The scope of the fraud is staggering, but there are reasons the political impact has been muted.
The United States government’s historic spending on pandemic aid in 2020 and 2021 was accompanied by a historic amount of fraud and theft, with potentially hundreds of billions of dollars stolen.
Yet despite much excellent investigative reporting into Covid relief fraud and various government investigations into it, it’s never really risen to dominate the news agenda or made much of a political impact. It’s become the sort of issue that burbles on in the background, not a major scandal demanding everyone’s attention.
The Covid relief bills did an enormous amount of good, cushioning devastating economic blows from the abrupt halt to much in-person activity in 2020 and helping millions of people across the US. Still, I have been surprised that the high level of fraud hasn’t gotten at least a bit more attention, considering the staggering sums of money involved, and how much the right obsessed with overblown controversies over far smaller amounts of supposedly misspent funds in President Barack Obama’s stimulus law.
The main reason for the relatively muted reaction is likely that focusing on this doesn’t play to either party’s political advantage. Democrats and Republicans collaborated to pass the Covid relief bills at issue under President Donald Trump. And the specifics of the fraud don’t really fit with either party’s current top messaging priorities, with Democrats hesitant to demonize big-spending government aid programs, while Republicans are increasingly consumed by the domestic culture war.
How the fraud happened
As the federal and state governments tried to get pandemic relief funds out quickly to people and businesses who needed it in 2020, fraudsters and scammers pounced.
NBC News’s Ken Dilanian and Laura Strickler wrote in March that, per experts they consulted, pandemic fraud across three major relief programs could reach the $250 billion to $560 billion range (though no one really knows because the exact amount is difficult to estimate). The federal government approved about $5 trillion in total pandemic relief money, per the Washington Post.
Matthew Schneider, a former US attorney, told NBC that this was “the biggest fraud in a generation,” adding, “nothing like this has ever happened before.” And ProPublica’s Cezary Podkul wrote that the pandemic relief fraud “may turn out to be the biggest fraud wave in U.S. history.”
Some culprits were domestic, but much of the fraud was targeted internet crime from foreign scammers operating in countries such as Russia, China, and Nigeria. These included self-motivated hustlers just trying to pick up what they saw as easily available money, while others were more organized criminals. It turns out that when US government or state entities offer free money on the internet with minimal safeguards for identity verification, people will come along and try to take that money.
The main programs targeted included the expanded unemployment insurance benefits and the Paycheck Protection Program. Both of these were signed into law in the March 2020 CARES Act by Trump after being passed by a Democratic House and a Republican Senate. That means the Trump administration was in charge of the executive branch when much of the theft took place — though it was often antiquated state unemployment benefit systems that were specifically targeted. After President Biden took office in 2021, Democrats passed their own pandemic aid plan that extended the expanded unemployment insurance benefits several more months.
Why the politics are playing out this way
All of the above makes for a messy picture of political culpability. Republicans can’t frame this as a purely Democratic scandal when Trump signed the bill and was president while much of the theft happened. Democrats, for their part, helped craft the initial relief bill and extended it further under Biden. So that’s an incentive for both parties not to look too closely at what might have gone wrong. Unless, of course, some Republican with an incentive to make Trump look bad — like his possible 2024 presidential primary rival Ron DeSantis — decides to lay it at his feet.
Among Democrats, there’s likely a generalized fear that making too much about any fraud in government benefits will be used to discredit the use of government benefits to help people generally (harking back to the “welfare queen” attack from Ronald Reagan). Both mainstream and left Democrats were thrilled at the generosity of vastly expanded unemployment benefits, and hoped they could make these changes permanent in some form. Dwelling too much on all the money that was stolen would not be helpful here.
One would think, though, that it would be anti-spending Republicans who would typically make a big stink about an issue like this. And yet with the GOP increasingly fixated on the domestic culture war, the specifics of the pandemic relief fraud (money stolen by foreign hackers) don’t seem to fit too well with their current message.
This is evident in an amusing recent exchange on the pages of the Wall Street Journal. Rep. James Comer (R-KY), the incoming chair of the House Oversight Committee, wrote an op-ed on pandemic relief fraud, along with five other issues he plans to investigate. But his most specific concern was that some states and localities used pandemic relief funds for “electric buses and controversial ideologies.” In an earlier press release, his office claimed to find evidence that pandemic relief money funded “woke initiatives.”
American Enterprise Institute fellow Matt Weidinger responded to Comer’s op-ed with a letter to the Journal urging him to focus on the bigger fraud picture so it could be stopped from happening again. “Criminal gangs, including some based in Russia and China, used stolen identities to seize U.S. tax dollars on an industrial scale,” Weidinger wrote. This could be read as saying: Focus on the real issue, please, not just the culture war crap. We will see next year whether the GOP House majority listens.
Finally, and more broadly, there could well be a general feeling of leniency from both the political system and the public because this was an unprecedented situation, and many people who did need help got it — even if many scammers got some too. Some fraud was inevitable, and sure, this might be a lot. But haven’t the past few years been a lot for everyone?
