports and--of reports 
of fraud in unemployment insurance programs enacted through 
COVID pandemic. No response to that at all.
    So, with no response, we sent another letter 10 months 
later, February 22nd, 2020, again, at the time, to the 
chairperson from Ranking Member Brady--Ms. Walorski and Tom 
Rice and Mr. Kelly--again, asking to investigate the size, 
scope, and severity of criminal fraud in pandemic unemployment 
insurance. No response, unfortunately.
    I would like to submit both these--both of these letters 
for the record, Mr. Chairman.
    Chairman SMITH. Without objection.
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    Mr. LaHOOD. Couple that with what Dr. Wenstrup just said, 
we offered an amendment to get to the bottom of this on 
unemployment insurance. Nothing.
    So here we are today, having this hearing today. And so, 
again, vitally important that we use our responsibility with 
oversight to have some accountability in this program.
    Mr. Horowitz, I wanted to ask you a couple of questions 
here. As we have heard here today, the more time passes, the 
harder it is to get these dollars back. And so, it is high time 
that someone start asking questions and look into how do we 
claw back billions of dollars.
    My question specifically for you: obviously, you are 
working in your capacity across all of government, uncovering 
these fraud schemes and getting real results in terms of 
suggestions for criminal prosecutions and, hopefully, 
convictions and some jail sentences for those involved, which 
will hopefully send a deterrent message.
    A bit of a hypothetical question, but if you had $2 billion 
today, how would you use those funds to ramp up efforts to 
recover the funds and hold wrongdoers accountable?
    Mr. HOROWITZ. Well, first off, that would be magnitudes 
greater than we have gotten in the past for any of the IGs. 
And--but what we would do is a couple of things: increase our 
agents, the number of law enforcement and other auditors and 
analytics capacity that we have, so we can find the fraud, 
pursue the fraud; I would actually also then provide analysts 
to the various task forces like we are doing already--the 
National Pandemic Unemployment Insurance Task Force--so that we 
can be a force multiplier in that regard; and then finally, 
very importantly, there is going to need to be more 
prosecutors, both at the Federal level and at the local level, 
to deal with these cases. We can investigate them, but we have 
got to hand them off to somebody who will actually go to a 
courtroom and pursue the prosecutions.
    Mr. LaHOOD. And is there an example of a state that has 
been very proactive in terms of hiring state prosecutors to do 
that?
    Mr. HOROWITZ. There have been a number of states, and I 
wouldn't want to leave one out. We are working with a lot of 
states. We have had great relationships with a variety of 
states who are dealing with these issues.
    It is just going to grow, though, exponentially as we 
uncover more and more fraud, and as the Labor IG, you know, 
finds more and more fraud, and as we find the overseas fraud, 
right? That is the hardest to find, and is going to take us the 
most amount of time to get to.
    Mr. LaHOOD. In your testimony, Mr. Horowitz, you provided a 
recommendation that Congress should amend the Program Fraud 
Civil Remedies Act----
    Mr. HOROWITZ. Correct.
    Mr. LaHOOD [continuing]. To raise the jurisdictional limit 
for administrative recoveries of smaller claims.
    Mr. HOROWITZ. Right.
    Mr. LaHOOD. What is the threshold we are using now, and how 
does it compare to the amounts we are talking about in fraud 
from UI programs?
    Mr. HOROWITZ. So, the threshold right now is $150,000. It 
provides the Program Fraud Civil Remedies Act that we can use 
the civil process in it through administrative means, which 
means we don't have to tie up the Federal courts or Federal 
prosecutors for lower-dollar fraud claims. We want to increase 
that to $1 million, because we have seen the extraordinary 
number of payments that went out that were below that million-
dollar amount.
    And the reality is that, given the limitations on resources 
at the U.S. attorneys' offices and for prosecutors around the 
country at the state and local level, we are going to have 
challenges getting them to take smaller fraud cases. We, at a 
minimum, want to be able to use the civil processes to collect 
the money back for the taxpayers. And so that is why that is so 
crucial.
    We have had, by the way, bipartisan support for it. It just 
hasn't made its way through Congress.
    Mr. LaHOOD. Great, thank you. I yield back.
    Chairman SMITH. I want to thank the gentleman, and 
recognize the gentlelady from Washington State, DelBene.
    Ms. DelBENE. Thank you, Mr. Chairman. I would like to thank 
the witnesses for being here today and for sharing your 
testimony with the committee.
    However, an important voice is missing from this 
conversation, and that is the voice of the millions of people 
and the families for whom the expanded unemployment insurance 
during the pandemic was a lifeline.
    I we think back to 2020, and the fear and the uncertainty 
that our country was facing as that first case of COVID was 
reported in my district in the State of Washington, we saw many 
workers laid off, no longer receiving a paycheck. Some had to 
find childcare quickly, because their kids were taking classes 
at home. Small business owners were wondering how they could 
keep their businesses afloat.
    Overnight, our world shut down. Our nation lost nearly 22 
million jobs at the outset of the pandemic. And Congress needed 
to act. And we needed to act quickly to ensure that families 
kept food on their tables and roofs over their heads. And that 
is exactly what we did.
    To address the dramatic level of job loss and hardship 
caused by the pandemic, Congress passed bipartisan legislation 
which temporarily increased state unemployment insurance 
benefits by $600 a week, and this ensured that families had the 
money they needed to stay afloat. We also created temporary 
benefits to self-employed workers who were not covered by state 
UI programs to ensure that these people were not left without 
support. These changes and increased funds had a real impact 
for the families and the workers in our communities.
    I wanted to share the story of a Washington family. Lori, 
who works for an education non-profit, and her husband work for 
music venues. Her husband was undergoing cancer treatment, and 
their family was already living paycheck to paycheck. When the 
pandemic hit, Lori's husband was laid off due to the live 
entertainment industry shutting down. The extra $600 in 
unemployment insurance was critical to ensure that Lori's 
family was able to pay their mortgage, pay medical bills, car 
payments, and meet the basic needs of their teenage daughter.
    Critical programs like the expanded unemployment insurance 
and the Paycheck Protection Program were essential to our 
record-breaking economic recovery. Because of the actions that 
Congress took then, the American job market has exceeded pre-
pandemic levels, and we now have historic unemployment. 
Incredible impact.
    So, thank you for this hearing. Thank you, Mr. Chairman. I 
yield back.
    Chairman SMITH. Thank you, Representative. I would like to 
recognize the gentleman from Kansas, Mr. Estes.
    Mr. ESTES. Well, thank you, Mr. Chairman. And I am so glad 
we are having this hearing today on this very important topic.
    You know, the facts are that, as representatives, we have a 
responsibility to ensure taxpayer dollars are used efficiently 
and effectively. And the evidence is apparent there has been 
nearly unchecked unemployment fraud.
    I want to be clear. In the early uncertain days of the 
pandemic, there were good reasons to help countless Americans 
who faced those unprecedented economic challenges through no 
fault of their own. But we are nearly three years past the 
first pandemic-related legislation, and my colleagues on the 
left have chosen to complete ignore the rampant fraud that has 
cost taxpayers an untold amount. The estimates in some points--
in some outlets have arranged up to as high as 300 to $400 
billion.
    In addition to the money lost, there is evidence of gross 
incompetence, including from the governor's department of labor 
in my home state of Kansas that left many without assistance 
who desperately needed it. Despite unemployment being a 
function managed by the state, my office in Wichita received 
more than 1,000 calls from constituents who were negatively 
impacted by Kansas's unemployment system.
    I have many stories of people impacted. For more than half 
a year, one constituent waited while her legitimate claim 
mysteriously ended up in the fraud department. Despite repeated 
calls and attempts to resolve the issue, nobody in the Kansas 
department of labor could help her.
    Others reached out to let us know that they themselves have 
been victims of fraud. Several received a notification in the 
fall of 2020 that someone had filed claims for unemployment 
under their name, and received a 1099 in 2021, claiming that 
they owed taxes on the benefits someone else had received.
    Today we still hear from Kansans who were victims of fraud, 
or have yet to receive benefits they deserve. These are just a 
few of the cases, but they point to a real problem in Kansas 
and across the country: taxpayers lost out to fraudsters who 
used the pandemic, massive amounts of Federal funds, and weak 
state leadership to game the system.
    In May of 2021, Ways and Means Republicans held a 
roundtable on this subject, and I invited State Representative 
Sean Tarwater to testify. As the chair of the Kansas House of 
Commerce, Labor, and Economic Development Committee, he saw 
firsthand the issue of fraud and unemployment. In his testimony 
he said, ``We have documented over 40 times the Kansas 
Department of Labor was notified, directed, and informed about 
massive concerns regarding unemployment benefit frauds.''
    He also said that when the Kansas Department of Labor--when 
asked about the fraud, their response was they are not worried 
about the fraud because the ``big money'' was in the Federal 
funds, and it was mostly the Federal programs that were being 
targeted, and that they would always add that they were not 
held responsible for those funds so that it was not a priority.
    Mr. Chair, I would like to submit to the record two audits 
conducted by the Kansas Legislative Division of Post-Audit that 
indicated roughly $700 million in potentially fraudulent 
payments were made, with half coming from state funds and half 
coming from Federal, or about $344 million.
    Chairman SMITH. Without objection.
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    Mr. ESTES. Despite the evidence, there is not an incentive 
for states to recover those unemployment frauds, and hard-
working Kansas taxpayers are left with the bill.
    Mr. Horowitz, what processes are in place for states to 
help recoup funds lost to UI fraud, both state and Federal 
funding?
    Mr. HOROWITZ. So, I think one of the key parts of that is 
working closely with IGs, local/state law enforcement, and 
their state's attorneys general to make sure there are 
processes by which the taxpayers can get the money back. That 
is one of the things we are trying to do, is work closely and--
have focused on with state auditors.
    In fact, we have a--we created the first-ever state auditor 
in residence program. So, we have two Tennessee state auditors 
working with the PRAC to help us, as well as the former 
California state auditor, so we can develop those relationships 
and work more closely with the states.
    Mr. ESTES. So how are you looking at or expecting states to 
recover funds that may have been a result of international 
crime?
    And what state or Federal jurisdiction is there, and what 
has been currently done on that front?
    Mr. HOROWITZ. So, the SWA is the state workforce agencies. 
They are not the law enforcement arm of this, of course.
    So, the key is working with local law enforcement, Federal 
law enforcement. We are working with the Secret Service, the 
FBI, other Federal law enforcement agencies, and trying to 
develop those partnerships, because that is the key to the 
success of moving forward. There has to be the interest not 
only in making sure the money gets out, which is obviously 
important, to the right people, but then making sure, when it 
doesn't get to the right people, that there is the recovery.
    Mr. ESTES. Right. Well, thank you.
    And I want to thank all of our witnesses for the work that 
you are doing on behalf of the American taxpayers, and helping 
make sure that we get money in the right hands and that the 
taxpayers are protected.
    I yield back.
    Chairman SMITH. I want to thank the representative, and now 
I will recognize the gentleman from Pennsylvania, Mr. Smucker, 
for five minutes.
    Mr. SMUCKER. Thank you, Mr. Chairman. Thank you for holding 
this hearing.
    Oversight is an important role of this committee of 
Congress. And when we know that there is at least 60 billion--
the lowest number--and perhaps hundreds of billions of dollars 
that were fraudulently given to others than those who deserved 
it, we should be evaluating that and looking at it, and seeing 
whether the Administration did all they could to prevent that, 
and see whether this committee under Democrat leadership 
abdicated their responsibility to provide that oversight.
    I would like to use my time to respond to a few of the 
comments made by Democrats, starting with the ranking member, 
who I have a great deal of respect for. He opened with a fiery 
speech that conflated the idea that looking at fraud was the 
same as trying to prevent benefits from going to individuals 
who really needed a lifeline. And I say it is quite the 
opposite.
    And in fact, if--another thing we heard was that there is a 
voice missing here, voices of families who benefited from those 
dollars. I think they would be appalled to know that as much, 
potentially, as for every dollar that they received in a 
lifeline went to someone that didn't receive it, and will be 
paid either by them or by their kids and their grandkids, which 
is most likely, they would be appalled at that. And I think it 
would be important to have their input on that.
    I thought, based on the ranking member's comment, that he 
perhaps misunderstood the purpose of this hearing in conflating 
those two messages. And then, as I listened further to other 
Democrat comments, I realized it was more than that. They were 
literally trying to say that Republicans, by holding a hearing 
of this sort, did not support helping individuals. And again, 
that is just not true.
    And they also said that we didn't vote for $2 billion worth 
of fraud prevention. And I would like to remind Democrats that 
that was included in a bill of about $1,900 billion that we 
felt would do more harm than good. We were worried about the 
inflationary impact of that bill that would harm the American 
people far more than the handouts that have been provided.
    And by the way, we heard that from individuals, everyday 
Americans in our first hearing, where individuals said that 
those inflationary pressures, they have now are hurting their 
ability to provide for their families, and are threatening 
their ability to be able to keep their businesses open.
    And I know this has been mentioned before, but I will say 
it, as well, to the ranking member and the rest of the 
Democrats here. I thought it was very unfortunate that 
Democrats were unwilling to leave the bubble of Washington, 
D.C. and hear from real American people the impacts of our 
policies. And I appreciated that the chairman put together a 
field hearing, and I know we are doing more, and I hope that 
Democrats will reconsider, because I think it was a very, very 
valuable hearing. And I think it would be worth all of us 
hearing that.
    By the way, we were right in the impacts of that $1.9 
trillion ARPA. We had all first voted for the CARES Act. We 
thought it was--we felt was absolutely important. But it led to 
the highest inflation rate in 40 years. We were right.
    And if you want to talk about Biden's economic policies, I 
read a newsletter this morning that I thought nailed it pretty 
well. You know, Biden came in and inherited an economy that was 
growing at 6.5 percent, and an inflation rate of 1.5 percent. 
And somehow, he was, in two years, successful at completely 
inverting those numbers. And we had 6.5 percent inflation and 
an economy that is barely growing.
    One additional point, and this goes back to something the 
ranking member said, as well. He proposed the idea that people 
did not respond--almost 40 percent of Pennsylvanians received 
more on unemployment than they could have earned going back to 
work. And he believed that people did not respond to that by 
staying home. And that, I think, doesn't recognize the very 
nature--the very characteristic of human nature: We all tend to 
do what is right for ourselves, we look out for our best 
interests.
    And one of the arguments that we had, as Republicans, 
against ARPA is that we put people in this terrible position of 
needing to decide that, if they went back to work, they would 
be less able to provide for their families. It is an awful 
position to put people in, and we don't fault anyone for taking 
available--or for taking advantage of what was available to 
them. But it was a bad decision in our part. We could have done 
far better, as we wanted to at that time, by incentivizing 
people to go back to work.
    One of the amendments that we had included on that bill--
they were all rejected, but one was to provide a $1,500 bonus 
for people to go back to work. Think how that would have 
changed where we are right now.
    We heard directly at that hearing of individuals, of owners 
of businesses who talked directly to employees and said we 
won't come back to work because we would lose this benefit or 
that benefit. And I have talked to hundreds of employers who 
were in the same position. It was a badly-guided decision that 
had--that has harmed American people far more than the 
government handouts that were included with it.
    Thank you, Mr. Chairman. I am sorry I am over time.
    Chairman SMITH. Thank you, Representative. I would like to 
recognize the gentlelady from the State of California, Ms. Chu.
    Ms. CHU. I would like to start by reminding my colleagues 
that the Pandemic Unemployment Assistance program was 
authorized by the CARES Act and extended by the Consolidated 
Appropriations Act of 2021, both in overwhelmingly bipartisan 
votes.
    Additionally, Ways and Means Democrats secured funding to 
fight fraud and to recover taxpayer dollars in the American 
Rescue Plan, which, actually, is the very reason why we have 
the testimony from the witnesses before us today.
    The pandemic was an unprecedented disruption of our 
economy, which is why Democrats and Republicans acted together 
to expand unemployment benefits as quickly as possible to 
assist American families who, through no fault of their own, 
suddenly found themselves without a way to provide for their 
families' basic needs. This was a success, which is why the 
U.S. has had a stronger economic recovery than any of our 
peers.
    And we learned many lessons along the way, including that 
there were gaps in the distribution of these benefits for 
individuals such as my constituent, Damian, a father of two who 
is self-employed and also works part-time as an ambulance 
driver to make ends meet. Damian didn't qualify for Pandemic 
Unemployment Assistance, even though his primary employment was 
self-employment, because he had a small amount of wage income 
that qualified him for regular UI. So, I was proud to champion 
the inclusion of benefits for mixed earners like Damian in the 
bipartisan 2021 Consolidated Appropriations Act.
    Likewise, I have heard from many individuals that Federal 
pandemic unemployment was a lifeline for providing for basic 
necessities like food and lifesaving medications. That includes 
Gretchen from Altadena, California, who has been in the film 
and television industry for the last 30 years and is a cancer 
survivor whose medical coverage is predicated on the number of 
hours worked. And Mary from Pasadena, a nursery schoolteacher 
whose employers' doors closed and had to file for unemployment 
for the first time in her 26 year career. And May, the primary 
breadwinner for her family living in Sierra Madre, trying to 
stay afloat while distance learning with her three kids.
    The swift action of Congress mitigated the hardship that 
jobless workers and their families suffered and was essential 
in stabilizing an economy that lost a staggering 22 million 
jobs in just 2 months in early 2020.
    We know that there are lessons to be learned from these 
efforts that can strengthen and sustain the UI system for 
future emergencies, and I hope that it is the goal of this 
hearing that we do not neglect our duties to protect our 
workers in the midst of a global pandemic.
    So, Mr. Dodaro, although this is not mentioned in today's 
testimony, GAO also conducted discussion groups with recipients 
of UI benefits. Is that correct?
    Mr. DODARO. Yes.
    Ms. CHU. Well, tell me. What are some of the things they 
said in terms of what they spent their benefit on?
    And did they talk about how the benefits affected their 
housing and their credit?
    Mr. DODARO. We conducted these discussion groups in six 
states. We did 2 in each state for 12 discussion groups. And 
people told us they spent their funds on rent, utilities, food, 
and health care, and other essential activities during that 
period of time. So, it helped sustain them through that period 
of time.
    They also had a lot to say about the difficulty in getting 
the benefits in the first place, and we included that in our 
report, as well.
    Ms. CHU. And how did this affect their housing and their 
credit?
    Mr. DODARO. Well, it helped them to maintain, you know, 
paying their bills, so I would assume that added a, you know, a 
positive--or at least didn't have a negative effect on their 
credit.
    Ms. CHU. And what do the dozens of high-quality research 
studies GAO reviewed say about the effect that providing UI 
benefits during this pandemic and in past recessions had on 
economic stability?
    Mr. DODARO. We reviewed 30 empirical studies that were 
done, and those studies indicated that it helped support the--
stabilized the economy during that period of time, it helped 
prevent the situation from getting worse, and so it had a, you 
know, positive effect.
    Ms. CHU. Thank you. I yield back.
    Chairman SMITH. Thank you, Representative. I would like to 
recognize the gentleman from North Carolina, Mr. Murphy.
    Mr. MURPHY. Thank you, Mr. Chairman. I appreciate you 
calling the hearing today.
    I can't help but think we have gotten sidetracked a little 
bit. The purpose of this hearing is not to hear stories that, 
obviously, we all, every single person in this chamber, can 
tell us about how important these funds were. I mean, my God, 
everybody can talk about how we desperately needed this 
program. We are here to talk about the fact that fraud 
occurred.
    Let me just redirect, pull us all back, and let's just 
direct in the right direction, and get the facts. I would just 
like to correct a few things, I guess.
    The President last night said he has added 12 million jobs, 
the greatest in history. Well, he got rid of 10 million jobs 
because of what we did during the pandemic. It is just actually 
recapturing them. So, let's get to the facts. Let's be true.
    And we talk about the unemployment rate. Yes, it is low. 
But our workforce participation rate now is lower than it was 
in January 2020 to the tune where more than two-and-a-half 
million people are not working today who were working in 
January of 2020, hence the need for workers everywhere.
    That doesn't even add in the 18 million individuals who are 
now receiving Medicaid benefits, who, because President Biden, 
who has said the pandemic was over, continues the public health 
emergency where no state is allowed to audit its Medicaid 
rolls. So that is over 20 million people that we are talking 
about that should be back in the workforce, and actually 
contributing to Social Security, contributing to Medicare. We 
would love to get those people back.
    And so, we are here today to talk about fraud. Fraud. And 
sadly enough, fraud occurs. It is not a Republican problem. It 
is not a Democrat problem. It is an American problem. It is the 
fact that when free money--when money flows freely, people take 
advantage of it. Period, point blank.
    In North Carolina, a citizen from the Republic of India 
alleged that they obtained $40,000 in pandemic unemployment 
insurance for North Carolina residents, which--by the way, 
anybody who is in the resident--is in the embassy of India, by 
the way, in the District of Columbia, can vote, just as an 
aside to my Democratic friends. That we are going to hopefully 
stop.
    Second, a Federal grand jury in Greenville, North Carolina, 
where I lived, indicted three individuals for conspiring to 
commit wire and mail fraud for a heroin and fentanyl 
distribution ring in eastern North Carolina. Again, fraud 
occurs when money flows freely. It is not just balloons for 
everybody. It is actual real things that happen.
    Lastly, a woman in Charlotte was--pleaded guilty of $1 
million in unemployment insurance fraud by defrauding the State 
of Arizona.
    These are real things, and I commend you guys for the work 
that you have done. I attack us for not actually attacking this 
earlier--$350 million in North Carolina.
    And so we all know this is what we are talking about. We 
are not here to tell stories of how we helped it. We did. We 
could all tell those stories, because it was absolutely needed.
    I just find it interesting that my colleagues across the 
aisle are happy to say that President Trump's Administration 
didn't put in fraud committee, while they blame him for 
everything else, but then take credit for all the work that 
Biden did. So, I just--I think that is kind of interesting.
    So let me just ask a few questions as it is. Mr. Dodaro, 
can I just--what percentage of your workforce is back to work?
    Mr. DODARO. Everyone.
    Mr. MURPHY. Everybody is back to work?
    Mr. DODARO. Well, we were never not out of work.
    Mr. MURPHY. Okay.
    Mr. DODARO. We have been working all the time.
    Mr. MURPHY. Excellent, excellent. I am really glad to hear 
this.
    The--and I ask this to Mr. Turner, and also again to Mr. 
Dodaro: Does the GAO and the Department of Labor know to the 
extent in which international cyber crime rings and foreign 
actors were involved in targeting state systems at all?
    Do we have any information about what happened against--
with cyber crime, international figures, for fraud for this?
    Mr. DODARO. I think that question could best be answered by 
Mr. Horowitz and Mr. Turner.
    Mr. MURPHY. Okay, please do.
    Mr. TURNER. Yes. It is equally spread. Well, equally may be 
the wrong word, but it spread throughout--on the international 
side, as well as domestic.
    Mr. HOROWITZ. Yes, we have seen fraud occurring overseas. 
Secret Service has testified about this, about breaking up 
various rings in Nigeria, Russia, China, for example.
    Mr. MURPHY. Right. And I think it is--and I will just kind 
of end with this, because I don't want to beat a dead horse. We 
all know that this fraud occurred, and we all know that we have 
not done our job, as Members of Congress, in providing 
oversight.
    You know, it just seems to be an action that one side of 
this body just is happy to flow the funds. And yes, our 
American people need it. But for those of us who have actually 
run businesses, there has to be accountability as to where our 
money goes. This isn't our money. This is the taxpayers' money. 
And if we don't know where it goes and where it should not be 
going, then we are out of business.
    And this Congress--and, my God, you know, look at our debt, 
which some people don't believe exists--we would be out of 
business, absolutely, if we did not commit to making sure that 
our money is well spent, and that criminals, criminals, are put 
back.
    And let me just ask a real quick question, if you 00 just 
two seconds, if you will, Mr. Chair.
    Mr. Horowitz, can you expand on the suggestion to increase 
the penalties for these individuals?
    Mr. HOROWITZ. Yes. So, what we have actually asked for is 
increasing the statute of limitations from 5 years to 10 years. 
The challenge for us--and I know for Department of Labor IG--is 
we are already three years since the beginning of the benefits 
going out. We have got a lot of work still to do.
    Mr. MURPHY. Right.
    Mr. HOROWITZ. So, if it runs out in 2025 for some cases, 
that is going to be a problem. We are going to need the 10 
years.
    Congress did this last year, bipartisan basis, extended it 
for the two big SBA programs, Paycheck Protection Program, 
Economic Injury Disaster Loan program. They should do the same 
here.
    Mr. MURPHY. Well, thank you. I hope that that is a 
bipartisan effort that we can understand that fraud does occur 
and that we need to enable you guys to actually investigate it 
and put those criminals behind bars. Thank you.
    Thank you very much, Mr. Chairman. I yield back.
    Chairman SMITH. I want to thank the representative, but I 
also want to tack on to his points in regards to the 
unemployment numbers we have heard numerous times.
    It is also important to know the fact that workforce 
participation is currently at 62.3 percent, which is the lowest 
since Jimmy Carter was president.
    I would love to recognize the gentleman from Tennessee, Mr. 
Kustoff.
    Mr. KUSTOFF. Thank you, Mr. Chairman. Thank you also to the 
ranking member. Thank you, Chairman Smith, for convening 
today's hearing. Thank you also to the witnesses.
    I know that you had--made diligent efforts to warn Congress 
early on about the potential for fraud in the CARES program. 
And unfortunately, we have not had these hearings until now to 
examine the extent of the unemployment fraud. But we are 
committed to doing these examinations.
    I do want to ask, if I can, there was--relating to Mr. 
Horowitz's testimony just a moment ago, Mr. Chairman, I would 
like to submit for the record the very first alert on the 
pandemic unemployment fraud issue that was issued by the United 
States Secret Service that I believe Mr. Horowitz just 
referenced. It is dated May the 14th of 2020.
    Chairman SMITH. Without objection.
    [The information follows:]

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    Mr. KUSTOFF. Thank you, Mr. Chairman. The alert is titled, 
``Massive Fraud Against State Unemployment Insurance 
Programs,'' and it was directed to financial institutions 
across the country. And to what Mr. Horowitz just said, it 
warned them of a well-organized Nigerian fraud wing that was 
exploiting the COVID-19 crisis to commit large-scale fraud 
against state unemployment insurance programs.
    The alert indicated--or indicated, rather--that banks at 
all levels, at all levels were being targeted, and that the 
fraud wing possessed a substantial database of personally 
identifiable information of first responders, government 
personnel, and school employees.
    Mr. Horowitz, back to you for a moment. I think you 
testified a week ago before the House Oversight Committee.
    Mr. HOROWITZ. That is correct.
    Mr. KUSTOFF. Your--some of your testimony, what you said, 
is referenced, I saw, in an ABC News article from last week. 
This is what it said you cited, if I can read from this report.
    It says that the $5 trillion--$5 trillion total spent on 
pandemic relief--throughout both the Trump and the Biden 
Administrations, ``Horowitz said that the amount siphoned off 
by fraud could be anywhere from tens of billions of dollars to 
over $100 billion, but that it would be years before the final 
numbers were tallied. The issue, Horowitz said, was that the 
trillion-dollar programs had to get off the ground quickly to 
prevent potential economic collapse, but they lacked key fraud 
protections, including verification systems and information-
sharing with other agencies to match up Social Security numbers 
with people's names and birth dates.''
    So, I guess my first question, is that--that fairly 
accurately reflects what you testified to last week.
    Mr. HOROWITZ. It does.
    Mr. KUSTOFF. You testified that the fraud could be over 
$100 billion. We have heard a lot of numbers testified to 
today. In fact, it could greatly exceed $100 billion, right?
    Mr. HOROWITZ. I don't know. It could.
    Mr. KUSTOFF. I am a former United States attorney. Mr. 
Fitzpatrick is a former FBI agent. Mr. LaHood is a former 
assistant U.S. attorney. I think everybody here, hopefully on 
both sides, is concerned about the amount of fraud. When do we 
know that number? When will we know that number?
    Mr. HOROWITZ. I think it is going to be years to get a more 
precise number, exactly for the reasons you just read, which 
is--and as you know, having been a Federal prosecutor, and for 
anybody who has been in law enforcement, to find the overseas 
fraud is particularly challenging.
    Mr. KUSTOFF. Yes.
    Mr. HOROWITZ. You need to go through--you need the help of 
other countries to find the money, because it probably isn't in 
the United States anymore. It is probably somewhere overseas.
    Mr. KUSTOFF. Do you have an opinion whether the biggest 
fraud is committed by domestic entities and individuals, or by 
foreign entities?
    Mr. HOROWITZ. I think it probably depends on the type of 
scheme we are talking about.
    I think whenever you undertake programs like happened with 
the two programs last week, the SBA programs and the self-
certification here for some of the UI programs, you are 
inviting fraudsters to come in. They don't--they can be in the 
United States, they can be overseas.
    One of the things, by the way, we are looking at with the 
data analytics we are able to use, we are looking at IP 
addresses, now that we have that information. We are going to 
try and figure out how much of the incoming was from overseas.
    Mr. KUSTOFF. If I can, briefly, two more questions.
    Again, you cited the problems with the system. Essentially, 
the systems don't talk to each other. The--couldn't match up 
the Social Security numbers with people's names and birth 
dates. If we had another incident today like the pandemic that 
called for whatever relief, are those safeguards in place 
today?
    Mr. HOROWITZ. So, the good news is things are improving. 
The bad news is we are not there yet.
    And credit to many of the state workforce agencies that 
have come together to try and build identity verification 
systems and share information across their agencies, because, 
for unemployment insurance at least, we are dealing with 54 
different entities managed at the local level, and they need to 
work together better.
    There are efforts underway. There is a lot more that needs 
to be done to get there.
    Mr. KUSTOFF. Thank you.
    Mr. Chairman, if I can, just briefly?
    In your written report--we talk about the--that the PRAC is 
working collaboratively with Department of Justice, with the 
National Credit Union Administration, and other law enforcement 
agencies. You cite in your report that the data collection 
effort identified about $8.75 million that may be subject to 
recovery. I applaud that. But it is kind of a drop in the 
bucket.
    Do you have other programs with other fiduciaries, domestic 
banks, et cetera, larger financial institutions?
    Mr. HOROWITZ. That is what we are working with, and we are 
working with the Secret Service and other law enforcement that 
have been engaged with the financial institutions.
    As you know, people think of the Secret Service primarily 
as protecting the President and other dignitaries, but they 
actually have a major role in dealing with counterfeiting and 
other financial institution fraud. So they have got a lot of 
relationships. We are trying to leverage off of those in our 
work.
    Mr. KUSTOFF. Thank you, sir.
    I yield back. Thank you, Mr. Chairman.
    Chairman SMITH. Thank you, Representative. I am pleased to 
recognize the gentlelady from Wisconsin, Ms. Moore.
    Ms. MOORE of Wisconsin. Thank you so very, very much, Mr. 
Chairman.
    And I want to join the bipartisan rebuke of fraud. And I 
want to commend all of you for the efforts that you are making 
for recovery. And, you know, as a member, I am willing to 
explore ways to help with that recovery.
    As many of you have indicated in your testimony, written 
and verbal here today, this is not a new problem. We have heard 
various dates pushed out by many of my colleagues about when 
this started. But I was thinking that 2010 was when the GAO 
first gave us a warning that our systems were at risk.
    Is that right, sir, Mr. Dodaro?
    Mr. DODARO. Well, we have--I don't--no. The--what I said 
about 2010 was that the--New York's deputy comptroller notified 
New York State in 2010 that their systems needed to be 
improved.
    Ms. MOORE of Wisconsin. Right, okay, thank you for that 
clarification.
    And, you know, I am from Wisconsin, and I know that our IT 
systems go back to the 1970s. You know, there was a sharp drop 
in eligible unemployment recipients from, like 40, 50 percent 
to 28 percent. And what states like Wisconsin did, many states 
did, is their staff, their trained staff, was also reduced in 
proportion to that. So, no one was ready for this pandemic. 
That just left things open for fraud, I would think.
    And I would like to just get some clarification for Mr. 
Turner.
    You mentioned that, you know, a lot of the overpayments 
that we saw, and maybe even underpayments, were not people's 
faults, necessarily. They were states' faults, their 
administrative problems that they had, given this old 
technology and how overwhelming it was.
    I mean, we--you know, I have a report that I am going to 
ask to be entered into the record, and it talks about how, in 
Wisconsin, for example, that 80 percent of the people who 
called, they just let the phones ring because they couldn't 
respond to it.
    So would you agree that, really, stuff outside of--that, 
you know, states not implementing it, the Trump Administration 
not implementing your recommendations, that these things 
created a glide path for fraud?
    Mr. TURNER. Well, there was a lot of mistakes made from the 
states. In some cases, it was a lack of training----
    Ms. MOORE of Wisconsin. Yes.
    Mr. TURNER [continuing]. on the part of the staff.
    In the case of PUA, it was a lack of understanding the 
program in some cases. And therefore, that caused some errors.
    Ms. MOORE of Wisconsin. Right.
    But given that, I guess the other thing that I would like 
to know from you, with all of your experience, Mr. Dodaro, do 
you still stand by the statement that the U.S. Government 
Accountability Office reviewed 30 different empirical studies 
and concluded that UI benefits created overall economic 
stability and improved outcomes for individuals?
    Mr. DODARO. I do.
    Ms. MOORE of Wisconsin. Okay. And I just am sort of 
wondering, if we had not provided--you said you were there when 
Mr. Paulson showed up asking for that 700 billion. Do you think 
we could have had the same kind of catastrophic events, had we 
not have provided unemployment?
    Mr. DODARO. I think the--yes, we----
    Ms. MOORE of Wisconsin. The 54 million people. Okay, thank 
you.
    Mr. DODARO. Yes.
    Ms. MOORE of Wisconsin. Also, you did these 30 reports, and 
you said--you reported that 8 of the 12 studies reviewed 
discussed whether the benefits discouraged folk from returning 
to work, and they said no. Is that something that is the case?
    Mr. DODARO. That is what the studies concluded.
    Ms. MOORE of Wisconsin. Okay, very good.
    Well, anyway, I would like, before my time expires, to 
enter into the record a couple of documents, one from the 
Wisconsin Public Radio: Lives on Hold: Pandemic Exposes 
Failures of Wisconsin's Unemployment Insurance System. And 
really, there are so many sad stories.
    I have other sad stories I would like to enter into the 
record from my district office that talked about people just 
feeling almost suicidal and giving up hope of not getting their 
benefits.
    This particular publication talks about a man in Wisconsin 
who moved into his car because he--you know, he checked the 
wrong box. He said he was--he didn't know why he was let go of 
the job. So that just sent his application into weeks and 
months' long obscurity. And he was humiliated, as a man, that 
he had to move in with his ex-wife and her new boyfriend in 
order to survive. That is very humiliating, and I think I would 
like everybody to--share that story with everybody.
    Mr. Chairman, I would like to ask unanimous consent to put 
in the record Lives on Hold: Pandemic Exposes Failures of 
Wisconsin's Unemployment Insurance System, and some redacted 
copies of the--my constituents who were affected, and I 
appreciate it.
    Chairman SMITH. Without objection.
    [The information follows:]

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    Ms. MOORE of Wisconsin. Without objection?
    Chairman SMITH. Without objection.
    Ms. MOORE of Wisconsin. Thank you so much, sir, and I yield 
back.
    Chairman SMITH. Thank you, Representative. I would like to 
recognize the gentleman from Pennsylvania, Mr. Fitzpatrick.
    Mr. FITZPATRICK. Thank you, Mr. Chairman.
    Mr. DODARO, just to slightly revisit the issue of state 
waivers from a different angle, as was mentioned earlier, I 
believe, by one of my colleagues referencing the GAO report 
back in March of 2021, in that report you had discussed the 
issue of overpayments with the PUA program, and the report 
said, keying in on one provision there, it said the DoL did not 
have plans to collect data on states utilizing authority to 
waive Pandemic Unemployment Assistance overpayments or the 
amount of overpayments that the states may have waived.
    Obviously, it is concerning that the exact amount of loss 
due to fraud is not known for the reasons we discussed earlier. 
But just as far as having no information about states waiving 
overpayments, some of which may have been fraud, don't you 
believe that that information is, in fact, needed to 
effectively monitor and, ultimately, recover these 
overpayments?
    Mr. DODARO. Yes, absolutely. We recommended that the Labor 
Department require the states to report how much money they 
have recovered, how much they have waived, as well.
    And so, I am always wary of waivers. And I think it is 
important that the Labor Department have accurate information 
from the states to monitor that effort.
    Mr. FITZPATRICK. And any suggestion on a remedy there, 
moving forward?
    Mr. DODARO. Well, there just needs to be required reporting 
of that. I think that is just proper management of the program 
to be able to do that. And the Department ought to follow up 
with the states.
    And I think it is also appropriate to either have the state 
auditors, or perhaps at the Federal level, one of us do a 
sample of the waivers to make sure they were adequately 
supported during the process. So there needs to be----
    Mr. FITZPATRICK. Do you have the manpower to do that?
    Mr. DODARO. No, but we could find some way to figure out 
how to do it. But somebody ought to do it. I think state 
auditors would be in the best position to do that.
    In fact, I don't think the Federal Government uses state 
auditors as effectively as possible for either the unemployment 
insurance program or the Medicaid program, for that matter, 
because each state system is a little different.
    Mr. FITZPATRICK. Right.
    Mr. Turner, in your testimony you had updated your estimate 
of improper payments from roughly $163 billion to $191 billion, 
with a significant portion attributable to fraud. Your estimate 
uses DoL's reported improper payment rate of about 21-and-a-
half percent for fiscal year 2022.
    Understanding Mr. Horowitz's well-made point that tracking 
this stuff is incredibly difficult once it leaves our shores, 
it does require cooperation with foreign governments, it is 
incredibly challenging, nonetheless I think it exposes a 
massive vulnerability in our system to allow it to leave our 
shores in the first place.
    But to the extent you haven't addressed this yet, sir, 
explain why your estimate is so substantially different from 
the Administration's estimate of $104 billion.
    Mr. TURNER. Well, again, we take our rate from the 
Department. And based on what the Department gave us, 21.5, 
that is how we end up calculating it, the 191. So--and that 
is--they are the ones that is responsible, as the policy 
owners, to provide that rate. We can't develop it ourselves.
    Mr. FITZPATRICK. Has there been any discussion with the 
Administration of reconciling these numbers?
    Mr. TURNER. No, there has not been.
    Mr. FITZPATRICK. Okay. Mr. Chairman, I yield back.
    Chairman SMITH. Thank you, Representative, and I recognize 
the gentlelady from New York, Ms. Tenney.
    Ms. TENNEY. Thank you, Mr. Chairman, and thank you to our 
witnesses. I really appreciate you drilling down on these 
numbers.
    I am actually a small business owner in upstate New York. 
Our business is in our 77th year, and we were greatly impacted, 
and been continually impacted, like all of our friends in 
business in New York by unemployment insurance, by the 
mismanagement of New York through a series of governors here, 
and by--and I think it is fantastic that the chairman is doing 
a much-needed look into this, and having you gentlemen with 
your expertise here to do this.
    And, you know, our taxpayers, our employers, our employees 
have paid the price for this fraud. And I just thought, you 
know, there are so many numbers being thrown out here, and 
since, you know, one of my favorite authors was Mark Twain, he 
made a famous statement I am sure all of you in the accounting 
business knows. There are three kinds of lies: lies, damned 
lies, and statistics. Thank you, Mark Twain, who is buried in 
New York State, for that.
    But there are a lot of numbers being thrown around. And I 
refer initially to the comments from the ranking member about 
the unemployment. And sometimes these are misleading. There is 
economic hardship right now in New York State. And you would 
think that, you know, with 3.7 percent, that 96.3 percent of 
the rest of the country are all working, which--we know that is 
not how the numbers are calculated. So that is why we need to 
drill into these statistics.
    But one of the things I wanted to talk about is the recent 
findings from the GAO. And I am going to address my first 
question to you, Mr. Dodaro, is that there was an estimate of 
fraud and--and, you know, you have answered this--$60 billion, 
with some outside experts going as high as $400 billion. We 
have heard $180 billion.
    But the New York fraud alone is estimated at about $11 
billion, and that is for fraudulent unemployment benefits since 
March 2020. In fact, the survey I conducted among my 
constituents and employers was that countless cases of 
individuals have received unemployment forms they hadn't 
requested, they have dealt with--these--they have dealt with 
these ramifications without having any verification. The 
payments were made, there was no look back to the employers as 
to whether these people were actually employed, and many of 
them were actually my family members, who were still gainfully 
employed. And so, many of these problems continue to persist in 
New York. And I thank you for calling out New York for some of 
their systems.
    But on top of that, the--New York State has an outstanding 
trust fund loan of nearly $8 billion, which it has yet to 
repay. Because of this gross mismanagement by the state, 
taxpayers, small businesses now have to make up that 
difference. And this has been devastating to especially the 
smaller employers, especially restaurants forced to close 
during the pandemic.
    And after all these hardships for the past couple of years, 
I just wonder how it could possibly be fair to now foist this 
tab for this negligence and incompetence, as you pointed out, 
on New York taxpayers, on our employers who can really--really 
cannot afford to keep this, and so many of them have closed.
    So, I wanted to follow up with you on how--I want to make 
sure that our Federal policies are no longer allowing this 
reckless behavior by irresponsible governments like New York 
State, which you keep pointing out. And I know that my 
colleague from--Mr. Higgins mentioned this, and alluded to 
this, as well. But my question to you is that--is there a 
recommendation from the GAO, the Government Accounting Office, 
issued to the Department of Labor that has not been implemented 
that would address these concerns?
    And is there a mechanism to compel New York to prioritize 
repaying this $8 billion of unemployment insurance loans, 
outside of, say, an automatic increase in the state business 
taxes, which would make us have even a larger out-migration of 
people and jobs in our state?
    Mr. DODARO. Yes. Well, there is a set of--we have 19 open 
recommendations to the Department of Labor. Eight of them focus 
on the fraud areas. The--there is a set that focused on the 
need to transform the unemployment insurance program itself to 
make it more effective. That may go to this issue of incentives 
in the state.
    One of the observations that I have had over the years is 
where we are relying on states to administer Federal programs. 
There is often a lot of deferential latitude that the Federal 
Government gives the states to implement the programs. There is 
not a lot of aggressive Federal oversight that is needed, and 
it doesn't really come vividly clear until you have these types 
of circumstances in place.
    You know, in good times we rely on the states to take, you 
know, administer these programs, and give them a lot of 
flexibility. But there needs to be a better balance between the 
Federal responsibilities and the states', and the Federal 
Government has to have additional responsibilities.
    Now, the $8 billion, the states are allowed to borrow from 
the Treasury Department when they run out of money. And then, 
you are right, it has to be paid back by the employers within 
the state. So that is left to the states' own devices on how 
they decide to repay that money back to the Federal Government.
    Ms. TENNEY. Well, thank you. Can I just clarify one thing?
    The fraud risk assessment framework, is that what you were 
talking about with the 19 recommendations?
    Mr. DODARO. That is eight of them.
    Ms. TENNEY. Eight of them, okay.
    Mr. DODARO. Eight of the nineteen. The other ones go to the 
need to transform the whole program to make it much more 
modern, efficient, and meant to deal with our modern economy.
    Ms. TENNEY. Thank you. And please send that message back to 
the New York State government now to save our employers. We 
really appreciate that recommendation. It is 13 years ago now 
since you made that. Thank you.
    Chairman SMITH. Thank you, Representative. I would like to 
point out that your favorite author, Mark Twain, is a good 
Missourian from the Show-Me State who wrote his life about the 
Mississippi in our congressional district.
    So, I would love to introduce--recognize the gentleman from 
Michigan, Mr. Kildee.
    Mr. KILDEE. Thank you, Mr. Chairman. And to our witnesses, 
thank you for your participation and your service to our 
country.
    As the nation responded to the coronavirus pandemic, 
workers and families, as we all recall, so painfully stayed 
home in order to stay safe and to keep their families safe. 
Many lost their paychecks and their livelihoods virtually 
overnight, through no fault of their own. In my home state of 
Michigan, unemployment rose to 24 percent in April of 2020, 
just 2 months after former President Trump declared the health 
emergency.
    In response, uninsured--unemployment insurance claims 
spiked at over 388,000 per week, compared to the previous peak 
of 77,000 during the Great Recession. That is why, thankfully, 
Democrats and Republicans jointly acted swiftly to pass 
bipartisan legislation to get these necessary benefits in the 
hands of hard-working Americans as soon as they possibly could. 
Both parties came together to pass and extend these critical 
benefits through legislation such as the CARES Act.
    Now, looking at the continued economic growth that our 
country has had, these benefits did help millions of people, 
preventing them from losing everything they have worked for, 
and precipitating a larger crisis. The GAO has highlighted that 
these payments helped keep our economy afloat and improve the 
labor market. Unemployment insurance kept money in people's 
pockets, and prevented our country from falling into much 
deeper economic demise.
    Now, some have argued that these benefits disincentivized 
workers and caused--are causing the labor shortage, despite the 
fact that benefits expired in September of 2021. The latest 
jobs report, obviously, would indicate otherwise.
    In February of 2023, the Department of Labor reported that 
unemployment was at 3.4 percent, the lowest since 1969. And I 
recognize the distinction when it comes to labor participation 
rates, but you just have to look at the data and see that labor 
participation rates are really less than a point off where they 
were three years ago, at what many would have considered to be 
peak economic activity.
    Now, the economy grew at 2.9 percent last quarter, more 
than 12 million new jobs created in just the last 2 years. Not 
only were these benefits good for the economy, they were a 
lifeline for workers when they most needed it. People were 
worried about putting food on the table, keeping a roof over 
their head, paying for basics like medicine.
    I would like to just mention, you know, these are human 
stories. My own constituents benefited from these important 
benefits supported, again, by both sides of the aisle. Cathy 
and Timothy from Flint told me that the payments were hugely 
impactful. Timothy was a musician at weddings and festivals and 
corporate events. Cathy's job in health insurance, they were 
able to provide and care for their oldest daughter as a result 
of these benefits. Timothy often worked nights to make sure 
that he did not have to hire a caregiver.
    These benefits made a difference. People like Carla in Bay 
City, a self-employed cosmetologist, but due to the pandemic 
she lost her main source of income. Without these benefits, she 
would have been in a very difficult position, would have lost 
everything she has worked for.
    Those are just a couple of the instances. And of course, we 
all know, all of us have had literally thousands of these cases 
come before us.
    No one, I think, ever should indicate that we think this 
system worked perfectly. We know of these difficulties. We know 
of the problems, and they are real, and they are serious, and 
absolutely have to be addressed. But I do think it is important 
that we not fall into the trap of somehow conflating the 
bipartisan decision that we all made to make sure that these 
benefits were quickly delivered to people at a time when, in 
order to protect themselves, they had to stay at home.
    Now, there is a debate in some revisionist history about 
just how difficult those moments were. We didn't know what the 
future was going to be. Fast forward, a million Americans died. 
It would have been millions more, had we not allowed people to 
make the decisions that they needed to do to protect themselves 
without having to lose everything that they have worked for.
    So, let's pledge that we will work to fix these problems. 
Let's pledge that we can come together to try to address these 
issues of fraud. The money was stolen not just from the 
taxpayers, but actually from needed help to additional workers. 
We need to go after this. But let's not mistake--make the 
mistake of somehow deciding we never should have done this in 
the first place, we never should have supplied this help. We 
certainly should have. And now we need to do what we can to 
make sure that we can reclaim the integrity and the aspects of 
the program that actually failed.
    So, with that, Mr. Chairman, thanks for holding this 
hearing. I yield back.
    Chairman SMITH. Thank you, Representative. I recognize the 
gentlelady from the State of Minnesota, Mrs. Fischbach.
    Mrs. FISCHBACH. The desks are so big, it is hard to reach. 
But thank you, Mr. Chair.
    And I just think Mr. Kildee had said a couple of the things 
about the dollars being stolen from the taxpayers, from the 
hard-working taxpayers. You know, and I think it bears saying 
it again and again, where that money is coming from, because I 
think the--Chair Smith had talked about, you know, the hard-
working families that this--these money came from, and I think 
it is important that we remember that while we are having these 
discussions.
    But I just wanted to, you know, ask a little bit. Mr. 
Turner, your testimony notes that DoL provided $1.3 billion for 
states for UI modernization, including IT modernization, and of 
the funds spent, however, states did not always take advantage 
of the opportunity to modernize their IT systems. Is that 
correct?
    Mr. TURNER. That is correct.
    Mrs. FISCHBACH. And do you know why that is, why they 
didn't take advantage of it?
    Mr. TURNER. In some cases, it was reported that some of 
these systems were so old that they did not really mesh well 
with the CARES Act in some cases. But the states that did use 
it showed benefit from doing so.
    Mrs. FISCHBACH. Well, so is there something more that we 
can use?
    I mean, so those dollars are still sitting there?
    Mr. TURNER. Yes, yes, those dollars are still there. And 
let me just share with you. During the Recovery Act, there was 
$7 billion that was dedicated for modernization, IT 
modernization. And of that, there was about two billion that 
was used for something other than that. And it was allowed at 
that time. But it just shows you just, for some reason, it has 
not been a priority for states when it comes to modernization. 
And that is one of the reasons that we have paid the price that 
we have.
    Mrs. FISCHBACH. So is--do you think there is anything that 
we can do to encourage them to use those dollars so that we do 
modernize those?
    Mr. TURNER. Well, I think one of the things the Department 
is doing is with performance measures they are using and 
keeping it as part of their top priorities.
    But I think just more emphasis on that, and continued 
emphasis will make a difference.
    Mrs. FISCHBACH. Is there anything in--that is attached to 
that money that would prevent them from using it now?
    I mean--or is it going to be taken back, or----
    Mr. TURNER. Well, some of that--well, first of all, they 
have established an IT modernization office. And I think part 
of that is going to help them provide the oversight that is 
needed by the Department.
    Mrs. FISCHBACH. Okay, all right. All right. Well, thank you 
very much.
    I also wanted to touch base with Mr. Dodaro about the--you 
have got 10 points. And I know that we have talked a little bit 
about the legislation--or at least the proposals that you had, 
and I looked over the 10 issues you had for congressional 
consideration. And I am just wondering if you wanted to expand 
a little bit, but--on some of those.
    But the other issue I--if these had been enacted, what kind 
of reduction to the fraud do you think would have happened?
    I mean, would they have had a direct result of stopping 
some of that?
    Mr. DODARO. If effectively implemented, they would have had 
a material effect. I don't know exact--I can't put a number on 
it.
    But for example, the one recommendation that the improper 
payment estimate be made in the first year of the program, the 
PPP program didn't estimate improper payments until 2022. The 
pandemic unemployment insurance program still hasn't. Even 
though it has ended, it still doesn't have an improper payment 
estimate. If you had had estimates earlier, you would have been 
able to take more forceful actions, and put things in place, 
and compelled the states to focus on those issues earlier.
    You know, the anti-fraud strategy that we have in place in 
the Paycheck Protection Program, they didn't designate an anti-
fraud dedicated entity until February 2022, when the program 
was almost finished. They didn't do a fraud risk assessment 
until well into 2021, almost the end of the 2021. The Labor 
Department still hasn't implemented the anti-fraud 
recommendations that we have to them.
    So, a lot of these things would have had a good effect, had 
they been put in place. That is why we are urging Congress to 
pass these legislative improvements.
    But I would say also to this committee that, unless there 
is sustained leadership attention at the Labor Department and 
effective working relationships with the states combined, 
combined with strong congressional oversight, these reforms 
won't be effectively implemented.
    Mrs. FISCHBACH. Thank you very much.
    Oh, and Mr. Horowitz, you had something?
    Mr. HOROWITZ. Can I add on to that? It not only would 
involve fraud prevention, but you would have better delivery of 
service to the people who are entitled to the benefits, more 
prompt payment, reduction in identity theft--think about how 
many people are dealing with identity theft issues now, as a 
result. All of those cascades from improving IT modernization, 
taking the steps that GAO has recommended.
    Mrs. FISCHBACH. Thank you very much.
    And I have eight seconds. I will--or I went over, so I 
yield back. Thank you.
    Chairman SMITH. Thank you, Representative. I recognize the 
gentleman from Utah, Mr. Moore.
    Mr. MOORE of Utah. Thank you, Chairman and Ranking Member. 
The work here we are doing is very important, and I believe our 
dialogue, while some differences, really has shone a spotlight 
on our joint concern about fraud, right?
    And I appreciate, more importantly, the witnesses--we have 
all gotten the chance to get up and take a few meetings and a 
few breaks--for sticking it out for a very long hearing. So, 
thank you for that.
    Fortunately, so for some positive here, there are lessons 
that we can learn from states that have managed this very well. 
In Utah, where I represent, fraud overpayments represented less 
than one percent of benefits paid. I am incredibly proud of the 
work done by our former governor, Gary Herbert, Governor 
Spencer Cox, their administrations, and the Utah state 
legislature to create systems and processes that protect 
taxpayer dollars. That is our most sacred responsibility, I 
believe, back here in this Federal role.
    And Congresswoman Spanberger and I have introduced the 
Preventing Improper Payments Act, and--which we prepared 
following an excellent study by the GAO about how we can 
safeguard taxpayer dollars and prevent more waste, fraud, and 
abuse in the future.
    Mr. Chairman, I would like to submit for the record a 
report from the Pandemic Response Accountability Committee 
called Pandemic Unemployment: How Much Has Been Paid to 
Fraudsters.
    Chairman SMITH. Without objection.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. MOORE of Utah. Thank you. This report is yet another 
demonstration of how much we don't know about the size and 
scope of this fraud.
    Many states have produced separate reviews on their own UI 
programs, and these reviews have sometimes included individual 
state estimates of fraud and improper payments, and up to 21 
states--this report tracked 21 states have reported 
approximately $58 billion in fraud estimates across these 
programs. And that is information that we have from less than--
again, less than--half of the states. So if state auditors are 
coming up with those large numbers, I do believe that the 
national estimate of $60 billion GAO reported is quite low.
    Mr. Horowitz, I have a question for you. In these state 
reports, do we know how much of the funding identified as 
improper payments or fraud was Federal dollars?
    Mr. HOROWITZ. So, for several of the pandemic programs, it 
is Federal dollars that flowed to the states. There were other 
parts of legislation enacted that were to fund and to support 
already-existing state programs. So, most of it is going to be 
Federal money. Some of it could be mixed in with state money. 
And, as you indicated, what we found was that the work of the 
state auditors was critical to this effort, but states were 
calculating fraud numbers in different ways.
    So, I would have--we would have to go through state by 
state to break that down.
    Mr. MOORE of Utah. Yes, excellent. My--the gentleman from 
Oklahoma highlighted something that I think Utahns feel a lot 
of times. We try to run things as responsible as we possibly 
can. I know there is a good faith estimate from a lot, but we 
do, Utahns often times feel like why, if we are being so 
responsible and have the data to show some of this, why can't 
other states figure this out? It is a continual frustration, 
and it is something that I hope to represent and shine a light 
on.
    My estimation--my understanding was that approximately 76 
percent was Federal dollars. So, we are talking a total of 
close to close to $700 billion. I mean, these are sizable 
numbers. These are deficit-reducing opportunities for us, which 
is a huge responsibility of this committee, is to be able to 
find ways to reduce deficits. There is significant bipartisan 
opportunity, and we hope to be able to do that with this. We 
will keep working on it.
    Do you get a sense how--to what level are you confident 
that states are going after this money and recovering it?
    Mr. HOROWITZ. I think a lot of the dialogue has moved in a 
positive direction over the last several years, from the state 
workforce agencies in particular. We are seeing a lot more 
effort to work together to do the kind of cross-border work 
that needs to get done, and interactions with state auditors 
because they are so central to this process, and important.
    Mr. MOORE of Utah. And the Department of Labor's role, 
where would you--how would you describe, or kind of like--I 
want to make sure that they do their role as much as possible.
    Mr. HOROWITZ. So, I am going to defer to the IG there on 
that.
    Mr. MOORE of Utah. Please.
    Mr. TURNER. Repeat the question, please.
    Mr. MOORE of Utah. Just to what extent would you put the 
Department of Labor responsible and involved in making sure 
that states can go after and recover as much of these funds as 
possible?
    Mr. TURNER. Oh, they are very responsible and involved.
    I think one of the things that they began to take advantage 
of is what we have kind of requested before, that people get 
more data access to IG, OIG. And once that began to happen, we 
began to see some improvement.
    Mr. MOORE of Utah. Excellent. There is another quick 
question to Mr. Turner, actually, about entrepreneurs, and they 
were at risk of being targeted quite a bit for some of this 
fraud. And we want to make sure that we are protecting that 
side of it, and making sure that those that are honest, doing 
the work that they need to do, that they have that capability.
    Are there any measures you recommend to help implement--to 
prevent fraud without penalizing these entrepreneurs?
    Mr. TURNER. Well, I will be a little premature in speaking 
to that now, because we actually have work going on to take a 
look at that. And then I should be able to provide the 
committee something in the future.
    Mr. MOORE of Utah. The whole point of this is to make sure 
we do this better, we shine the light, and keep working on it. 
So, thank you for your time.
    Chairman SMITH. Thank you, Representative. I recognize the 
gentleman from Virginia, Mr. Beyer.
    Mr. BEYER. Mr. Chairman, thank you very much, and thank you 
for holding this hearing.
    Thank you for hanging in there.
    I am so glad that we are holding a hearing on the 
unemployment system, which has long been neglected and 
underfunded by Federal and state policymakers. I can tell you 
that, like many of the colleagues here, at the height of the 
pandemic that is all we did was chase down unemployment 
insurance claims.
    I think--you know, and every story was distressing. Each 
one was grimly similar, that the enhanced UI payments were 
literally the only thing that allowed ordinary Americans who 
lost their work through no fault of their own to pay their 
bills, to buy groceries, to support their families.
    We had myriad constituent cases, I think well over 1,000 
just in the first couple of months, that we are wrestling with 
in Virginia with an antiquated and over-burdened state 
employment commission, and it just emphasized to me how 
important it was to have a program like this in a time of 
crisis.
    At the time, I was chairman of the Joint Economic 
Committee, a bipartisan, bicameral--a great honor. And one of 
the things we did was talk to the smartest economists across 
the board, Democrat, Republican, you know, conservative, 
liberal about what to do. And everyone started with the 
unemployment insurance system and the enhanced unemployment. It 
became really clear that this work was essential to the 
recovery.
    You know, you have heard, I am sure, through many different 
witnesses that no other country in the world has recovered as 
quickly from the pandemic economically, as we, with still have 
a ways to go.
    UI kept millions of Americans out of poverty, it saved 
countless jobs, and prevented home foreclosures, which 
obviously destroyed us in 2008 and 2009, and has set the stage 
for this historically low unemployment, 54 years, steady GDP 
growth and, although there is still a ways to go, slowing 
inflation.
    Every Thursday at 5:00, the governor of Virginia held a 
conference call with all the Democratic and Republican members 
of the Virginia delegation. So, Morgan Griffith from southwest 
Virginia to Tim Kaine. And we each got our three or four 
minutes with the governor. And virtually every conversation was 
about the broken UI system. And he would have to explain that, 
in Richmond, the software was from 1980, the codes were--nobody 
knew anymore, and the hardware was from 1980, and that they 
were doing the best they could with--but they had not--you 
know, in January of 2020 they hadn't expected the incredible 
deluge that they had.
    So right away, we tried to go to work and say, look, 
let's--as we are handing money out, let's make sure that we are 
giving a lot of money to the states, Democratic and Republican-
led states, to invest in their UI systems, so that if this ever 
happens again, we can be ready.
    So, Mr. Turner, a softball question. Would investing in 
highly trained state UI staff and better computer systems help 
prevent the fraud that we were talking about today, and ensure 
that the benefits are paid on time?
    Mr. TURNER. No doubt about it. That is something that we 
have included in our recommendations in the past.
    Mr. BEYER. That is a very short answer, thank you. 
[Laughter.]
    Mr. BEYER. That is about the shortest I have heard in my 
four years on the Ways and Means.
    Mr. Horowitz, a similar question. And you mentioned that 
multiple states experienced issues verifying eligibility for 
benefits. That was a huge one for us. People would be ruled 
ineligible, and that would take them weeks or months to be able 
to prove their eligibility, and long delays because of that.
    One of the things we provided in the American Rescue Plan, 
which half of us like, was upgrading antiquated state UI 
computer systems. How important is that investment for the 
fraud that we are talking about?
    Mr. HOROWITZ. It is critical. The states, as you indicated, 
the situation with Virginia, it is not alone. It is a problem 
across the country. States need to upgrade their IT systems.
    We have moved light years in just the last several years on 
the ability to do verification, identity verification. And so, 
systems has to--have to catch up.
    Mr. BEYER. Great, great. Well, I still have a minute left, 
which I will yield back.
    And I want to thank you for showing up, and for helping us 
get our hands around this, balancing both the need to preserve 
every possible taxpayer dollar from fraud, but also making sure 
that we are supporting the American citizens who look to us.
    Mr. Chairman, I yield back.
    Chairman SMITH. Thank you, Representative. I recognize the 
gentlelady from the State of California, Mrs. Steel.
    Mrs. STEEL. Thank you, Mr. Chairman, and I want to thank 
the witnesses for being here today, and all--for all the work 
you have done to shine a spotlight on this important issue. 
Today's hearing is about fraud, and this lost funds actually 
came from hard-working taxpayers, and it should not happen 
again.
    Last Congress I led an effort to recover funds, prevent 
fraud, and support the victims of unemployment fraud and 
identity theft. Along with Speaker McCarthy I introduced the 
Pandemic Unemployment Assistance Fraud Protection Act. My bill 
would create an incentive structure to encourage states to 
recover fraudulent unemployment payments, require states to 
revamp and improve fraud prevention efforts in the unemployment 
program, and include necessary protection for victims, those 
innocent taxpayers who receive 1099K without receiving these 
employment payments--unemployment benefits fraud.
    My constituents, Californians, and Americans who actually 
need unemployment assistance should be the ones who receive it, 
not criminals.
    California was one of the biggest targets for this fraud. 
The State of California Legislative Analysis Office reported 
that $18.7 billion, 94 percent of unemployment insurance 
benefit fraud, may have occurred in the federally funded 
unemployment program. An estimated $20 billion in potentially 
fraudulent unemployment payments are still under investigation.
    Mr. Chairman, I would like to submit for the record for--a 
report by California State Auditor issued in January 2021.
    Chairman SMITH. Without objection.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mrs. STEEL. This report found significant weaknesses in the 
Employment Development Department's approach to fraud 
prevention, which led to billions of dollars in improper 
benefit payments. According to the report, EDD paid $1 billion 
of $11 billion, in part due to a problematic decision to 
streamline its process by removing a safeguard against paying 
individuals with unconfirmed identities.
    EDD, which was led by current Department of Labor Deputy 
Secretary Julie Su, issued the payments to those claimants with 
unconfirmed identities before discovering it had removed the 
safeguards for more than a four-month period. And believe it or 
not, she was just named then Acting Secretary of the Department 
of Labor, so somebody who messed up in California's EDD 
problems.
    California made it easy for fraudsters access benefits, and 
that had devastating consequences for my constituents. We 
should all be on the side of good governance and protection of 
taxpayer money, and the billions in fraud paid out over the 
last two years is an embarrassment.
    Mr. Turner, last October your agency issued a report 
finding that nearly half of the pandemic unemployment benefits 
may have been improperly paid, with 1 in $5 going to 
fraudsters. California was one of the worst states you looked 
at. One of the things your report looked at was timeliness of 
the payments.
    I share the concerns voiced by my friends on the other side 
of the aisle about ensuring equity and access to benefits. That 
doesn't mean we should prioritize speed over safeguards just to 
get money out the door quickly. California stories show how 
unfair and unjust the consequences can be for taxpayers and 
workers.
    Mr. Turner, can you talk about best practices, and what 
needs to be done to modernize systems to ensure states have the 
proper verification up front?
    Mr. TURNER. Yes, and thanks for the question. I think one 
of the things that we don't do enough and utilize enough is 
data analytics. Data analytics has helped us. It has been a 
game changer and a force multiplier, and it was one of the 
things that allowed us to identify the $45.6 billion in fraud 
from those 4 high-risk areas that I mentioned earlier. So that 
is one thing.
    I think also maybe we need to look at probably a central 
database. One of the things that helped this fraud get 
perpetrated was the fact that every state, all 53 states or 
entities, operate different systems. So, there was not enough 
cross-checking to basically catch some of that fraud early on.
    Mrs. STEEL. So how are you going to make it easy between 
California--especially California is the highest amount, that 
fraudulent amount that, you know, you found out. So how are you 
going to work with the state and Federal Government?
    Mr. TURNER. Well, just giving guidance from our reports as 
far as what needs to be done to be improved. I think that is a 
big start.
    And just emphasizing working together, and coming up with 
maybe one system, because right now the biggest challenge for 
the OIG is data access. And so--and that is what I believe 
slowed us down in identifying some of this fraud earlier.
    Mrs. STEEL. Thank you very much.
    I yield back.
    Chairman SMITH. Thank you, Representative. I would like to 
recognize Ms. Van Duyne from the great state of Texas.
    Ms. VAN DUYNE. Thank you very much, Mr. Chairman. Thank you 
for holding this hearing, as well.
    As my colleagues have already alluded to, this hearing is 
long overdue. It is entirely unacceptable that it took a change 
in control of Congress to investigate the greatest theft of 
taxpayer dollars the United States has ever seen. And yet this 
Administration has not shown an ounce of care.
    Behind me I want you to look at the estimates of immensely 
irresponsible amounts of fraud and improper payments. The fact 
that the Biden Administration can turn a blind eye to this dire 
level of fraud raises questions that there is no end in sight.
    OMB estimates an appalling $104 billion of potential fraud. 
Let's put that into perspective, because we have been throwing 
out numbers like they don't mean anything: $104 billion, that 
is a level of spending that is equal to the entire budget of 
the Department of Veterans Affairs, the entire budget. But it 
is also thought by a number of professional auditing agencies 
that that number is worse. It is four times that amount. It is 
up to $400 billion.
    And not only is this the greatest theft of taxpayer money, 
but it is borderline criminal, and certainly pure incompetency. 
The oversight of this money is an absolute dumpster fire being 
put out by a fireman with a garden hose.
    Mr. Turner, you mentioned that you had sent correspondence 
to the Trump Administration about some of these concerns. Have 
you also sent correspondence communications to the Biden 
Administration?
    Mr. TURNER. Yes, we have.
    Ms. VAN DUYNE. Do you think--do you have any reason to 
suspect that there was fraud, abuse, potential outlays of 
dollars that were improper after January 20th of 2021?
    Mr. TURNER. Yes, there was.
    Ms. VAN DUYNE. I appreciate you saying that, because I 
think members on the other side of this aisle need to hear 
that. We have, in the last two years, experienced a lot of 
fraud. We are talking about $400 billion that, to the people 
that they claim that they want to help, that dollars could have 
gone into those pocketbooks.
    We just released--just because they are saying that this 
happened under the Trump Administration does not release 
Congress from its duty to be able to protect those dollars. We 
have to admit that there have been problems under both 
administrations, right? We can't just stick our head in the 
sand and blame Trump for everything, and pretend, like we heard 
last night, that everything under this Administration is rosy 
and perfect.
    We have an opportunity right now today to have an honest 
discussion. You would assume that getting down to fraud and 
abuse and saving taxpayer dollars for those people who need it 
the most would be a bipartisan effort.
    All of you are well versed. You have done a tremendous 
amount of investigation. You have got solutions on the table 
that you want to present to us today. But instead, we are 
hearing about the witnesses who aren't here, the stories of 
people who have used unemployment. We understand it was used. 
It was used by people who needed it the most. But we also 
understand up to $400 billion was misused, and we need to get 
down to that.
    And I have got some questions. I know during my time on 
Small Business that there were issues with PPP and EIDL, and we 
thought those dollars were being spent overseas illegally. Do 
we know how much money went to international organizations and 
foreign actors?
    Do we know if this money fell into the hands of terrorist 
organizations?
    And can we track how much money actually went overseas?
    And probably the biggest question I have got for any of 
you: Do we have any hope I have ever seen these dollars again?
    Mr. Dodaro.
    Mr. DODARO. History will tell us that there will be a very 
low percentage that would likely be recovered from fraud. And 
that is just the fact of the matter.
    Ms. VAN DUYNE. Mr. Turner.
    Mr. TURNER. I would agree. And let me just say it is going 
to take a while. As you know, the--a lot of the fraud is still 
out there. We still have 162 open investigations that we 
haven't looked at. And so it is going to actually take quite a 
while to ever figure out exactly how much.
    Ms. VAN DUYNE. Mr. Horowitz.
    Mr. HOROWITZ. The recovery rate is clearly going to be far 
below what the fraud rate is. Having said that, the public 
should know we are going to do everything we can in our powers 
to try and track down and find every dollar. And Congress has 
given us tools to do that. We are asking for some more, and we 
are going to do everything we can.
    We are going to also, by the way, use suspension and 
debarment authorities and others to try and make sure that 
crime doesn't pay to the best extent possible we are able to do 
it.
    Ms. VAN DUYNE. Do you think it is important to us that we 
start that as soon as possible, and not have kind of this 
political theater?
    Mr. HOROWITZ. Oh, absolutely. Look, this--and we are doing 
it. We have been doing it for three years, and we are going to 
keep doing it.
    Ms. VAN DUYNE. I appreciate that answer. Thank you very 
much.
    And I yield back.
    Chairman SMITH. I want to thank the gentlelady and 
recognize the gentleman from Pennsylvania, Mr. Evans.
    Mr. EVANS. Thank you, Mr. Chairman. Mr. Chairman, my 
comments will be to the point.
    First, I want to thank the ranking member for what he has 
said, because I believe he has summed it up. And when you talk 
about just the facts, that is what I believe that it should 
come down to. That is where I believe that we are.
    So, I encourage my colleagues to consider these distressed 
constituents, and remember that unemployment insurance saved 
the economy and kept families out of poverty. So, I believe 
that what he said, he summed it up.
    And I yield back the balance of my time.
    Chairman SMITH. Thank you, I thank the gentleman. I 
recognize the gentleman from Iowa, Mr. Feenstra.
    Mr. FEENSTRA. Thank you, Mr. Chairman Smith. Thank you also 
to each of our witnesses for your testimony. I greatly 
appreciate it.
    Obviously, we have talked about, you know, what has 
happened at the height of the pandemic, with 15.4 percent 
unemployment, 23 million people unemployed. The circumstances, 
obviously, demanded a resolution, and we did that. But with 
that created risk. And now we are responsible. We are 
responsible for oversight of the risk that occurred in giving 
these unemployment benefits.
    What is interesting to me is that we never had oversight, 
or never had hearings in 117th Congress, despite the warnings 
that were noted last March from the Department of Labor that we 
had $163 billion of improper payments.
    So, I am grateful. I am very grateful and thank Chairman 
Smith for holding this hearing. And I also want to thank you 
again as witnesses for doing so and being part of this.
    Mr. DODARO, it is very important, I think, that we continue 
to assess the exact scale of the problem. I mean, we really 
need to know the exact scale. And I know you have been working 
on that. I greatly appreciate it.
    The GAO's report last month noted that this is a little 
difficult concerning the false positives and false negatives. 
We are not sure. Also, due to the lack of consistent and 
reliable estimates that cover all UI payments during the 
pandemic, it is not currently possible to combine existing 
estimates and measures to make a meaningful statement about the 
extent of fraud and UI programs during the pandemic.
    So, in your testimony you noted GAO has committed to build 
on existing evidence with its own modeling to calculate a more 
precise estimate. Can you talk about that?
    How do we refine our estimate, and what would be the 
barriers in refining that estimate?
    Mr. DODARO. Well, first, the Labor Department, for a number 
of years, has what is called the--the acronym is BAM, Benefit 
Accuracy Measurement program. So, they estimate a national 
fraud rate and a national improper payment rate. So far, they 
have not measured the improper payment rate for the pandemic 
unemployment insurance program. That was the one for self-
employed people, a brand-new program. We all think that the 
rate, fraud rate, is higher for that program than probably the 
more traditional unemployment insurance program because there 
was--allowed for self-certification rate.
    So, what we are trying to do is to look at that program, in 
particular. We will see what the Labor Department comes up with 
their estimate, which is due this year, and then we will do 
some sampling of that particular program. We are going to look 
and do some modeling of other areas. So, we are going to take a 
modeling approach. We are also going to try to sample some of 
the estimates.
    Mr. FEENSTRA. Yes.
    Mr. DODARO. And it is important to remember that our 
estimate of 60 billion is the low end.
    Mr. FEENSTRA. Correct.
    Mr. DODARO. We have said that that is the low end. We are 
working on a higher rate now.
    Mr. FEENSTRA. So, when do you think you can have a more 
accurate number? At what point----
    Mr. DODARO. I mentioned earlier late this summer.
    Mr. FEENSTRA. Late this--okay, late this summer, okay.
    Mr. DODARO. Late this summer. If we do it earlier, I will 
obviously let you know.
    Mr. FEENSTRA. Yes.
    Mr. DODARO. But I think it is important----
    Mr. FEENSTRA. It is.
    Mr. DODARO [continuing]. to note that there are a lot of 
numbers out there.
    Mr. FEENSTRA. Yes.
    Mr. DODARO. But they are all bad.
    Mr. FEENSTRA. I hear you. An accurate number would be 
wonderful. Then we know what we are dealing with, right?
    So, another question. So, I come out of State of Iowa. I 
was chair of ways and means. I handled unemployment, the tax 
tables and stuff like that, understanding the nuances of 
unemployment tax. So, when I look at empowering state auditors, 
I really think we can do this. I think we can use state 
auditors, but we have got to empower them.
    So, Dodaro, and even Mr. Turner, what are your ideas to 
empower them? Because they are just not going to say, oh, I am 
going to do this, right? I mean, they could care less about the 
Federal Government. It's like--but we can do things to empower 
them. What are your thoughts on that?
    Mr. DODARO. I think we should have specific audit 
requirements for state auditors to look at the unemployment 
insurance program and the Medicaid program. These are two 
programs on our high-risk lists. Medicaid is one of the 
fastest-growing programs.
    Right now, there is hardly any auditing done of the managed 
care portion of Medicaid. And----
    Mr. FEENSTRA. But do they care? I mean, I look at the state 
going--and they are--I mean, I--we use our tables, and it is 
like, what do we care about--why should I do this for the 
Federal Government? I mean----
    Mr. DODARO. Well, but I think in both of those programs 
states provide their own money.
    Mr. FEENSTRA. Yes, right, that is true.
    Mr. DODARO. And so there are some incentives for them. I 
mean, the Medicaid program is probably a third of each state's 
budget, at least, in the program.
    Mr. FEENSTRA. Right, right. So, do you think that is enough 
carrot? I mean, I just----
    Mr. DODARO. Well, all you got to do is turn an auditor 
loose, and you give them some money to pay for----
    Mr. FEENSTRA. There is the key. You hit it on the head. You 
give them a little incentive of money, don't you think?
    Mr. DODARO. Right. You have to provide support.
    Mr. FEENSTRA. Yes.
    Mr. DODARO. Now, right now, there are single audits that 
are done by state auditors.
    Mr. FEENSTRA. Yes.
    Mr. DODARO. But they don't focus enough on the detailed 
aspects of fraud and mismanagement. They are starting point for 
accountability----
    Mr. FEENSTRA. Yes.
    Mr. DODARO [continuing]. But they are not the answer.
    Mr. FEENSTRA. No, no. Well, I want to thank you for that.
    I just want to quickly note, I mean, when you work in 
business, you pay people to collect debt. That might be a clue 
for our first eight auditors for the Federal Government.
    Thank you, and I yield back.
    Chairman SMITH. I thank the representative. I would like to 
recognize the gentlelady from the State of New York, Ms. 
Malliotakis.
    Ms. MALLIOTAKIS. Thank you very much. Thank you so much for 
your testimony. It was very informative.
    And we have heard today of the massive figures of improper 
unemployment payments, many fraudulent, which could be as high 
as $400 billion, some of which could have been prevented if we 
had put in the proper guardrails in place in--particularly in 
the last $1.9 trillion American Rescue Plan that the Democrats 
jammed through.
    My home state of New York--unfortunately, but not 
surprisingly--ranks near the top of the list, with an estimated 
$11 billion in fraudulent unemployment payments--I mean, 
payments alone. These taxpayer dollars went to fraudsters, many 
who are from overseas, as far away as China and Russia and 
Nigeria, who bought luxury cars, condos, watches, designer 
goods.
    As you could see, I mean, a nice graph here, because we 
haven't talked about that today. It is shocking to my 
constituents when we tell them that this pandemic relief money 
shamefully went to purchase 18 carat Rolex watches, luxury 
condominiums, Louis Vuitton and other designer goods, a $10 
million villa in the Dominican Republic, $3.5 million mansion 
in New Jersey, chartered jet services, luxury vehicles, from 
Porsches to Mercedes Benz to Ferraris to Bentleys. One person 
even received $1.5 million over a span in 10 months.
    This is absolutely unacceptable, and I am glad to hear 
today that there is bipartisan support to crack down on this, 
and we must do what we can to recoup this money.
    But to make matters worse, my district offices in Staten 
Island and Brooklyn worked with dozens of constituents who have 
had their identities stolen and could not get the unemployment 
benefits that they desperately needed. Because the department 
of labor in New York failed to prevent fraud at the outset of 
the pandemic, the Unemployment Insurance Trust Fund was 
drained. And for the last two years the state has had an 
outstanding loan to the tune of $8 billion from the Federal 
Government. My colleague mentioned this earlier. I am concerned 
that New York small businesses are going to be left holding the 
bag.
    And my question, if you can clarify, if New York continues 
to fail to repay its Federal advance due to its failure to 
limit this fraud, will their per-worker tax keep increasing 
year after year, and by how much?
    Mr. DODARO. I can provide an answer for the record for it, 
but I would say offhand that that is up to the state to decide 
how to repay the money.
    Now, some of the pandemic money was available for states to 
use to repay their money that they owed to the unemployment 
insurance program. So, I even think there is money, you know, 
in the coronavirus relief fund that was given, $350 billion to 
the states, I believe--don't hold me precisely to this, but if 
my memory serves me right, some of that money could be used to 
help repay the program.
    So, it depends on the decisions made by the governors and 
the state legislatures on how to repay that money.
    Ms. MALLIOTAKIS. Well, that is a good point, and it is 
about $100 billion that is unspent in COVID relief funds. So 
perhaps the Federal Government can take action there.
    Which states did it right? Okay, New York, obviously, did 
it wrong. My colleague talked about his state of Utah, that 
they had good preventive measures in place. What states, Mr. 
Horowitz, do you think are model states that we should be 
looking at on how to prevent this type of fraud?
    Mr. HOROWITZ. What we have seen are evolving actions by the 
states over the last several years. And so, what I would want 
to do is get back to you on sort of which ones perhaps are 
leading the effort.
    There are several, though, as part of the National 
Association of State Workforce Agencies, that have come 
together to, for example, implement identification 
verification, identity verification tools that have been very 
important because--you mentioned identity theft. We at the PRAC 
often talk about identity theft creating three victims: there 
is the public at large, because it is the public's program that 
gets the money stolen from; there is, obviously, the person 
whose identity is stolen, who has credit issues, other issues 
they have got to deal with; but then there is the person, as 
you mentioned, who was the intended beneficiary.
    And we have heard testimony about individuals, as you said, 
who went to get benefits, whether it is from unemployment 
insurance or other programs, and were turned down because the 
agencies thought they were the fraudsters.
    Ms. MALLIOTAKIS. No, I appreciate that.
    Mr. HOROWITZ. The fraudster beat them there.
    Ms. MALLIOTAKIS. And I want to--just 20 seconds left with--
on that point.
    Mr. Dodaro, your testimony notes that as of October 2022 
there have been 41 states using the Identity Verification 
Service that provides new data sets to conduct enhanced 
unemployment claim and identity verification, as was discussed 
here, and contains cross-matching with Social Security, the 
Death Master File, to identify the use of deceased persons.
    Can you please talk about that? Why are--and should all 
states be using this service, number one?
    And do we have an estimate of how many dead people received 
unemployment benefits?
    Mr. DODARO. I don't know if Mr. Horowitz knows that, or Mr. 
Turner, but I don't have the estimate for the total number.
    But I do know that it is an appropriate cross-match to 
make. And one of the easiest targets for fraudsters is to get a 
Social Security number from a deceased individual. A lot of 
this information, as Mr. Turner mentioned earlier, is on the 
dark web. And they can do that.
    And I know my own mother received--she passed away, 
unfortunately, right before the pandemic, so she received an 
economic incentive payment from the Treasury Department. Now, 
my sister returned it, because she called me and said, ``What 
to do?''
    I said, ``Send it back.''
    And so, you know, Treasury--this is a problem at the 
Federal Government, too. Treasury sent $1.4 billion to an 
estimated 1.2 deceased individuals in the economic incentive 
programs. Now, due to our recommendation, I got about half of 
that back, so about $700 million.
    The--right now, the Treasury Department Fiscal Service is 
not allowed to use the Social Security full Death Master File 
to check before they make a Federal payment. Now, that is 
something I have been trying to get for years. Congress finally 
passed it. It is due to take effect next year around this time. 
But I think it should be expedited and made prominent on the 
basis.
    I mean, there is no reason that we should be doing this.
    Ms. MALLIOTAKIS. Thank you.
    Mr. TURNER. Just if I could add on that--the Death--Social 
Security numbers of dead individuals, we do have that 
available. I don't have it broken down for me right now, but we 
can provide that to you at a later time after the hearing.
    Ms. MALLIOTAKIS. Thank you. I am sure everyone on the 
committee would like to know that, the answer to that.
    Mr. TURNER. Yes, we can provide that.
    Ms. MALLIOTAKIS. Thank you.
    Mr. HOROWITZ. And we will, you know, work to get that data.
    But I would say, just picking up on Mr. Dodaro's comment, 
we--on our fraud alert we just released, when we matched PPP 
and EIDL information with the Social Security Administration, 
we have several thousand deceased individuals who got PPP and 
EIDL loans. Our job now is we are trying to figure out if they 
were alive at the time of application. My guess is some were, 
my guess is many weren't, because we have seen this problem, 
and it makes no sense why you would want the Social Security 
Administration to have a Death Master File index, and yet let 
other parts of the Federal Government pay out billions of 
dollars in benefits to individuals who are deceased.
    Chairman SMITH. Thank you, Representative. We will now 
recognize the gentleman from Illinois, Mr. Schneider.
    Mr. SCHNEIDER. Thank you, Mr. Chairman, and let me start 
with the obvious.
    Everyone on this committee is outraged at the rampant fraud 
experienced during the pandemic. American taxpayers, including, 
as was touched on, those who relied on the programs stood up by 
this Congress--and, by the way, stood up unanimously by 
Republicans and Democrats together--were victimized by 
deceitful individuals and organized criminal groups. No one is 
defending it. We all agree that we should be doing everything 
possible to recover the money stolen and prosecute those who 
stole the money to the full extent of the law.
    We also need to make sure that, going forward, we are 
better at defending against fraud, from program design to 
system development supporting the programs, and deterring those 
inclined to consider stealing from taxpayers with greater 
prosecution and enhanced recovery.
    And let's review the facts. Three years ago, our nation 
faced an unprecedented health and economic crisis. In February 
of that year, we sat in this very room with Secretary Azar. I 
would venture to say that no one sitting here had any idea of 
the devastating impact the pandemic would have.
    We had a much better view a month later, when we came back 
to D.C. and passed the CARES Act, bipartisan, unanimous. And 
then 20 million people lost their jobs. Unemployment reached 
nearly 15 percent, and that is the highest rate since the Great 
Depression. And there was no end in sight.
    Now let's consider what would have happened if Congress had 
not acted. Maybe another Great Depression, the loss not just of 
individual businesses, but of entire industries, and millions 
of people out of work with no prospect of finding a new job, 
rising poverty across the country, and negative economic and 
social impact lasting for generations.
    So, some like charts. I love analogies. We had a five-alarm 
fire raging out of control. We were trying to put that fire out 
with water passed in buckets as fast as possible, and the 
buckets had holes. Speed mattered, as we have discussed, which 
meant that there was a trade-off between trying to fix the 
holes and precisely passing the buckets so no water spilled and 
getting the water as quickly and effectively as possible to the 
fire lines. And unfortunately, that would mean not getting 100 
percent of the water to the flames.
    Does anyone here want to claim we failed in our primary 
goal of putting out the fire?
    Are you asserting that the millions of Americans out of 
work at the time and otherwise unable to feed their families or 
keep roofs over their heads didn't receive desperately needed 
assistance?
    Is anyone arguing that we should not have stood up these 
programs?
    Last month, this economy created more than 500,000 jobs, 12 
million jobs just in the past 2 years, and employment, as also 
has been noted today, is at its lowest rate in 54 years.
    So my questions to our panel, as we have discussed today 
the breadth and sophistication of the many unemployment 
insurance schemes and the ongoing efforts to pursue criminals 
and reclaim the monies, and with an eye towards making sure 
that we are better prepared if we face a similar crisis, what 
should have or could have Congress and the Trump Administration 
done in 2020 to better protect against fraudulent claims, and 
what should we be doing now?
    And I will start with you, Mr. Dodaro.
    Mr. DODARO. First, the legislation that Congress passed in 
2016 was to get agencies prepared to prevent fraud. That needs 
to be effectively implemented. It is still not effectively 
implemented at the Labor Department or at the Small Business 
Administration and others. So, we are slightly better prepared 
than we were before, but we are not fully prepared for the next 
emergency so that, to use your analogy, that, you know, we 
saved--you know, the fire doesn't do as much damage as it does 
before, we put it out. And that--all right?
    And so, secondly, there needs to be more oversight by the 
Congress to make sure agencies put these anti-fraud prevention 
measures in place, and deal with improper payments. Since 2003, 
when agencies have been required to report improper payments, 
there has been $2.4 trillion in improper payments. This is a 
problem that is pervasive across the government. Last year, 86 
programs, 16 different agencies. More attention needs to be put 
on these two matters.
    Mr. SCHNEIDER. Great, thank you.
    Mr. Turner.
    Mr. TURNER. For us I would say data access. If Labor OIG 
had data access from the start, instead of having to wait five 
or six months to get it, we would have been able to move out 
and identify some of these issues a lot earlier. So, for us, 
that would be the key.
    And although the Department has gotten better with that, 
they are assisting us, but it is a temporary solution that we 
have in a--in place right now. And so, we hope that we can get 
something more permanent, and we would hate to resort back to 
IG subpoenas.
    Mr. SCHNEIDER. Okay. Mr. Horowitz.
    Mr. HOROWITZ. IT modernization, what Mr. Dodaro said on 
that.
    Transparency, greater transparency into data. Justice 
Brandeis famously said, ``Sunlight is the best of 
disinfectants.' Get that information out. We need it. The IG 
needs it.
    And third, data analytics, the ability to cross-match data. 
One person shouldn't be able to take their Social Security 
number to 40-plus states to get benefits.
    Mr. SCHNEIDER. Thank you. And if I can quote my friend, Mr. 
Kelly, we shouldn't be pointing fingers. Let's find a way to 
work together and solve this problem, make sure we don't face a 
crisis like this again.
    I yield back.
    Chairman SMITH. Thank you, Representative.
    We want to highlight again the purpose of this hearing is 
to investigate the size and scope of fraud in the Federal 
unemployment program, which more than doubled in the last few 
years during the pandemic. The purpose is to investigate fraud.
    I would like to introduce--recognize the gentleman from 
Ohio, Mr. Carey.
    Mr. CAREY. Thank you, Mr. Chairman, and I want to thank the 
witnesses for your time and your patience with all the 
questions that you are getting asked.
    We highlighted, I think throughout today, the importance 
that state auditors have in--across the country. To that end, 
Keith Faber, who is our state auditor, actually issued a 
report. And in it--in the--which I will be eventually putting 
it to the record--Ohio estimated--is estimated to have paid 
over a billion in fraudulent unemployment benefits from March 
2020 to 2022. And I think my colleague from Ohio highlighted 
the fact that both our governor, our lieutenant governor, and 
the governor's wife each received the fraudulent claims.
    The other thing that the auditor's report identified, which 
I found interesting, was it identified over $475 million was 
actually paid to criminals.
    So, Mr. Chairman, without objection, I would like to submit 
this for the record.
    Chairman SMITH. Without objection.
    [The information follows:]

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    Mr. CAREY. So, I am going to go into--I am going to kind of 
go through my question, lay it out.
    Last February the Administration took unilateral action to 
sweep suspected fraud under the rug, releasing guidance to 
allow states to waive large numbers of suspicious claims and 
forgo recovery and restitution for the taxpayers. Then, in 
March, DoL reported that the states identified $35.1 billion in 
overpayments made in the UI programs during the first seven 
quarters of the pandemic.
    So after first allowing the states to waive the 
overpayments, and only subsequently identifying the extent of 
the overpayments, DoL relented last July and sent $250 million 
to the states for reporting and detection and recovery of the 
overpayments. While DoL is not here to address these contrary 
actions, perhaps DoL OIG can shed some light on this.
    So, with that, Mr. Turner, I do believe you were in the 
military for a number of years.
    Mr. TURNER. Yes, I was.
    Mr. CAREY. I want to thank you for your service. So, Mr. 
Turner, even if DoL told states they could not waive fraudulent 
payments, how are we to know what--some claims involved in 
those waivers were not fraud, if the states don't have to look 
into them at all?
    Mr. TURNER. Well, you have kind of taken the OIG position, 
because you--we actually believe that you do have to do that. 
And part of our work this year and this spring is going to take 
a look at that.
    Mr. CAREY. Wonderful. And to that, are you investigating 
the impact of this guidance on your ability to recover 
fraudulent payments?
    Mr. TURNER. Yes, we are.
    Mr. CAREY. Okay. Mr. Chairman, I yield back.
    Chairman SMITH. Thank you, gentleman. And last, but 
certainly not least, the gentleman from California, Mr. 
Panetta.
    Mr. PANETTA. Thank you, Mr. Chairman.
    Gentlemen, I will try to be quick.
    Obviously, starting with the CARES Act, Congress acted with 
speed and bipartisanship to help people who lost their 
livelihoods, who lost money, who lost their jobs. We provided 
billions for unemployment insurance that worked, that helped 
people, that actually prevented hardship for millions, 
including in my district, the 19th congressional in California.
    Now, unfortunately, as we have heard over and over, and as 
we know well, there was fraud. And as a former prosecutor, I am 
well aware of people who try to pull one over on the Federal 
Government and on the government. And yes, we should hold them 
accountable to the fullest extent of the law, as we have been 
hearing throughout today's hearing.
    But now, as a Federal representative, I get to look 
forward. And basically, we get to create laws, or provide 
funding to help eliminate--to help prevent fraud. That is why, 
through the American Rescue Plan, we in Congress provided that 
type of significant funding for oversight and improvements for 
our unemployment insurance systems.
    Now, Mr. Horowitz, earlier I think you mentioned, you know, 
that is exactly what we are doing and have been doing right 
now. And so, my question to you is did that funding help crack 
down on fraud during the pandemic, and will it help states in 
the future protect from fraud?
    Mr. HOROWITZ. So, the funding did help states make a start 
in this effort. I think there is more that needs to be done, as 
GAO has reported on and DoL OIG has reported on.
    But the extent to which you modernize and improve the 
systems, you not only reduce the rate of fraud, but you improve 
the benefit, you improve the delivery of benefits to people who 
are entitled to get the benefits.
    Mr. PANETTA. Right. Do you have many examples of states 
that are modernizing, with this funding, their unemployment 
systems?
    And are there any lessons learned, looking at any 
particular states?
    Mr. HOROWITZ. There are multiple states, actually, that are 
moving forward. So, I am not going to single any out, but they 
are working through their national association to do that.
    And I would say the key movement forward is modernizing 
their systems and taking steps to do identity verification. So, 
there is a variety of tools being tested in--among the states. 
But that, to me, from what I have seen so far--not just, by the 
way, with unemployment insurance, with SBA as well, and other 
Federal programs--the need to put in place identity 
verification.
    Mr. PANETTA. Understood. And then just let me throw this 
out there. Would it help if there was a national standard for 
unemployment systems when it comes to maybe--and I think you 
guys have mentioned this--technology, data gathering, or--in 
order to help states set up systems for employing unemployment 
insurance?
    Mr. HOROWITZ. You know, I think that is an excellent 
question, Congressman, and a key question for Congress. And--
because we have largely built an unemployment insurance system 
that is managed effectively at the state level, with 54 
entities, the 50 states, D.C. and territories.
    And the question is, how much do you want to centralize it? 
How much do you want to give authority to the Labor Department 
to manage those systems? And I know GAO has written on that and 
spoken about that, as well. It is a policy question, really, 
for the Congress to consider.
    Mr. PANETTA. Mr. Dodaro.
    Mr. DODARO. I think it would be a good idea to have some 
minimum national standards. You don't want to hamstring the 
states from being innovative and trying different approaches, 
because that could be beneficial.
    But you have to have some minimum standards that are in 
place, particularly for IT systems, particularly if you want 
those systems to be able to talk one another, and to have--be 
able to cross-match. As we have been--pointed out this morning, 
if somebody files a claim, you know, in one state, they can 
file in all the other states, and nobody would know the 
difference, because there is no way to cross-compare.
    There ought to be cross-comparisons against incarcerated 
people, as well. There is a system that is kept for that, as 
well.
    Unless there are standards, you are not ever going to have 
the optimum IT system network, nationally, to deal with a 
global problem like we had before.
    Mr. PANETTA. Great. Mr. Turner, anything on a national 
standard?
    Mr. TURNER. The only thing that I could say to add is that 
I think there needs to be some kind of central database that 
the OIG has direct access to, as well as the Department and the 
States.
    Mr. PANETTA. Great, great. Thank you, gentlemen.
    Mr. Chairman, I yield back. Thank you.
    Chairman SMITH. Thank you, Representative.
    I would like to thank our witnesses for being here the 
whole time, and for the great discussion.
    Please be advised that members have two weeks to submit 
written questions to be answered later in writing. Those 
questions and your answers will be made part of the formal 
hearing record.
    With that, the committee stands adjourned.
    [Whereupon, at 2:08 p.m., the committee was adjourned.]
      

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