Massive pandemic aid fraud hasn’t made a big political impact

The United States government’s historic spending on pandemic relief in 2020 and 2021 was accompanied by historic amounts of fraud and theft, with potentially hundreds of billions of dollars stolen.

But despite the excellent investigative reporting on the Covid relief fraud and the various government investigations into it, it never rose to dominate the news agenda or have any political impact. This is a background issue, not a major scandal that needs everyone’s attention.

The Covid relief bill did a lot of good, cushioning the devastating economic blow of shutting down much private activity in 2020 and helping millions of people in the US. Still, I’m surprised that the high level of fraud doesn’t get more attention, considering the staggering amount of money involved, and how the right is obsessed with the overblown controversy over the amount of funds misappropriated by the President. Barack Obama’s stimulus law.

The main reason for the relatively muted reaction is the possibility that the focus on this does not play to the political advantage of either party. Democrats and Republicans are working together to pass a Covid relief bill in trouble under President Donald Trump. And the specifics of the fraud don’t sit well with either party’s top messaging priority, with Democrats hesitant to destroy big-spending government aid programs while Republicans are increasingly consumed by a domestic culture war.

How the fraud happened

As the federal and state governments try to quickly get pandemic relief funds to people and businesses who need them in 2020, fraudsters and scammers are attacking.

Ken Dilanian and Laura Strickler of NBC News wrote in March that, according to experts consulted, pandemic fraud in the three main aid programs could reach $250 billion to $560 billion (although no one knows because the exact amount is difficult to estimate). The federal government has approved about $5 trillion in total pandemic relief money, according to the Washington Post.

Matthew Schneider, a former U.S. attorney, told NBC that it was “the biggest fraud in a generation,” adding, “nothing has ever happened before.” And Cezary Podkul of ProPublica wrote that the pandemic relief scam “may be the biggest wave of fraud in US history.”

Some of the causes are domestic, but many of these scams are targeted internet crimes from foreign scammers operating in countries such as Russia, China, and Nigeria. This includes self-motivated hustlers just trying to pick up what they see as easy money available, while others are more organized criminals. It turns out that if the US government or state entity offers free money on the internet with minimal security for identity verification, people will come and try to take the money.

Key targeted programs include expanded unemployment insurance benefits and the Paycheck Protection Program. Both were signed into law in the March 2020 CARES Act by Trump after it was passed by the Democratic House and the Republican Senate. That means the Trump administration is holding the executive branch accountable when most thefts occur — though often the antiquated state unemployment benefits system is specifically targeted. After President Biden takes office in 2021, Democrats pass their own pandemic relief plan that extends unemployment insurance benefits for several more months.

Why is politics playing around like that?

All of the above paint a poor picture of political malfeasance. Republicans can’t make this a pure Democrat scandal when Trump signs the bill and becomes president when so much theft is happening. Democrats, for their part, helped craft the initial relief bill and pass it under Biden. So it’s an incentive for both parties not to look too closely at what could go wrong. Unless, of course, some Republicans who have an incentive to make Trump look bad — like 2024 presidential primary rival Ron DeSantis — decide to lay it at his feet.

Among Democrats, there is a general fear that creating more fraud in government benefits will be used to undermine the use of government benefits to help the public (harking back to the “welfare queen” attack of Ronald Reagan). Mainstream Democrats and the left are thrilled by the massive unemployment benefits, and hope to make the changes permanent. Too much putting in all the stolen money won’t do any good here.

However, one would think that anti-spending Republicans would normally make a big stink about issues like this. But with the GOP increasingly embroiled in a domestic culture war, the specifics of the pandemic relief scam (money stolen by foreign hackers) don’t seem relevant to today’s message.

This is evident in a funny recent exchange in the pages of the Wall Street Journal. Rep. James Comer (R-KY), chairman of the House Oversight Committee, wrote an op-ed on pandemic relief fraud, along with five other issues that he wants to investigate. But the most specific concern is that some states and localities are using pandemic relief funds for “electric buses and controversial ideologies.” In a previous press release, his office claimed to have found evidence that the pandemic relief money was funded by a “wake up initiative.”

American Enterprise Institute fellow Matt Weidinger responded to Comer’s op-ed with a letter to the Journal urging people to focus on the bigger picture of fraud in order to stop it from happening again. “Criminal gangs, including some based in Russia and China, are using stolen identities to siphon US tax dollars on an industrial scale,” Weidinger wrote. This can be read as saying: Focus on real issues, please, not just culture war nonsense. We’ll see next year whether the GOP House majority listens.

Finally, and more generally, there may be a general sense of indolence from the political system and the public because this is an unprecedented situation, and many people need help – although many scammers also get it. Some fraud is inevitable, and of course, this can be a lot. But have the past few years been too much for everyone?