Trump administration warns governors to crack down on unemployment insurance
Labor officials demand action on unemployment fraud
The U.S. Department of Labor and its Office of Inspector General today announced they have jointly issued formal letters demanding that financial institutions immediately preserve funds held in prepaid debit card accounts linked to fraudulent unemployment insurance claims issued across many states during the COVID-19 pandemic. Acting Department of Labor Secretary Keith Sonderling joined LiveNOW from FOX's Ryan Schmelz to discuss their efforts to recover these stolen taxpayer dollars.
The U.S. government wants states to do more to combat fraud, waste, and abuse in their unemployment insurance programs and is threatening to withhold federal dollars until they do.
Big picture view:
Letters from the Labor Department were sent to the governors of every state warning that, if they do not crack down on their unemployment programs, administrative funds would be withheld. The move is the latest action by President Donald Trump’s administration to combat fraud and waste in state programs.
What they're saying:
"We are officially putting governors on notice," Acting Labor Secretary Keith Sonderling said in a statement Wednesday. "The American people will no longer tolerate the blatant waste, fraud, and abuse of their hard-earned tax dollars — no state should allow it either. If states allow it, they will suffer the consequences."
The backstory:
The Labor Department blamed poor oversight, outdated technology, weak identity verification, and lax control for "allow[ing] unprecedented fraud to flourish." Its statement cited examples from California, Illinois, and New York to show how hundreds of millions of dollars have been reportedly lost to fraud, improper payments, and mismanagement.
RELATED: How does unemployment work?
What they're saying:
"The days of excuses are over," Inspector General Anthony D’Esposito said. "States that fail to protect taxpayer dollars should expect consequences. Acting Secretary of Labor Keith Sonderling and I will use every available enforcement tool to demand accountability, recover stolen money, and ensure unemployment benefits only go to eligible Americans."
Dig deeper:
An estimate by the nonpartisan Government Accountability Office showed fraud accounted for between 11% and 15% of money paid through unemployment insurance programs during the depths of the pandemic, between April 2020 and May 2023.
In this photo illustration, a person files an application for unemployment benefits on April 16, 2020, in Arlington, Virginia. (Photo by OLIVIER DOULIERY/AFP via Getty Images)
States are expected to receive more information from the Labor Department’s expectations in the coming weeks.
The Source: Information for this article was taken from the Department of Labor and The Associated Press. This story was reported from Orlando.