As lawmakers grapple with the possibility of extending a temporary $ 600 increase in unemployment benefits to help people who have been suspended or reduced their hours as a result of the coronavirus pandemic, a government watchdog agency warns. the program is probably overpaying.
According to a report released Thursday by the Government Accountability Office, the expanded benefits program has a “higher risk of improper payments” due to the dramatic increase in unemployment insurance claims.
More than 47 million people have filed unemployment claims since mid-March.
AMERICANS ARE NOT CLEAR IN UNEMPLOYMENT COMPENSATION TAXES, THE SURVEY SHOWS
The overall unemployment insurance program has been designated a “high priority program” by the Department of Labor’s Office of the Inspector General due to overpayments, which were estimated at $ 2.7 billion in fiscal year 2019, a year without a global pandemic, GAO explained.
Additionally, history has shown that temporary programs after natural disasters have led to improper payments, GAO researchers said.
IRS SPENT MILLIONS ON AUDITS THAT DID NOT RETURN REVENUE, REPORT FINDS
There are two main scenarios by which the government may be making payments to people who do not necessarily qualify for them.
The first is a situation in which applicants return to employment but do not report their work, and therefore continue to receive benefits.
There is an additional risk for companies receiving help through the Paycheck Protection Program. GAO said that improper payments in this case can happen if workers are paid with PPP loan dollars while also receiving unemployment benefits.
In fact, there is currently no way for the government to detect real-time information about claimants receiving PPP loan wages.
Labor Department officials said they are developing comprehensive monitoring systems to help states implement the processes necessary to detect and recover overpayments. GAO requested clarification to draw the state’s attention to “the potential for fraudulent or improper payments.”
CLICK HERE TO READ MORE ABOUT FOX BUSINESS
Republicans, along with business leaders in some industries, have already voiced concerns that the expanded benefit may discourage workers from seeking new employment.
GAO also noted that some people may refuse to return to work due to health-related safety concerns.
Under the CARES Act, eligible Americans who are completely unemployed or underemployed for coronavirus-related reasons can receive an additional $ 600 per week for up to four months.
The benefits for 68 percent of workers are likely to exceed what they would have earned if they were still working, and the median replacement rate for approximately 20 percent of people is 134 percent.
Some Democrats are in favor of extending the proposal, as millions of new Americans continue to file new unemployment claims every week. White House officials have advocated finding other ways to provide financial aid to people in need.
For example, the administration has endorsed what it calls a “return to work bonus” as an alternative, which would provide an incentive for people to re-enter the market.
GET FOX BUSINESS ON THE MOVE BY CLICKING HERE