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The Labor Department’s pandemic relief “first week” unemployment benefits program has been shut down for two years, but the department is hoarding nearly $5 billion in allocations.
An inspector general said it’s time to return the money to the Treasury Department and warned that leaving that kind of money in a government account is a “risk for waste, fraud and abuse.”
“These funds could have been put to better use,” the inspector general said.
The forgotten $5 billion is left over from $12.5 billion that Congress set aside to help states speed up payment of unemployment insurance benefits early in the pandemic by waiving the usual one-week waiting period. The point was to help states deliver money to Americans faster.
Congress dramatically overspent. Not a single state used up its allotment, and seven states never drew down a single dollar, leaving a massive amount of money unused.
It probably happens with troubling frequency in the federal government, said Tom Schatz, president of Citizens Against Government Waste.
He pointed to earmarks, the pork spending that lawmakers direct to pet projects back home, as examples where money can sit untouched for a decade or longer.
It all amounts to a broken government, he said.
“A normal organization or operation would take the money back and spend it elsewhere,” Mr. Schatz said. “It could be $1, or it could be $5 billion. But any entity other than the federal government would get that money back as soon as possible.”
Not Congress, he said, where lawmakers measure success by how much money they spend.
Early in the pandemic, lawmakers dipped deep into their children’s and grandchildren’s pockets and ran up federal debt to pump money into the economy.
A lot of that money remains unspent.
Of $195.3 billion sent directly to states by Democrats’ rescue plan in 2021, less than half has been spent. Localities got another $130.2 billion, and 60% of that has yet to be disbursed, the Government Accountability Office said in a report last week.
Oklahoma and South Carolina have spent less than 2% of their allocations, GAO said.
The states and localities have until the end of next year to allocate their money and through the end of 2026 to spend it.
The first-week unemployment program audited by the inspector general was part of a March 2020 aide package that Congress approved in the early days of shutdowns. It was renewed in December 2020 and again in Democrats’ 2021 rescue plan.
Officially known as Temporary Full Federal Funding of the First Week of Compensable Regular Unemployment for States With No Waiting Week, or TFFF for short, the program was supposed to entice states to waive their one-week waiting period by covering that first week’s full payments.
The program ran through Sept. 6, 2021, and applied to all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. The Labor Department devised a formula to allocate the $12.5 billion among the 53 states and territories.
No state used all of its allocations, the inspector general said.
Seven states didn’t draw down any money at all.
The $5 billion may not sound like much in a federal budget that topped $6 trillion in spending over the past year, but it would be enough to fund about 200 more miles of the border wall system or the Environmental Protection Agency’s entire Clean School Bus program for five years or Project NextGen, the federal government’s latest effort to expedite coronavirus vaccines and treatments.
The Labor Department, in its official response to the audit, discounted the risk that the money left sitting is at risk of fraud or waste. Officials said the money can be used only for first-week unemployment benefits.
“They cannot be used for anything else, and to infer that these funds could be used elsewhere is incorrect,” said Principal Deputy Assistant Secretary Brent Parton.
He said the department plans to provide “guidance” to states for returning unused funds.
Clawing back the money now is premature because states may still request it, he said, and the TFFF has enough to cover the costs.
“Although the CARES Act programs and provision eligibility period expired Sept. 6, 2021, this does not mean that the TFFF provisions or reconciliation activities have concluded,” he said.
The inspector general dismissed that reasoning and pointed out that no state had accessed the money since June 2022, except for one $5,000 drawdown by Oregon in July.
“Viewed collectively, the minimal dollar amount of drawdowns across 53 states [and territories] and the time lapse since the last drawdowns for five of the six in-depth states allows us to conclude that most of the remaining almost $5 billion will not be drawn down for eligible benefit reimbursement,” the inspector general said.
Seven states, allotted a total of $1.1 billion, never accessed the money.
The state that drew down money in June 2022 was Delaware, which the audit accused of taking $5.5 million for claims made outside TFFF’s eligibility window.
Delaware blamed “confusion” about the pandemic spending period.
The state ended its drawdowns after auditors asked about unusual activities.
“While we did not identify fraud, waste or abuse in Delaware’s drawdowns, the ability for states to access ineligible funds without ETA’s knowledge is a risk for fraud, waste and abuse,” the inspector general said.
Mr. Schatz said Congress may have to get involved.
“It takes an act of Congress to get back money that Congress appropriated,” he said.
He said one lesson for Congress is to include in legislation a way to reclaim unspent money after a set time.
For more information, visit The Washington Times COVID-19 resource page.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.
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