Biden begs Congress for $1.6B to fight $100B in COVID fraud

President Biden asked Congress Thursday for $1.6 billion to crack down on COVID relief fraud — only two days after he nominated a new cabinet secretary who oversaw billions of dollars’ worth of that very fraud while California’s top labor official.

As part of its request, the White House asked for $600 million to crack down on “criminal syndicates who preyed on Americans during a time of unprecedented health and economic emergency;” another $600 million to “invest in better prevention of identity theft and all forms of major fraud involving public benefit programs;” and $400 million to redress “harms to innocent victims” of the fraud.

“​​While the initial pandemic legislation in 2020—as well as the American Rescue Plan passed in 2021—were essential to mitigating the health and economic impact of this unprecedented pandemic, there must be a bipartisan response to punish those who engaged in major and systemic fraud against the American people during a time of national emergency, to put in place stronger fraud and identity theft prevention going forward, and to hold harmless those Americans who were innocent victims of identity theft,” a fact sheet put out by the Biden administration stated.

On Tuesday, Biden announced he would nominate deputy labor secretary Julie Su to replace outgoing Labor Secretary Marty Walsh — even as Su caught flak while California’s labor secretary for botching pandemic handouts for millions of residents.

Su, 54, who served as the Golden State’s top labor official from January 2019 to July 2021, admitted during her final year in office that California’s Employment Development Department may have distributed up to $31.4 billion in unemployment funds to fraudsters.

“There is no sugarcoating the reality,” Su said in January 2021. “California did not have sufficient security measures in place to prevent this level of fraud.”

The White House announcement comes a month after the Republican-controlled House Oversight Committee held its first hearings on COVID relief fraud, which took advantage of more than $4.5 trillion in pandemic stimulus enacted by Biden and former President Donald Trump.

“We owe it to the American people to get to the bottom of the greatest theft of American taxpayer dollars in history,” said the committee’s chairman, Rep. James Comer (R-Ky.).

The relief had been intended to make whole ailing businesses and unemployed workers following economic shutdowns caused by the onset of the pandemic in March 2020. About 22 million jobs were lost in those early months, with unemployment nearing 15%.

By the end of 2021, around $100 billion in COVID relief funds had been fraudulently obtained, Secret Service officials announced, a number that has grown larger in the months since.

Department of Labor Inspector General Larry Turner testified before the House Ways and Means Committee last month that the amount stolen was believed to be at least $191 billion.

The White House said the Department of Justice has already launched “strike forces” to fix the issue — in one case recovering $286 million in stolen stimulus funds. In his Thursday proposal, Biden set aside $300 million to fund 10 more strike forces.

Biden is also asking Congress to up the statute of limitations for any serious pandemic unemployment insurance fraud to 10 years.

“On the whole, those programs did enormous good,” White House adviser Gene Sperling told reporters on Thursday. “There were also cases where guardrails were unnecessarily lowered, which led to unnecessary and massive fraud.”

Biden will roll the funding request into his larger budget proposal for fiscal year 2024, which is set to come out next week.