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S. Hrg. 117–564
PANDEMIC RESPONSE AND ACCOUNTABILITY:
REDUCING FRAUD AND EXPANDING ACCESS
TO COVID–19 RELIEF THROUGH EFFECTIVE
OVERSIGHT
HEARING
BEFORE THE
COMMITTEE ON
HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
MARCH 17, 2022
Available via the World Wide Web: http://www.govinfo.gov
Printed for the use of the
Committee on Homeland Security and Governmental Affairs
(
U.S. GOVERNMENT PUBLISHING OFFICE
49–912 PDF WASHINGTON : 2023
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
GARY C. PETERS, Michigan, Chairman
THOMAS R. CARPER, Delaware ROB PORTMAN, Ohio
MAGGIE HASSAN, New Hampshire RON JOHNSON, Wisconsin
KYRSTEN SINEMA, Arizona RAND PAUL, Kentucky
JACKY ROSEN, Nevada JAMES LANKFORD, Oklahoma
ALEX PADILLA, California MITT ROMNEY, Utah
JON OSSOFF, Georgia RICK SCOTT, Florida
JOSH HAWLEY, Missouri
DAVID M. WEINBERG, Staff Director
ZACHARY I. SCHRAM, Chief Counsel
LENA C. CHANG, Director of Governmental Affairs
MATTHEW T. CORNELIUS, Senior Professional Staff Member
PAMELA THIESSEN, Minority Staff Director
AMANDA H. NEELY, Minority Director of Governmental Affairs
SAMANTHA ONOFRY, Minority Counsel
RYAN L. GILES, Minority Counsel
LAURA W. KILBRIDE, Chief Clerk
THOMAS J. SPINO, Hearing Clerk
(II)
CONTENTS
Opening statements: Page
Senator Peters .................................................................................................. 1
Senator Portman .............................................................................................. 3
Senator Johnson ............................................................................................... 17
Senator Hassan ................................................................................................. 19
Senator Carper ................................................................................................. 22
Senator Hawley ................................................................................................ 24
Senator Padilla ................................................................................................. 27
Senator Scott ..................................................................................................... 30
Senator Lankford .............................................................................................. 33
Senator Rosen ................................................................................................... 36
Prepared statements:
Senator Peters .................................................................................................. 39
Senator Portman .............................................................................................. 41
WITNESSES
THURSDAY, MARCH 17, 2022
Hon. Jason S. Miller, Deputy Director for Management, Office of Management
and Budget ........................................................................................................... 5
Hon. Gene L. Dodaro, Comptroller General of the United States, U.S. Govern-
ment Accountability Office .................................................................................. 7
Hon. Michael E. Horowitz, Chair, Pandemic Response Accountability Com-
mittee, and Inspector General, U.S. Department of Justice ............................ 8
Hon. Larry D. Turner, Inspector General, U.S. Department of Labor ................ 10
ALPHABETICAL LIST OF WITNESSES
Dodaro, Hon., Gene L.:
Testimony .......................................................................................................... 7
Prepared statement .......................................................................................... 51
Horowitz, Hon. Michael E.:
Testimony .......................................................................................................... 8
Prepared statement .......................................................................................... 97
Miller, Hon. Jason S.:
Testimony .......................................................................................................... 5
Prepared statement .......................................................................................... 45
Turner, Hon. Larry D:
Testimony .......................................................................................................... 10
Prepared statement .......................................................................................... 111
APPENDIX
Drug Adverse Event Comparison Chart ................................................................ 130
Matt Weidinger, American Enterprise Institute Statement for the Record ....... 131
Responses to post-hearing questions for the Record:
Mr. Miller .......................................................................................................... 145
Mr. Dodaro ........................................................................................................ 163
Mr. Horowitz ..................................................................................................... 167
Mr. Turner ........................................................................................................ 171
(III)
PANDEMIC RESPONSE AND ACCOUNTABILITY:
REDUCING FRAUD AND EXPANDING ACCESS
TO COVID–19 RELIEF THROUGH EFFECTIVE
OVERSIGHT
THURSDAY, MARCH 17, 2022
U.S. SENATE,
COMMITTEE ON HOMELAND SECURITY
AND GOVERNMENTAL AFFAIRS,
Washington, DC.
The Committee met, pursuant to notice, at 10:20 a.m., in room
SD–342, Dirksen Senate Office Building, Hon. Gary Peters, Chair-
man of the Committee, presiding.
Present: Senators Peters, Carper, Hassan, Rosen, Padilla, Ossoff,
Portman, Johnson, Lankford, Romney, Scott, and Hawley.
OPENING STATEMENT OF CHAIRMAN PETERS1
Chairman PETERS. The Committee will come to order.
Today we will examine the Federal Government’s efforts to con-
duct oversight on vital pandemic relief spending. Over the past two
years, Congress has authorized historic levels of emergency relief
to address the public health and economic challenges caused by the
Coronavirus Disease 2019 (COVID–19) pandemic. This important
emergency relief helped ensure that families could make ends
meet, and businesses could continue to pay their employees during
lockdowns. It also helped ensure that much-needed personal protec-
tive equipment (PPE) could be secured, and that lifesaving vaccines
could be developed, to help get our nation closer to bringing the
pandemic under control.
The Federal Government’s efforts to tackle this pandemic have
been a monumental task, and our Federal agencies have been
working literally around the clock to help keep Americans safe, and
make sure that this critical aid reached the families, small busi-
nesses and health care providers who needed it the most.
There is no question that there were challenges in getting these
programs off the ground, and that criminals wishing to take advan-
tage of these resources made fraudulent attempts to access these
funds.
That is why I was proud to work with Senator Johnson to ensure
that these important emergency relief bills included important
oversight mechanisms, like the Pandemic Response Accountability
1 The prepared statement of Senator Peters appears in the Appendix on page 39.
(1)
2
Committee (PRAC), to ensure these funds were being used as Con-
gress intended and to prevent waste, fraud and abuse.
Along with the PRAC, each of the agencies represented here
today have taken exhaustive efforts to ensure the effective use of
the nearly $7 trillion in COVID–19 relief funding that was passed
by Congress, that provided critical aid to Michiganders and Ameri-
cans across the country.
Over the last two years, these key oversight bodies and agency
inspectors general (IGs), have issued more than 350 reports and
more than 500 recommendations to improve our nation’s pandemic
response. This included efforts to uncover inefficiencies, such as
outdated systems and infrastructure, and develop innovative prac-
tices to detect and prevent fraud and identity theft, while improv-
ing transparency for all American people.
The PRAC’s Pandemic Analytics Center of Excellence (PACE)
has facilitated access to more than 150 million records that would
otherwise have not been available to inspectors general and law en-
forcement, and the broader inspectors general community has
made nearly 1,300 indictments and 1,000 arrests for pandemic-re-
lated fraud.
While I am very grateful for these successes and that our Federal
Government got relief funds out the door as quickly as possible, the
swift release of funding also exposed the potential for mismanage-
ment and lack of internal controls that left many programs vulner-
able, especially to fraud.
For example, instead of a thorough examination of an applicant’s
eligibility, many programs substituted this requirement with
quicker self-reported information, which contributed to funds mis-
takenly being sent to deceased individuals, ineligible applicants, or
fraudulent criminal schemes.
In fact, the unemployment insurance (UI) program has consist-
ently ranked as one of the highest-risk Federal benefits programs
for known or suspected fraud, and the Department of Labor Office
of Inspector General (DOL OIG) estimates more than $87 billion
may have been paid improperly.
Most shockingly, even before the release of COVID–19 relief
funding, some estimates note unemployment insurance often has
an improper payment rate above 10 percent, including for 14 of the
last 17 years.
While some measures have been taken to remediate these very
well-known problems, tracking down and recouping money that has
already been improperly spent has proven to be a difficult and inef-
fective solution.
Congress and the Administration must better understand the un-
derlying causes that led to the fraud across these programs, and
put the government on stronger financial footing for any future
spending priorities.
I look forward to hearing today from our panel of experts who
are going to discuss their roles in preventing improper payments
and reducing fraud across these Federal spending programs.
Ranking Member Portman, you are recognized for your opening
comments.
3
OPENING STATEMENT OF SENATOR PORTMAN1
Senator PORTMAN. Thank you, Chair Peters, and thanks to our
witnesses. I look forward to hearing from you.
As Chairman Peters has said, we have spent an awful lot of
money on COVID. In fact, over the past two years we have spent
more than $5 trillion of taxpayer money to address the COVID–19
crisis. It has gone for some necessary things—expanding unemploy-
ment benefits, supporting small businesses at a time they needed
it, and other challenges. Five times we did this on a bipartisan
basis, and I was proud to be part of that effort. In fact, the biggest
of those bills I was one of the five Republicans, along with five
Democrats who helped put it together.
Unfortunately, as the new Administration came in, they decided
to go it alone and not to take a bipartisan approach, and at the
time I was very concerned about that, in part because it was not
going to be something that we could do together, as we had pre-
viously, but also because most of the money that was spent had
nothing to do with COVID.
At the time some like Larry Summers, former Treasury Sec-
retary, said this could ‘‘set off inflation pressures of a kind we have
not seen in a generation.’’ Many of us echoed those concerns with
the $1.9 trillion spending package, again that was done on a par-
tisan basis, and unfortunately it looks like those warnings have
largely come true. Inflation is at 7.9 percent, a 40-year high. That
is one issue. We are where we are.
But against this backdrop, we have also learned that billions of
dollars spent to help American families were stolen, stolen by indi-
vidual criminals, stolen by transnational criminal organizations
(TCOs), many of whom used fraudulent schemes to exploit the pan-
demic for their own financial gain. Many of these criminals, by the
way, were, as I said, transnational, meaning overseas, from places
like China, Nigeria, Russia, and elsewhere.
It is hard to know exactly how much money was stolen. Perhaps
we will learn more about today, as I know many of you have ana-
lyzed this situation. The estimates range from $87 billion to $400
billion. To put this in context, the low estimate there, $87 billion,
of course, is larger than the entire annual budget for the Depart-
ment of Homeland Security (DHS), over which we have oversight.
We could send almost six times the recently authorized amount
of aid to Ukraine with this money that was stolen from the Amer-
ican people. We are talking about probably the biggest frauds ever
committed against the American people, even though we do not
know exactly how COVID relief funds were spent or exactly how
much was stolen, we have, or course, a request to spend a lot more
on COVID now. I am not suggesting we do not have additional
needs, but it sure would be nice to know how we spent the money
that the taxpayers sent us to protect and why so much of it did not
get to the right place before we have billions more going out the
door.
One of the biggest sources of fraud involved the unemployment
insurance programs. As you know, these benefits were designed to
help Americans who lost their jobs because of the pandemic. I
1 The prepared statement of Senator Portman appears in the Appendix on page 41.
4
thought it was necessary to help those individuals, but billions of
these dollars went to criminals, who used stolen identities and
lacked safeguards to steal the money away from Americans who
needed it. Unfortunately, we did not have the infrastructure set up
to be able to protect those funds.
Another major source of fraud involves the Paycheck Protection
Program (PPP) and the Economic Injury Disaster Loan (EIDL) pro-
gram. These are two programs that worked well for many small
businesses to be able to survive the pandemic. Like the unemploy-
ment insurance funds, however, these small business loans became
easy targets for criminals, both here and abroad. Money that was
supposed to be used to employ American workers instead funded
organized crime, and purchased luxury cars and mansions for
criminals. We now know more about this from some of the fraud
schemes that have been revealed, and again, we will probably hear
more about this today.
The purpose of this hearing, as I see it, is to examine the govern-
ment’s oversight of this massive spending. Specifically, we need to
understand how this fraud occurred, what we can do to get the
money back—some of it has been recovered, and I want to hear
more about that—and, of course, most importantly, how we can
prevent this from happening in the future? If we are going to spend
billions more, let us figure out how to try to avoid this fraud being
perpetrated on American taxpayers.
At the beginning of the pandemic, Congress established the Pan-
demic Response Accountability Committee to provide oversight of
the pandemic relief. This group of 21 inspectors general were ap-
propriated $120 million and tasked with preventing fraud and miti-
gating risks associated with the pandemic-relief funds. The Govern-
ment Accountability Office (GAO), the Office of Management and
Budget (OMB), and the Department of Labor’s (DOL) inspector
general also had a role to play in overseeing these funds and these
programs. Each of the witnesses today brings a unique perspective
from these agencies, and I appreciate their work and appreciate
them being here.
I look forward to hearing what they have to say about their role
in the oversight of these funds, and about their plans to help fix
the structural problems that allowed this fraud to occur in the first
place. Again, I thank them for their service and for testifying
today, and I look forward to the discussion.
Thank you, Mr. Chairman.
Chairman PETERS. Thank you, Ranking Member Portman.
It is the practice of the Homeland Security and Government Af-
fairs Committee (HSGAC) to swear in witnesses, so if each of you
would please stand and raise your right hand.
Do you swear that the testimony that you will give before this
Committee will be the truth, the whole truth, and nothing but the
truth, so help you, God?
Mr. MILLER. I do.
Mr. DODARO. I do.
Mr. HOROWITZ. I do.
Mr. TURNER. I do.
Chairman PETERS. Thank you. You may be seated.
5
Our first witness is Jason Miller. Mr. Miller serves as the Dep-
uty Director for Management at OMB. In his role, he coordinates
governmentwide management initiatives to empower the Federal
workforce for a more equitable and effective Federal Government.
Mr. Miller is also chair of the President’s Management Council
(PMC), where he leads the development and implementation of the
President’s management agenda.
Previously, Mr. Miller served as the Deputy Assistant to the
President and Deputy Director of the National Economic Council in
the Obama Administration.
Mr. Miller, welcome to the Committee. You may proceed with
your opening comments.
TESTIMONY OF THE HONORABLE JASON S. MILLER,1 DEPUTY
DIRECTOR FOR MANAGEMENT, OFFICE OF MANAGEMENT
AND BUDGET
Mr. MILLER. Thank you, Chairman Peters, Ranking Member
Portman, and Members of the Committee. I appreciate the oppor-
tunity to speak to you alongside my colleagues from the oversight
community. My testimony will focus on OMB’s role overseeing re-
lief spending in cooperation with the oversight community, actions
taken, and importantly, considerations for the future.
Implementation of the American Rescue Plan (ARP) and other
pandemic relief efforts helped jumpstart our economic recovery.
Moody’s estimated that without ARP real gross domestic product
(GDP) in 2021 would have grown by three percent. Instead, it grew
by 5.7 percent, the fastest since 1984. Last month, the economy
added 678,000 jobs, bringing total job growth since January 2021
to 7.4 million and the unemployment rate to 3.8 percent.
It is also true that the unparalleled scope and speed of pandemic
relief have highlighted real challenges, including in program design
and integrity, benefit systems, and equitable delivery. The speedy
processing of benefits at the outset of the pandemic came with
costs, affecting program design and internal controls.
The pandemic revealed cracks in under-resourced benefits deliv-
ery systems. The 53 different unemployment insurance systems
run by States and territories were overwhelmed by the historic
surge of claims that jammed their underfunded and outdated infor-
mation technology (IT) architecture, resulting in backlogs and a
rise in improper payments, including fraud. As the pandemic dis-
proportionately harmed underserved communities, early relief ef-
forts often failed to reach those most in need.
To tackle these challenges, the Administration is focused on de-
livering timely relief to the intended beneficiaries while strength-
ening government’s ability to act as a trustworthy steward of tax-
payer funds. The Administration’s collaboration with the oversight
community has proven essential. In December, OMB institutional-
ized the Administration’s commitment to the role of inspectors gen-
eral through governmentwide guidance, instructing agencies to re-
store and respect IGs’ integrity and independence, to ensure IGs
can exercise their vital role.
1 The prepared statement of Mr. Miller appears in the Appendix on page 45.
6
Through ARP implementation we have focused on getting it right
at the front end, working toward prevention to mitigate risk. New
joint, gold-standard meetings offer a good example. OMB and the
White House ARP implementation team convened agency officials,
IGs, and leadership of the PRAC to jointly review new or expanded
ARP programs before launch.
The Administration has taken concrete steps to strengthen relief
implementation. The Small Business Administration (SBA) quickly
recalibrated the PPP program in early 2021 to better assist the
smallest of small businesses and companies. OMB released govern-
mentwide guidance for ARP, based on lessons learned from 2020,
requiring robust controls and rigorous new reporting requirements.
The Department of Labor used ARP funds to tackle immediate
challenges, including grants to 50 States and territories to fight
fraud and improve accessibility, tiger teams to work hand-in-hand
with State UI officials to fix problems.
DOL changed policy to require States to give Mr. Turner and his
team access to State UI claim and wage data to help detect and
prevent fraud. The Department of Justice (DOJ) and others in the
enforcement community are undertaking an unprecedented effort
to prosecute and recover stolen funds. DOJ reported last week they
have filed criminal charges against over 1,000 defendants, opened
over 248 civil investigations into more than 1,800 individuals and
entities, together involving billions of dollars in suspected fraud.
I want to call out four areas for further consideration.
First, cross-cutting vulnerabilities require cross-cutting solutions.
The rise of identity theft, targeting Federal benefits, is ongoing.
The President launched the Initiative on Identity Theft Prevention
and Public Benefits last year, and we are working toward addi-
tional steps through a forthcoming Executive Order (EO) to better
prevent and detect identity theft, based upon lessons learned.
Second, victims of identity theft deserve increased attention.
They face a complex recovery process to resolve resulting harms.
Third, Congress should consider heightening penalties for crimi-
nals who commit egregious pandemic-related fraud by amending
the Emergency and Disaster Assistance Fraud Penalty Enhance-
ment Act of 2007.
Fourth, cross-cutting efforts and capabilities enabled by the
PRAC warrant consideration for ongoing capabilities and it is a
model for future oversight of major investment initiatives.
Thank you for your attention to these issues. I look forward to
working with the Committee and the oversight community to fur-
ther strengthen implementation of Federal programs.
Chairman PETERS. Thank you, Mr. Miller.
Our next witness is Gene Dodaro. Mr. Dodaro is the eighth
Comptroller General of the United States and head of the U.S.
Government Accountability Office. As Comptroller General, Mr.
Dodaro helps oversee the development and issuance of hundreds of
reports and testimonies each year to various committees and to in-
dividual Members of Congress. He has also personally testified be-
fore Congress several times on the long-term outlook for Federal
spending as well as other important national issues.
Mr. Dodaro, it is great to see you back again before this Com-
mittee. You may proceed with your opening comments.
7
TESTIMONY OF THE HONORABLE GENE L. DODARO,1 COMP-
TROLLER GENERAL OF THE UNITED STATES, U.S. GOVERN-
MENT ACCOUNTABILITY OFFICE
Mr. DODARO. Thank you very much, Mr. Chairman, Ranking
Member Portman, and Members of the Committee. I am very
pleased to be here to talk about our work on COVID–19 relief
spending.
As has been mentioned, great urgency was given to providing
quick relief to deal with public health issues and economic reper-
cussions of the pandemic. However, tradeoffs were made that lim-
ited progress in ensuring transparency and accountability over this
money. Controls that should have been in place before payments
were made were either reduced or eliminated. Also, monitoring ef-
forts, post-payment reviews, and other efforts were not instituted
as fast as possible after the payments were made, to try to assess
the integrity of the programs and have recovery efforts underway.
These shortcomings were exacerbated by already-existing prob-
lems in financial management in the Federal Government. Chief
among these is a serious improper payment program—the govern-
ment has a payment problem—and lack of focus on prevention of
audits, not after-the-fact pay-and-chase.
With regard to improper payments, since 2003, reported esti-
mates total over $2.2 trillion. In fiscal year (FY) 2021 alone it was
$281 billion, a jump from $75 billion in the prior year. This in-
volves 16 agencies, 86 Federal programs. Twenty-six, or 30 percent
of them, have over a 10 percent improper payment rate. This is not
a complete estimate. Some of them are not reporting. Some of the
estimates are not rigorous.
With regard to the fraud prevention issue, we worked with the
Congress in 2016 to help Congress pass the Fraud Prevention Act
that was supposed to have agencies focus more on preventing
fraud. This was slow to be implemented. Therefore, we were not in
a good position when the emergency pandemic came around to pre-
vent the fraud that occurred.
We are recommending today 10 different legislative solutions
that Congress could pursue to address both what we found during
the pandemic and these underlying, persistent, serious, funda-
mental financial management issues that the government has.
No. 1, chief financial officers (CFOs) ought to be given more re-
sponsibility for improper payments estimates to certify their accu-
racy. To monitor corrective actions right now it is the program peo-
ple who administer the programs that are providing the estimates,
so we need more rigor in the estimates, more transparency, and
corrective action plans. They ought to be mandated to be reported
in agency financial statements every year.
Any new program, in my opinion, over $100 million, ought to
automatically be determined to be susceptible to improper pay-
ments. There should have to be proved it is low risk, not proved
that there is a problem, and this would ensure improper payment
estimates are made in the first year of the program. Right now it
is two or three years down the road before these estimates are
1 The prepared statement of Mr. Dodaro appears in the Appendix on page 51.
8
made and problem are already entrenched into the program activi-
ties.
Second, with regard to fraud, we need to reinstitute the reporting
requirements that the agencies have to report on the status of their
fraud prevention efforts. This would provide better visibility and
more assertive congressional oversight over their efforts, because
only if the agency officials can prevent fraud is the most meaning-
ful way that this could be addressed. Also I believe that what is
now called the PACE Committee ought to be permanently insti-
tuted and focused on all Federal spending, not just COVID spend-
ing. I recommended this back in 2015, after the Recovery Act. Un-
fortunately, Congress and the administration did not follow that.
This effort that was put in place was too late. It was a year after
the efforts. It was only limited to the pandemic, so that could be
fixed.
Also, internal control plans ought to be put in place immediately
for emergencies, so they are already in place. We know what the
problems are. They could be tailored later if there was a unique
need for the emergency, but they ought to be put in place. Normal
controls is not sufficient, as we have seen here, and OMB should
do this. Congress should mandate that it be done.
Also, we need to reinstitute the requirement for the inspectors
general to audit periodically all Federal spending that is displayed
through USAspending.gov.
I have other suggestions but my time is up. I am happy to an-
swer questions at the appropriate time. I appreciate the invitation
to participate today. Thank you.
Chairman PETERS. Thank you, Mr. Dodaro.
Our next witness is Michael Horowitz. Mr. Horowitz serves as
the Inspector General of the Department of Justice and as the Act-
ing Chair of the Pandemic Response Accountability Committee. In
his IG role, Mr. Horowitz is responsible for combating waste, fraud,
and abuse in DOJ programs, and he simultaneously leads the
PRAC, a committee of 22 Federal inspectors general that oversee
Federal pandemic-related emergency spending.
Prior to his time at DOJ, Mr. Horowitz worked as a partner at
a private law firm. His practice specialized in white-collar defense,
internal investigations, and regulatory compliance.
Mr. Horowitz, welcome back to the Committee. You may proceed
with your opening comments.
TESTIMONY OF THE HONORABLE MICHAEL E. HOROWITZ,1
CHAIR, PANDEMIC RESPONSE ACCOUNTABILITY COM-
MITTEE, AND INSPECTOR GENERAL, U.S. DEPARTMENT OF
JUSTICE
Mr. HOROWITZ. Thank you, Mr. Chairman, Ranking Member
Portman, Members of the Committee. I appreciate the invitation to
speak to you today.
This Committee played an instrumental role in creating the Pan-
demic Response Accountability Committee, in March 2020, to over-
see what is now over $5 trillion in pandemic relief spending across
426 Federal programs at 40 agencies.
1 The prepared statement of Mr. Horowitz appears in the Appendix on page 97.
9
Given the magnitude of these responsibilities and the amounts
involved we have sought to develop, and I believe have developed,
a new model for conducting oversight in a crisis at the inspector
general community, and that has involved promoting transparency
by providing the public with accessible and comprehensive data
about spending, and that is on our website,
PandemicOversight.gov.
We have collaborated across the oversight community to identify
cross-cutting issues and risks. We have been detecting and pre-
venting fraud, waste, abuse, and mismanagement by using leading-
edge data insights that we have been able to obtain through our
data analytic tools, the PACE, as the Chairman referenced. We
have been able to hold wrongdoers accountable by marshaling the
investigative and analytical resources of the oversight community.
One of our foundational responsibilities is transparency by pro-
viding information to the public about pandemic-related spending.
Information is power, and that is what we are trying to do for the
American public is to see how their money has been spent. Infor-
mation also brings accountability. You cannot have accountability
without transparency.
Unfortunately, we have faced challenges in putting forward all of
the information that we think should be out there. We have de-
tailed that in two different reports, one in 2020, one in 2021, where
we have identified significant agency weaknesses in providing com-
plete data and gaps in reporting information from recipients.
Our reports include recommendations on how to address that.
We have had significant discussions with leadership at OMB and
the Administration about how to address that. We appreciate
OMB’s release of a memorandum addressing some of these issues
by outlining the need for detailed and accurate award descriptions,
a problem we have seen; enhanced transparency of spending
through the use of disaster and emergency funding codes, some-
thing that has been missing; and a commitment to work with
PRACs and IGs to strengthen payment integrity, as the Comp-
troller General just indicated.
We have also reported other lessons learned through our work.
First, agencies cannot rely solely on self-certifications of individuals
that they are eligible for benefits. Second, underserved commu-
nities should be prioritized for funding where that is needed, as we
saw in many instances here. Additionally, agencies should use ex-
isting data to verify eligibility, like the Do Not Pay system. Fur-
ther, relief guidance needs to be gotten out quickly for new pro-
grams. Finally, programs need to fully disclose where their money
went and how it was spent.
Briefly, let me turn to collaboration. It is something we recog-
nized we need to do at the outset. We have done that in the past
and continue to do it with GAO and their leadership. We have also
moved forward in a very significant way in working with our State
and local counterparts, something that, frankly, we had not done
much of in the Federal IG community and something that has been
very central to the work that we have done.
We have also been able to develop a very strong working rela-
tionship with OMB leadership and the ARP implementation team.
I have outlined that in my written statement, and we very much
10
appreciate that working relationship and think, frankly, it is the
model for how effective oversight should occur, going forward in the
future.
Finally, let me touch on the accountability efforts that we have
undertaken, and that we have done through the use of data. You
cannot oversee $5 trillion in spending with just people. You need
the data. That is where our Pandemic Analytic Center of Excel-
lence comes in. It is critical to our efforts. It is something that has
led to our providing nearly 200 requests and addressing requests
from law enforcement in looking at oversight issues and fraud
issues.
As has been mentioned, the oversight community, the Federal in-
spector general community, their work has resulted in over 1,200
indictments and complaints, nearly 1,000 arrests, almost 500 con-
victions. It is critical for the community to have these capabilities.
I appreciate the Comptroller General’s support for those efforts. As
he noted, he supported it back in 2015. It went away. We had to
spend a year and more taxpayer money recreating that database
because it went away in 2015. We look forward to working with
OMB and hopefully their support for that effort.
We are going to use all of our tools—criminal, civil, administra-
tive, suspension and debarment, forfeiture—to try and recover the
funds that have been stolen that have been referenced, and we are
doing that and we are making every effort.
I look forward to continuing to work with the Committee on
these efforts and appreciate your support for our work.
Chairman PETERS. Thank you, Mr. Horowitz.
Our final witness is Larry Turner. Mr. Turner is the Inspector
General for the U.S. Department of Labor, where he helps detect
and deter waste, fraud, and abuse in DOL programs. Mr. Turner
oversees critical programs on unemployment insurance, worker
safety, pension and health care benefits, and other essential needs.
Mr. Turner also leads investigations into organized crime influence
and labor racketeering corruption in employee benefit plans, inter-
nal union affairs, and labor management relations.
Mr. Turner, welcome to the Committee. You may proceed with
your opening remarks.
TESTIMONY OF THE HONORABLE LARRY D. TURNER,1
INSPECTOR GENERAL, U.S. DEPARTMENT OF LABOR
Mr. TURNER. Thank you, Chairman Peters, Ranking Member
Portman, and distinguished Members of the Committee. Thank you
for the opportunity to testify today.
Although the OIG is responsible for overseeing all DOL pro-
grams, my testimony today will focus on our oversight of unemploy-
ment insurance during the pandemic. The views expressed in my
testimony are based on the independent work of the OIG and are
not intended to reflect DOL’s positions.
Mr. Chairman, the OIG has remained committed to assisting
DOL and Congress in improving the efficiency and integrity of the
UI program. In our view, strengthening the program to prevent
and detect fraud are key objectives to ensure that unemployed
1 The prepared statement of Mr. Turner appears in the Appendix on page 111.
11
workers quickly receive needed benefits while safeguarding tax-
payer dollars.
For many years, the OIG has highlighted significant concerns
with DOL’s and States’ ability to deploy UI benefits expeditiously
and efficiently while ensuring integrity and adequate oversight.
The pandemic exacerbated these challenges, creating the perfect
storm. As the OIG report States, we were not prepared to process
the historic volume of claims, resulting in significant delays in ben-
efits. The Pandemic Unemployment Assistance (PUA) program ini-
tially relied on claimant self-certification without evidence of eligi-
bility, and the unprecedented infusion of Federal funds gave forces
a high-value target to exploit. That, combined with easily attain-
able stolen identities and weaknesses previously identified by the
OIG, allowed criminals to defraud the program.
Consistent with the OIG recommendation, UI reported an im-
proper payment rate of 18.7 percent for 2021. Applying the rate to
the $872 billion in estimated pandemic UI payments, at least $163
billion in benefits could have been paid improperly, with a signifi-
cant portion attributed to fraud.
Indeed, following the passage of the Coronavirus Aid, Relief, and
Economic Security (CARES) Act, fraud against the UI program ex-
ploded. The OIG has received more than 143,000 complaints, and
has independently opened more than 38 investigative matters con-
cerning UI fraud. That represents 1,000 times increase in the vol-
ume of UI investigative matters.
The OIG took immediate action to respond to this crisis. We
hired additional investigators, deployed Federal and contract staff
to audit the program, established a pandemic rapid response team,
and strengthened our data analytics program. We also worked with
DOJ to create a national UI task force, leveraged Council of the In-
spectors General on Integrity and Efficiency (CIGIE) and PRAC re-
sources, and implemented outreach and education programs with
the States.
In addition, we collaborated with the PRAC, DOJ, and the U.S.
Secret Service (USSS) to recover fraudulent funds, and we engage
with international law enforcement partners to pursue
transnational organized criminal groups targeting the UI program.
To date, our efforts have resulted in the execution of more than
850 search warrants, 749 indictments, and $830 million in mone-
tary results. From our oversight perspective, we issued an advisory
report at the start of the pandemic, identifying six initial areas of
concern for DOL and the States to consider when implementing the
CARES Act. Since then, we have released nine reports and alerts.
For example, we identified more than 3 million claims, totaling
nearly $17 billion in potential fraud, including payments to de-
ceased individuals and Federal inmates.
In response to our recommendations, DOL has instituted efforts
to improve the UI program. However, several OIG recommenda-
tions remain unimplemented in the following areas: OIGs need to
access UI date, States’ need for adequate staffing and modernize IT
systems timely and effective guidance to States, and controls for
improper payments.
Mr. Chairman, I would like to also highlight two challenges the
OIG faced, the first being the lack of direct access to UI data. For
12
many years, the OIG has requested access to data to proactively
monitor the program for systemic weaknesses and potential fraud.
Given the magnitude of the issues we saw in the beginning of the
pandemic, we took the unprecedented step of using IG subpoenas
to obtain UI data directly from the States. The data allowed the
OIG to identify billions in potential UI fraud. However, the IG sub-
poena process took months and delayed our ability to detect fraud
early in the pandemic.
The second challenge we faced was resource limitations. The OIG
received $38.5 million in much-needed supplemental funding to
oversee DOL’s pandemic responses. However, in light of the unex-
pected fiscal year 2022 appropriation, which held the OIG at its fis-
cal year 2021 levels, additional funding would allow the OIG to ad-
dress the issues I have discussed today.
Mr. Chairman, thank you for the opportunity to testify about our
work overseeing the UI program. I also want to thank the dedi-
cated OIG employees who continue to work tirelessly in support of
our oversight mission. I look forward to answering any questions
you or the Members of the Committee may have. Thank you.
Chairman PETERS. Thank you, Mr. Turner.
Mr. Horowitz, the Pandemic Response Accountability Committee,
as we are referring to it, without question had a Herculean effort
over these last two years, as you mentioned in your testimony. I
would like you to tell the Committee, in your opinion, has the
PRAC been successful in its mission to date, and then if you let the
Committee know what more can the PRAC and the rest of the
oversight community do to stop fraud and identity theft and the
bad actors out there? Be specific about that as well.
Mr. HOROWITZ. Certainly. I do think we have been very effective
in addressing this Herculean task. As you know, when we were cre-
ated back in March 2020, we were only overseeing about $2 trillion
of Federal funds. It grew to over $5 trillion.
The key to our ability to do that has been our ability, thanks to
this Committee’s support, the data analytics platform that we have
built, the PACE. As I mentioned, nobody can oversee that kind of
funding without the ability to get good data. It is what IG Turner
just mentioned. You need access to information and you have to
have the systems be able to run against it. Through doing that, we
have identified, for example, multi-dipping across programs, be-
cause we have seen individuals applying with the same fraudulent
information across programs. We have seen the use of payment to
individuals on Do Not Pay lists and other lists. It has really en-
abled us to identify, find the fraud, as well as find weaknesses in
department programs. It has been critical.
There is one bill I would mention that I think would make a dif-
ference. It is the Administrative False Claims Act of 2021, which
you are co-sponsoring along with Ranking Member Portman. Sen-
ator Hassan and Senator Lankford of this Committee are also co-
sponsoring it. It would allow us to pursue administratively claims
of up to $1 million, not have to go through the district court proc-
ess. We think that is likely to be a substantial effort. We are hop-
ing the Senate will pass that. The bill is on the floor.
We have also considered and are thinking about questions re-
lated to the statutes of limitations. As you know, in prior crises
13
Congress extended the statute of limitations with regard to bank
frauds from five years to 10 years. It turns out that the fraud here,
even though lenders were giving out the money, the fraud here is
often, for example, with the Payment Protection Program really of
the Small Business Administration, not the banks. There is a real
question of whether that extended statute of limitations applies.
Loans that were given out in March 2020 would have a statute of
limitations, potentially, depending on the facts, to March 2025, and
given the amount of fraud, that may be an area that is worth con-
sidering as well.
Chairman PETERS. Very good.
Mr. Turner, as you well know, probably one of the most high-pro-
file areas for the improper payments and pandemic fraud were in
the 54 State and territorial unemployment insurance programs,
and as you stated in your testimony today, as well as some of the
reports your office has published, there were serious challenges for
the DOL OIG to get data from these State workforce agencies to
conduct the audits and investigations that you needed to do. I have
heard similar concerns about timely and complete access to impor-
tant data from other IGs as well.
Could you please discuss for the Committee the impact on IGs
when you are unable to get timely and complete access to this crit-
ical data?
Mr. TURNER. Yes, Chairman. I would be more than happy to do
so. One of the challenges and one of our issues when we cannot get
direct access to the information is that it slows the process. Even
once you have identified problem areas, it just slows the process
down when you actually have to go other ways to get the informa-
tion.
For us, one of the tools that we have to use was our IG sub-
poenas, because we did not have direct access to labor data coming
from the States. There are 54, as you mentioned, States and terri-
tories we had to look at. By us not being able to get that informa-
tion directly it meant months that the pay problems, fraud prob-
lems were able to exist. We tried to go through the DOL to expedite
this problem, but DOL had a challenge with the CARES, the doc-
trine with the CARES in terms of some of the information. Part of
that problem was that it did not allow them to provide us inves-
tigative audit information. We were able to get investigative infor-
mation but not audit.
We pushed back, because we wanted to get from the Department
all the information right away, and the Department would not
allow us to do that. We went to subpoenas, and when we went to
the IG subpoenas we did two rounds of IG subpoenas, because that
allowed us to get the information we needed in a more direct fash-
ion. In being able to do that, we were able to identify $17 billion
of problem areas that came from stolen identification, with Social
Security numbers. Part of that was through multi-states, multi-
claims, through deceased people, as well as through several other
areas, to include cemeteries were some of the areas that were iden-
tified.
Those are some of the challenges that we faced.
Chairman PETERS. Great. Thank you.
14
Mr. Horowitz, although I know you can only speak on behalf of
the PRAC and your role as the IG at DOJ, could you provide this
Committee any perspective on how successful the DOJ and the
Federal Bureau of Investigation (FBI) have been in obtaining ar-
rests and convictions for pandemic-related fraud? Then on top of
that, do you believe that the new chief prosecutor that was an-
nounced by the White House earlier this month can improve the
government’s efforts to address fraud, like we are hearing from UI
and the Paycheck Protection Program?
Mr. HOROWITZ. Yes, certainly, Mr. Chairman. The importance of
coordination here cannot be overstated. For example, part of the
Department’s Fraud Task Force. We have separately created, at
the PRAC, our own Fraud Task Force to bring together the IG com-
munity with our partners in law enforcement. We work very closely
with the FBI to ensure that kind of coordination and to provide
them with access to certain information that we have through the
PACE, that they may actually not have access to. It has been a
very important collaborative, strong working relationship.
I think it is very important, having been an Assistant U.S. Attor-
ney (AUSA) myself in my prior stint at the Justice Department,
having that kind of coordination at the headquarters level is crit-
ical. These are issues that are not limited to one district in the
country or one State in the country. They are cross-cutting. They
are international, in many instances. It is very important to have
that relationship, that connectivity. We have a very strong working
relationship. I have already gotten a reach-out a couple of times by
the new prosecutor that was named the other day. I was at a meet-
ing with the Attorney General (AG) and the Deputy AG to talk
about these issues last week.
They are including us, me not just as the IG at Justice but as
the chair of the PRAC.
Chairman PETERS. Great. Thank you.
Ranking Member Portman, you are recognized for your ques-
tions.
Senator PORTMAN. Thank you, Mr. Chairman, and again, thanks
for the work you all are doing in a very difficult situation.
I want to start with Inspector General Turner and focus on the
unemployment insurance fraud that you talked about. You said
that we know that at least $163 billion in pandemic UI benefits
were paid improperly, and a significant portion was attributable to
fraud. You said that fraud cases have exploded by about 1,000 per-
cent. Could you describe your efforts to date to try to recover some
of those improper payments, approximately how much have we
been able to recover so far, and what is our plan to try to recover
more of that $163 billion-plus in the future?
Mr. TURNER. Let me say that, I can start off by answering your
second question first. We have $830 million in terms of the mone-
tary gains that we have found so far that we have been able to re-
cover. It is a challenge because I think we believe that it has to
be a proactive effort initially to stop and prevent fraud before it ac-
tually happens.
The concern, in terms of how we get it back, we go back to when
we started the program. When we first started 20 years we have
identified several problems within the program. A lot of it is lack
15
of staffing and lack of modernization. That has allowed some of the
fraud to occur. Athough we talk about 18.71 percent as being the
fraud rate, therefore of the $872 billion, that is what we believe—
and that is just the IG figure of the $163 billion that you are talk-
ing about—we believe that it is going to be somewhat difficult to
get that back.
No. 1 is because a lot of the funds have been expended before we
actually are able to get it back because so many of the fraudsters
have already spent it in high-dollar-value items, whether it be
homes, whether it be vehicles, or whatever. Some of that is hard
to get back. A lot of it is also tied up in the courts in terms of res-
titution. Some of the ones that we have identified it is going to take
years to actually see what that total amount of recovery will be.
Senator PORTMAN. Thank you for doing everything you can to get
that taxpayer money back. Eight hundred thirty million bucks is
a lot of money. On the other hand, it pales in comparison to the
$163 billion, does it not?
Mr. TURNER. Yes, it does, and every dime of government money,
we take that serious in trying to recoup all that we can.
Senator PORTMAN. Yes. Let us know how we can be more helpful,
and part of the problem, you said, is it is converted to assets. Those
assets can be seized, as well, and, it seems to me that, particularly
with regard to some of the foreign nationals that we should have
a governmentwide approach to this, getting more help from, in that
case, the Department of Justice.
Chairman Horowitz, PRAC has identified a lot of gaps in existing
data sources—you talked about this a little bit—so the lack of
transparency means less accountability. What are the key gaps in
the existing data sources that you see? In your October 2020 report
you identified 13 corrective actions, all Executive Branch it looks
to me, to mitigate these gaps. Tell us how many of those 13 rec-
ommendations have been implemented.
Mr. HOROWITZ. So on this issue, Senator Portman, the gaps are
many, as you indicated. We have outlined them in our two reports.
Let me highlight two of them.
There is a significant issue with coding and putting sufficient in-
formation in about naming what the money went for. Our second
report lays out thousands of grants that have either program
names associated with it or things like codes of initials. Nobody
looking at that, not us as oversight professionals, the public looking
to see where money went, would have any idea where that money
went from looking at that reporting data.
That is not what I think Congress intended when they set up the
Data Act and other mechanisms for reporting through
USAspending.gov, to report out for the public to learn how their
money was being spent. So that is one significant issue. Even when
there are reports of where the money is spent, we are finding thou-
sands of instances where, I have referred to it as ‘‘gibberish,’’ is
there. You cannot make heads or tails of what the money is for.
Another major problem we found is going beyond the first level
of spending, to figure out where the money actually went to and
how it was actually being used. You can see, oftentimes, how agen-
cies distributed the money in the first instance, but in many of
these programs, as you know, through the grant programs the
16
money goes even further downstream, and there is no information
about that flow.
Finally, the information reporting back from recipients. What did
they do with the money? How did they spend it? One of the big
questions we hear all the time is, so the PPP program, $800 billion
in the Paycheck Protection Program. How did that impact employ-
ment? We do not know. The agency does not know because the in-
formation is not being collected.
Senator PORTMAN. Huge gaps, and understanding we needed to
get money out the door quickly there is no reason not to have that
kind of coding and to understand where the money is going and
then to follow the money to see whether it is working.
In terms of the amount stolen, $87 billion to $400 billion, that
is a pretty big range. We just learned from the IG at the Depart-
ment of Labor it is $163 billion there alone, at least, so it is more
than $87 billion. Can you give us your best guess, as the PRAC
chair and as someone who has been looking at this for a long time
and has some perspective on it, how much was stolen?
Mr. HOROWITZ. Senator, I wish I could answer that right now. A
couple of reasons that is a challenge. First of all, we do not have
all the data just yet. Second, we have lots of cases ongoing, and,
of course, there is a difference between an improper payment, of
which there are billions and hundreds of billions of dollars, and a
fraud. We have to sort that out through the investigative process.
I cannot give precision at all. I am not even sure I can give a
wild guess yet at what the fraud number will be. It will be very
large. The improper payment number, as the Comptroller General
indicated, is disturbingly large. We know about, just for example,
$3 billion went out the door right away to deceased payees through
the Internal Revenue Service (IRS) and the initial loan check dis-
tributions. Fifty thousand-plus PPP loans went to individual enti-
ties on the Do Not Pay list.
Senator PORTMAN. Chairman Horowitz, give me your best edu-
cated guess. Is it less than $400 billion or more than $400 billion?
That is the top of the range.
Mr. HOROWITZ. Senator, I am going to be careful in giving a
guess. It is certainly in the three-digit billion number. How big it
is, I am just not prepared to——
Senator PORTMAN. You are prepared to say it is over $100 billion
but not prepared to say whether it is $400 billion or $300 billion?
Mr. HOROWITZ. I think in light of, obviously, the UI numbers
that IG Turner just mentioned, if you are talking $87 billion-plus
of potential fraud in that program——
Senator PORTMAN. 163.
Mr. HOROWITZ [continuing]. $163, I am sorry, billion-plus in that
program, you are obviously already north of that number. I know
from SBA IG the Payment Protection Program, the EIDL program,
is the other place where we are finding very substantial fraud.
Senator PORTMAN. Yes. When we get the Administrative False
Claims Act done, and we are working to get that done in the Sen-
ate soon, and again with regard to these 13 corrective actions that
you proposed, I would like to know if you would get back to us how
many of those have been implemented and how many have not.
17
These are all administrative Executive Branch functions, so we can
help, perhaps, to put some focus on that.
Thank you, Mr. Chairman.
Mr. HOROWITZ. Absolutely.
Chairman PETERS. Thank you, Ranking Member Portman.
Senator Johnson, you are recognized for your questions.
OPENING STATEMENT OF SENATOR JOHNSON
Senator JOHNSON. Thank you, Mr. Chairman. I think we are
probably only looking at the tip of the iceberg here, and I think you
are kind of indicating that as well. I think part of the big problem
is the fact that Congress took a shotgun approach to COVID relief
as opposed to targeting our relief. I personally think it was hun-
dreds of billions of dollars that went to people that in the end did
not need it.
A lot of them did not commit fraud. We just set such a low hur-
dle rate. For example, in the PPP program, again, if you were con-
cerned about the economic uncertainty, you qualified and we just
forgave the loan. I thought it was madness. I spoke out about it
at the time. But, a lot of this falls on Congress’ shoulders here in
terms of the amount of fraud that eventually will be uncovered,
and we probably will not uncover the vast majority of it.
I do not see how anybody can take a look at our response to
COVID and call it a success. Nine hundred sixty-five thousand
Americans dead. The human toll of the economic devastation from
the widespread shutdowns, I argued against those at the time.
What we have done to our children. I want that to sink in—what
we have done to our children, the delayed learning.
I will tell you. Whether you agree with masks or not, I will tell
you where masks would not work—on a child—and yet we have
subjected them to two years of wearing masks, delayed speech,
could not see their teacher’s face, the smiles of their classmates.
We need to really do oversight on what our response was, what a
miserable failure it was, so it never happens again.
Mr. Horowitz, you have done a lot of investigations. I sent 35
oversight letters, and I think one thing you have to recognize about
me—and I think you would agree with this—I have never used the
‘‘everything and the kitchen sink’’ approach. I have tried to really
target my response to get information that we would actually use.
My oversight letters have been very focused on issues, asking for
information that I believe the American people deserve.
I want to ask you, if you would get the response I have been get-
ting, which is basically we are not going to respond other than
refer you to our website, does that happen to you in your investiga-
tions?
Mr. HOROWITZ. Actually, on occasion, we have had problems, and
I agree, we push back, and we push back hard, and oftentimes I
have been in front of this Committee, on multiple times, including
when you were Chair, to talk about those issues. I agree, you de-
serve and are entitled to answers. We are, as you know, very re-
sponsive to you and your staff as well as other Members here, be-
cause it is important for Congress to be able to get the information
it needs to do the oversight it needs to do.
18
Senator JOHNSON. A brief list of some of the things I have asked
questions about. By the way, I think our biggest blunder was we
did not put enormous time and effort and resources into exploring
and researching early treatment. In fact, we sabotaged early treat-
ment. But I have written letters. How much did we expend? What
were our efforts? I do not get anything.
We have requested the emails from Dr. Fauci, unredacted, 4,000
pages. We do not get them. We have been given access to about
400, in dribs and drabs, 50 pages at a time. We do not actually get
them. We have to review them on camera.
I have asked questions, what did the Food and Drug Administra-
tion (FDA) do in August 2021, when they extended the emergency
use authorization (EUA) for the vaccine that is available in the
United States, and granted full licensure on one that is not avail-
able? What was that all about. It is confusing. I get no answer
whatsoever.
We have we not acknowledge and explore natural immunity?
Why have we not factored that into these idiotic and pointless vac-
cine mandates?
One of the more recent ones was information on the Defense De-
partment’s (DOD) DMED database, that showed a three-to tenfold
increase in different diagnoses of cancers and things like myocar-
ditis, and neurological problems.
The DOD, by the way, did respond to a PolitiFact request, before
they responded to me in a very inadequate way. But what they
said is, ‘‘Oh, we recognized a glitch in our system.’’
What we have is from whistleblowers, doctors, military doctors,
who were seeing vaccine injuries. They did an analysis, the pre-
vious five years versus 2021. They saw a tenfold increase in these
diagnoses.
What the DOD told us is, ‘‘Oh, we were wrong for the previous
five years,’’ and all of a sudden they have given us some data
where those things shot up ten-fold. What is pulling off here? They
are not showing us the data.
But I think one of the more troubling ones—and why don’t you
put up my chart1 here—very early on in the process—again, I was
a big supporter of Operation Warp Speed (OWS). I am not anti-vax
in any way, shape, or form, but I think you have to take a look at
the data coming in. The data coming in was concerning to me. I
was asking questions back in March, April, May 2021, when the
Vaccine Adverse Event Reporting System (VAERS) were showing 2,
3, 4, 5,000 deaths. Today we are up to over 25,000 deaths reported
in the VAERS system, 1.168 million adverse event.
What this chart shows is a comparison—for example, ivermectin.
You are not supposed to say that word. By the way, in New Hamp-
shire, I guess, their Assembly just approved over-the-counter use of
ivermectin, because it is pretty safe. Fifteen deaths, on average,
over 26 years on the VAERS system. Hydroxychloroquine, 70
deaths. Annual flu vaccines, 78 deaths. Remdesivir now 721
deaths. COVID vaccines, 25,158 deaths.
1 The chart referenced by Senator Johnson appears in the Appendix on page 130.
19
Again, now I realize VAERS does not prove causation. Twenty-
nine percent of those deaths are occurring on days zero, one, or two
following vaccination. It is something I would be concerned about.
I write the FDA. I write the Center for Disease Control and Pre-
vention (CDC). I write National Institute of Health (NIH). What is
happening here? I asked them about their other surveillance sys-
tems. I get no information whatsoever. It is not that I do not get
information, the American people do not get information.
The reason the American people have lost faith in our health
care agencies is because they have been completely non-trans-
parent. They have not provided the information that we are getting
from other public health agencies from around the world. We have
had to look to Israel. We have had to look to the United Kingdom
(UK) to find out what is happening here.
I guess the plea I am making to this Committee, the Chairman
of the Permanent Subcommittee on Investigations (PSI), in which
I am Ranking Member, is this needs to be investigated. If the agen-
cies do not respond to us, we need to issue subpoenas. Congres-
sional oversight is almost a joke nowadays. You can do an inves-
tigation at the Department of Justice. You can do pretty good in-
vestigations in the IG’s office. Congress? The agencies just thumb
their nose at us, and doing so they are thumbing their nose at the
American people.
This is outrageous. It cannot continue. Mr. Chairman, I am call-
ing on you, as Chair of this Committee, to start strengthening our
ability to get information out of these agencies. It is outrageous
what has been happening, our lack of information, our lack of
transparency, the lack of honesty coming out of our health care
agencies.
This is a scandal. The fraud, the hundreds of billions of dollars
probably sent to people that did not need it is a scandal. This im-
pacted people’s lives. We need answers, and we need answers now.
Thank you, Mr. Chairman.
Chairman PETERS. Thank you, Senator Johnson.
Senator Hassan, you are recognized for your questions.
OPENING STATEMENT OF SENATOR HASSAN
Senator HASSAN. Thank you so much Mr. Chair and Ranking
Member Portman for this important hearing, and thank you to all
the witnesses for your critically important work to prevent waste,
fraud, and abuse of taxpayer dollars and to improve management
of pandemic relief programs.
I want to start with a question to you, Inspector General Horo-
witz, and then to Comptroller General Dodaro. To date, the GAO
and inspector general community have made hundreds of rec-
ommendations to Federal agencies on how to improve their re-
sponse to the pandemic and ensure that relief funds have the max-
imum benefit. However, as of December 2021, agencies have imple-
mented less than one in five GAO recommendations.
Inspector General Horowitz, you talked a little bit about some of
this with Senator Portman, but in your review as chair of the Pan-
demic Response Accountability Committee, what more can agencies
do to address IG and GAO recommendations that could help them
curb waste, fraud, and abuse of COVID–19 relief funds?
20
Mr. HOROWITZ. Senator, as you indicated IGs have issued hun-
dreds of reports now to date. They include hundreds of rec-
ommendations in them about how to improve programs, and you
are right, the track record of agencies in implementing them has
been uneven, I would say at best. Some perhaps do better than oth-
ers.
But one of the things we do now, in the IG community, is make
that information public. On oversight.gov and on IG websites we
are trying, through making the information public where agencies
stand in implementing them, in an aging list. You can see how long
it has taken them to do. Our strongest tool in that, to get that
done, is not only speaking and elevating it within the agency but
frankly talking now more frequently with OMB leadership, so that
they can do, with the tools they have available to them, to try and
push agencies to more promptly implement these recommenda-
tions.
Senator HASSAN. Thank you. Comptroller General Dodaro, what
recommendations should agencies prioritize to maximize the effec-
tiveness of their pandemic response in a cost-efficient way?
Mr. DODARO. I have sent letters to every head of every depart-
ment and agency in the Federal Government with a priority list of
recommendations. Those have been provided to the Congress. They
are public on our website. I have met with all the new leadership
of the departments and agencies, urged them to do that. In some
agencies we have regular meetings to focus on the progress in im-
plementing our recommendations, and other agencies, not so much,
particularly the Department of Health and Human Services (HHS).
I am disappointed at the pace. Like Mr. Horowitz said, we have
been working with OMB, and I have regular meetings with the
White House coordinator, Gene Sperling, on this, to try to enlist
their support to get the agencies to move faster in implementing
these recommendations.
I do believe additional congressional attention to this matter
would be very helpful. I have also used the high-risk list. When I
was here last March I mentioned that I put the emergency loan
programs of the Small Business Administration on the high-risk
list, because it is not only our recommendations, they failed their
audit the last two years. They have not been able to get a clean
audit and show the proper accounting of this money. I have also
added HHS’s leadership and coordination in January as a high-risk
issue. Clear roles and responsibilities are not there. There is not
a lot of clear communication. These have been problems for dec-
ades.
I am doing everything that I can, but I could always use extra
help.
Senator HASSAN. Right. We can return to that priority list and
see if we can focus on it to, because I think that is important for
us all to be speaking with one voice, to prioritize the best ways to
have the most efficient and most impactful results.
Let me turn to you, Inspector General Turner. Single sign-on
technology allows users to create one username and password to
securely access many different websites. This is not just convenient
for consumers but it can also prevent fraud when single sign-on
technology verifies users’ identities.
21
For example, during the pandemic some States managed access
to pandemic relief applications through single sign-ons using iden-
tity verifications. States that used these tools experienced a signifi-
cant decrease in fraudulent claims and were able to prevent bil-
lions in improper unemployment insurance payments.
Inspector General Turner, how could the Department of Labor
work with State partners to implement these identity verification
tools across the country?
Mr. TURNER. Senator, that seems like something that the State
workforce agencies would be able to share, in terms of best prac-
tices, and I think that is something that we could probably pass
onto them as well as the Department could. The Department, part
of reducing the possibility of fraud is also sharing best practices
across the government. There are like 53 different entities, so they
have their own way of doing business, and sometimes you have
some that do a better job than others. But I think if they could
kind of share that information, and that is something I will pass
on to the Department.
Senator HASSAN. Thank you. I want to turn to Mr. Miller on
some of this same issue. Last September, the Technology Mod-
ernization Fund (TMF) awarded $187 million to the General Serv-
ices Administration (GSA) to expand its single sign-on service,
login.gov. Part of those funds are intended to shore up login.gov’s
identity verification capabilities.
How could these identity verification tools help the Federal Gov-
ernment prevent improper payments, not just of COVID–19 relief
funds but of payments that the government makes daily?
Mr. MILLER. Thank you, Senator, for that question, and login.gov
is an important tool but it needs to be strengthened going forward.
This is something that we are working on. Looking actively at, to
Mr. Turner’s point, when you looked at those 53 different systems
some of them were not using identity verification for reasons like
they could not afford identity verification tools. The end cost of that
was substantially larger than the cost of identity verification on the
front end.
The second thing on this is right now we largely leave agencies
and States to their own devices to determine how best to do these.
We need stronger tools in place on identity verification. That is
why we are investing in login as a potential option, and it is a topic
that we are working hard on at OMB.
Senator HASSAN. Thank you. Mr. Chair, if I could, I want to fol-
low up for one short bit on that, because some Federal agencies
such as IRS, the Department of Veteran’s Affairs (VA), and Social
Security Administration (SSA) already partner with private single
sign-on companies to verify customer identities and prevent fraud.
How can OMB work with the GSA as well as GAO to ensure that
its efforts to expand identity verification through login.gov does not
overlap or duplicate the existing agency efforts here?
Mr. MILLER. One thing that we want to make sure that we are
putting in place is clear standards and guidelines for agencies as
they are moving forward, so that we have strong identity
verification tools while also ensuring that those tools are allowing
access and protecting individuals’ privacy.
22
Senator HASSAN. Thank you very much. Thanks for the extra
time, Mr. Chair.
Chairman PETERS. Thank you, Senator Hassan.
Senator Carper, you are recognized for your questions.
OPENING STATEMENT OF SENATOR CARPER
Senator CARPER. Thanks very much. Welcome. Some of you are
not strangers to this Committee, and we are delighted to see those
who might be here for the first time or those who have been before
us many times. Thank you all for the great work that you do and
for your leadership.
I am just wondering, Mr. Turner, do you remember when you
were sworn in as the Inspector General of the Department of
Labor?
Mr. TURNER. That would have been December 7, 2021.
Senator CARPER. Does that date have any special meaning to
you, when you think of it, besides for being sworn in that day? Any
other special meaning?
Mr. TURNER. Not that I can think of.
Senator CARPER. It is Pearl Harbor Day, the anniversary of Pearl
Harbor, when we lost so many. I am a retired Navy captain, so for
my family it is something that is real.
For the people in Delaware it is also real in another way. It is
the day that Delaware ratified the Constitution. It became the first
State to ratify the Constitution. For one whole week we were the
entire United States of America (USA), and then we opened it up
and let in Maryland, Pennsylvania, and the rest. I think it has
turned out OK, for the most part, but it is still early.
When you look at the Preamble of the Constitution—this is
where I am going with this—it starts off, as you recall, ‘‘We, the
people of the United States, in order to form a more perfect union,
establish justice, insure domestic tranquility, provide for the com-
mon defense, promote the general welfare, and secure the blessings
of liberty.’’
We are talking about here the response of our country, our peo-
ple over the last two years to really, in a way that is consistent
with the Preamble of the Constitution, promote the general welfare
and secure the blessings of liberty to ourselves and our posterity.
It is important work, and it is consistent with what our Founding
Fathers, the framers of the Constitution, had in mind.
I have a couple of questions. I probably will not have time to ask
all of them, unless the Chairman wants to require everybody else
to yield their time to me, which is probably not likely.
But my first question would be of you, Mr. Miller. Over the last
couple of years, through two administrations, Congress has ap-
proved about $4.5 trillion, I am told, to support COVID response
and recovery efforts. So far, agencies have obligated $4.2 trillion.
I am not sure how far back we have to go in our nation’s history
where that is actually more money than we would spend in a given
year through the Federal Government. It is probably not all that
far. It is a huge amount of money, and requires a lot of oversight.
We want to thank all of you and the folks who work for you, with
you, for leading the oversight effort and for testifying today.
23
Mr. Miller, we learned a lot about Federal and State technology
systems, staffing, resources, and communication processes during
the pandemic. We are still learning. My constituents would tell me
that we learned a lot about what did not work as well as what did.
In your testimony you outlined a number of steps the Administra-
tion is taking to improve communications and access across the
Federal Government, in execution across the Federal Government.
With that said, State and local governments are responsible for
implementing, as you know, many of these programs. How is the
Administration ensuring they have the necessary support and suffi-
cient communications with Federal agencies? That would be my
question for you, Mr. Miller.
Mr. MILLER. Great. Thank you for that question, Senator. Yes,
State, local, tribal, territorial (SLTT) governments are critical in
successful implementation. Open communication channels, both at
an agency level and an administration level and a program level
are important. Certainly this is something that Treasury has done,
and it is well underway, in terms of implementing the programs
over the course of pandemic relief. We are also taking steps on this
as we are implementing the Bipartisan Infrastructure Law, where
that specific set of investments is almost entirely reliant on States,
localities, tribal, and territorial governments.
One additional way, in partnership with the oversight commu-
nity, that we are trying to make sure that we have strong collabo-
ration and coordination, is not with those executing the programs
but with those who are auditing and investing in the programs, so
that they have the information that they need to protect program
integrity and support States and localities in executing these pro-
grams.
Senator CARPER. All right. Thank you for that response. My sec-
ond question would be, Mr. Turner, for you. The question deals
with improving the unemployment insurance program, something
that some of us on this Committee have given a lot of time and at-
tention to.
Mr. Turner, I have a wonderful constituent services team. They
work hard every day to advocate for Delawareans seeking help, but
including Federal assistance. The top issue we hear about is delays
in processing unemployment insurance claims. That may be at the
top of the charts in terms of complaints that we hear from our con-
stituents. These delays predate the COVID pandemic, but the pan-
demic has certainly exacerbated this particular issue.
You noted in your testimony ongoing challenges with States hav-
ing sufficient staffing and systems resources to manage UI claims.
You also noted an earlier, unsuccessful attempt by the Department
of Labor to help States modernize their legacy IT systems through
Federal funding. Why did this not work, and what lessons has the
Department of Labor learned from this effort?
Mr. TURNER. Let me first say thanks for the question. First, we
have been identifying, for the last 20 years, the Labor OIG, some
of the problems that are existing now with COVID. These are prob-
lems with lack of IT modernization. As a matter of fact, around
2010, there was $7 billion that was dedicated and funded for States
to modernize their systems, and in most cases they did not. In
some cases, I think of the $7 billion that was set aside for that only
24
$4 billion was actually used. About $2 billion was used to pay bene-
fits, which was allowed, but I think it should have gone toward the
modernization. Those were some of the challenges.
But when we look at the work we have done the last 20 years,
to include 10 years ago, we find some of those same problems, and
those problems actually added to the explosion in terms of lack of
support for claimants, during COVID.
Those have been some of the challenges. Also, I think the biggest
thing was that a lot of the States were not adjusting to the new
UI care packages, in a sense, because some of them were different.
I will give you an example. The gig from the PUA, that was dif-
ferent because this was talking about, in some cases, gig workers,
self-employed workers. There were different requirements for those
workers. In some cases there was not the safeguards that had been
in the normal UI program.
Senator CARPER. OK. Mr. Chairman, if I could, for the record, I
will state the question and then ask you to respond, Mr. Turner,
for the record. How can Congress and the Administration work to-
gether to effectively help States address staffing and systems short-
falls moving forward? The last thing for the record, a question.
There has been a good deal of conversation about data gaps that
are challenging effective oversight. What steps is the Administra-
tion willing to take to address these gaps and how can Congress
help?
Again, our thanks to all of you. I hope you feel welcomed here.
We very much welcome you, and I think you know that, and your
teams, the folks that are sitting behind you and those that you rep-
resent. God bless you. Thank you. Happy St. Patrick’s Day, even
if you are not Irish.
Chairman PETERS. Thank you, Senator Carper.
Senator CARPER. We are lucky to have you in our service.
Chairman PETERS. Thank you, Senator Carper.
Senator Hawley, you are recognized for your questions.
OPENING STATEMENT OF SENATOR HAWLEY
Senator HAWLEY. Thank you very much, Mr. Chairman. Thanks
to everybody for being here, to the witnesses.
Mr. Miller, if I could start with you. I want to try to understand
what is happening with the special inspector general for pandemic
recovery. This is, as you know, a position that this body, Congress,
created when we passed the CARES Act several years ago now.
The Senate confirmed a nominee to lead that office. Multiple Sen-
ators have referred complaints to that office. For example, on July
15, 2020, Senator Warren wrote to the Special Inspector General
for Pandemic Recovery (SIGPR) calling for an investigation into a
‘‘COVID lobbying palooza’’—those are her words—and stating her
understanding that SIGPR was created—I am quoting her again
now—‘‘to investigate any fraud, waste, and abuse of Coronavirus
Aid Relief in the Economic Security Act funds.’’
On August 6th of that year, 2020, 28 other Senators—that in-
cludes me—wrote to SIGPR requesting an investigation into 43
Planned Parenthood affiliates that applied for and received CARES
Act funds through the Small Business Administration’s Paycheck
Protection Program, despite clear rules against that.
25
My point is that multiple Senators have referred multiple things
to SIGPR. It is in the legislation. However, the Biden administra-
tion and DOJ, in consultation with OMB, stripped SIGPR of almost
all of its jurisdiction pretty much as soon as he came to office, in
April 2021. I am trying to understand what is going on here. Why
has SIGPR been stripped of its jurisdiction? Why is it not able to
perform its mandated functions? What is happening here?
Mr. MILLER. Senator, thank you for the question to receive clar-
ity on this issue. The dispute that you are referring to go back into
the prior administration with regards to SIGPR’s authorities.
SIGPR went to the Office of Legislative Counsel (OLC), at DOJ,
which makes determinations for the Executive Branch regarding
authorities when they are disputes within the Executive Branch.
OLC consulted with OMB informally, as it would on any matter,
where it felt OMB’s input would be useful. OLC determined that
the legislation had specific authorities for SIGPR, and the Execu-
tive Branch follows what OLC determines.
Senator HAWLEY. You are saying that OMB did not recommend
that SIGPR be stripped of its jurisdiction? Is that your testimony?
Mr. MILLER. OMB answered questions and input from OLC and
did not make a determination. OLC made a determination.
Senator HAWLEY. Will you provide us with records of that com-
munication?
Mr. MILLER. It occurred before my time. I would welcome follow-
up discussion.
Senator HAWLEY. Wait a minute. The OLC–OMB communication
occurred before your time? It occurred under this Administration,
though.
Mr. MILLER. I was sworn into office at the end of April.
Senator HAWLEY. But it occurred during the Biden administra-
tion, right? I do not particularly care when you were there. I care
when it happened. I care that you are there now and have some
authority. It does not matter to me when you were in office or not.
It matters to me that you are before this Committee, that presum-
ably you have sworn an oath to answer to this Committee the ques-
tions. I am asking you a direct question, whether you will give us
the communications. I do not care if you were there or not.
Mr. MILLER. I would welcome follow-up with you on this, Senator
Hawley.
Senator HAWLEY. Is that a yes or a no or a maybe?
Here is the deal. I want to know why in the world this Adminis-
tration has taken an act of Congress and gutted it, and that is
what they have done with SIGPR. You have gutted it. There are
trillions of dollars that have—let us just review. The CARES Act
spent more money than we spent on World War II, and we have
no effective oversight, in my view, of how that money is being spent
when it comes to waste, fraud, and abuse, because this Administra-
tion has chosen to gut the IG system that was set up to oversee
it. I want to know why, and I want to know if we can get the infor-
mation from you. That is my question to you.
Mr. MILLER. This Administration has taken active steps to re-
assert the role of IGs in providing oversight.
Senator HAWLEY. SIGPR?
26
Mr. MILLER. OLC made a determination with regards to SIGPR’s
authorities. In 2020, actions were taken to undermine the IG com-
munity. We believe that IG roles——
Senator HAWLEY. Indeed actions were taken to undermine the
IG. In April 2021, this Administration gutted this IG. They gutted
the IG that we created, that Congress created, on a bipartisan
basis, and that bipartisan groups of Senators have referred infor-
mation to. Now this entity cannot carry on its work because your
Administration gutted it.
Let me come back to my question. Will you provide this Com-
mittee the communication between OLC and OMB regarding the
decision to gut SIGPR?
Mr. MILLER. You are welcome to request——
Senator HAWLEY. I am requesting it now. That is what I am
doing.
Mr. MILLER. We will look into the specifics of the communication
and absolutely get back to you on that.
Senator HAWLEY. So is that a yes?
Mr. MILLER. I would like to look into the specifics of the commu-
nication.
Senator HAWLEY. That sounds like, frankly, a non-answer to me,
and unfortunately, that has been the case for a year now, since this
Administration gutted SIGPR. I have introduced legislation that
would restores SIGPR’s jurisdiction and restore its funding. Frank-
ly, I think it is being funded on a shoestring budget. It needs to
be funded more than it is. It needs to have the full resources to
carry out its mission to oversee waste, fraud, and abuse and get to
the root of it in this huge amount of spending that we did for an
unprecedented crisis. But to do that amount of spending, and to
look at the fraud reports that we have been getting, and to not
have SIGPR funded and with its jurisdiction fully intact to me is
totally inexplicable. I continue to be amazed that the Administra-
tion is doing this.
I will follow up with you, but frankly, I am disappointed in your
answer.
Let me ask about something else. Yesterday, The New York
Times reported that the Biden administration is taking $377 mil-
lion in Federal emergency housing aid from States mostly con-
trolled by Republicans—I am quoting from The New York Times—
and redirected that cash to States that have already used their al-
lotted money, including New York, California, and New Jersey.
Is there statutory authority for this?
Mr. MILLER. I am not familiar with the specific decision that you
are referring to, but I am happy to follow up with you on it.
Senator HAWLEY. It is right here. ‘‘Treasury shifts $377 million
among States as pandemic housing aid dries up,’’ from The New
York Times. It is about the $46 billion in emergency rental assist-
ance that this program enacted back in 2020.
Mr. MILLER. It is a program that is critical to keeping people in
their homes.
Senator HAWLEY. My question to you is, is there statutory au-
thority to shift around almost half a billion dollars from one State
to another without the State’s consents.
27
Mr. MILLER. I would expect the Treasury only take action con-
sistent with statutory authority. If they did to, it would be inappro-
priate.
Senator HAWLEY. OK. That is a yes, you think there is statutory
authority? What would it be? Can you direct me to the——
Mr. MILLER. I would be happy to follow up with you on the spe-
cifics. Again, if Treasury took action that was inconsistent with
statutory authority that would be inappropriate, and I would hope
that Treasury’s IG would say so as well.
Senator HAWLEY. My time has expired here and there are other
Senators who want to ask questions. I have a few questions for
you, Mr. Turner, about some of the things that you have discovered
in terms of delays and providing disaster relief, so I will get those
to you for the record. Thanks for the work you are doing. Thanks
to you all for being here.
Thank you, Mr. Chairman.
Chairman PETERS. Thank you, Senator Hawley.
Senator Padilla, you are recognized for your questions.
OPENING STATEMENT OF SENATOR PADILLA
Senator PADILLA. Thank you, Mr. Chair. I appreciate the partici-
pation of all the witnesses here today.
Let me begin by uplifting a dynamic of disparities. There has
been a lot of talk in recent years, and not just relative to COVID
but because of the impacts of COVID, responses to COVID. A lot
of the preexisting inequities in our society have been exacerbated,
frankly. Although underserved communities, in many ways, experi-
ence disproportionately the harms from the COVID pandemic, from
a health perspective, from an economic perspective, and more, Fed-
eral relief programs often fail to reach those most in need.
Federal legislation enhanced unemployment insurance benefits,
for example, and expanded eligibility amid the severe economic
shock caused by the pandemic. However, during the first year of
the pandemic, Black and Latino applicants were less likely to re-
ceive unemployment insurance benefits than white applicants. We
have the data that tells us that.
Additionally, a University of California, Los Angeles (UCLA) re-
port found that the first distribution of loans through the Paycheck
Protection Program actually widened pre-pandemic racial inequal-
ities by supporting far fewer jobs per resident in Black and Latino
neighborhoods than in white neighborhoods in California. I would
be shocked to think that that was an isolated dynamic to California
alone.
These disparities are certainly not new, as I mentioned, but the
COVID–19 pandemic certainly exacerbated them, and it is particu-
larly disconcerting that Federal relief programs may have made
disparities even worse. I am proud that the American Rescue Plan
included language that helped put equity front and center as part
of our recovery efforts, but we need to make sure that its imple-
mentation actually improves upon those underlying inequities.
My first question is for Deputy Director Miller. How is the Biden
administration using COVID relief efforts and other Federal fund-
ing to address these underlying inequities?
28
Mr. MILLER. Thank you, Senator. Thank you for the opportunity
to talk about these efforts. As I noted in my opening remarks, the
pandemic disproportionately harmed underserved communities,
and too often relief did not reach those intended. One of the early
actions of the Administration was making adjustments to the PPP
program for the items that you noted that were widely and publicly
reported in terms of access to PPP loans for some of the smallest,
disadvantaged businesses, at a time where Black-owned businesses
were closing at twice the rate of other types of businesses, making
sure that they had access to PPP.
Another thing that we have done with regards to implementation
of ARP is on the front end of programs, bringing together, as noted,
the gold-standard meetings with agency IGs, the PRAC, OMB, the
ARP implementation team, and agencies so that we are taking
steps in program design, ensuring that both relief is targeted
where intended, and that we are putting in place reporting mecha-
nisms that get the right balance between ensuring that we are get-
ting the outcomes that we need while reducing burden for appli-
cants.
Senator PADILLA. That definitely acknowledges the progress that
has been made in thinking about this on the front end, and I cer-
tainly hope that it becomes institutionalized and baked into efforts
going forward across the board.
The next question is for Chair Horowitz. I would like to ask what
recommendations you may have for how the Federal Government
can better ensure that underserved populations are prioritized for
funding and resources.
Mr. HOROWITZ. Senator, thank you for the question. One of the
challenges we found again is the data gaps here. What we have
seen is we have looked to see how have underserved communities
been advantaged by these programs, or disadvantaged by these
programs. We are finding there is a lack of data. We are not sure
what the backgrounds are of those who have gotten the loans. We
are not sure about the economic status of individuals who have ap-
plied. It has been one of the things we have reported on, and we
have actually held hearings on, about some of the challenges in us
even trying to figure out how that came about. I think one of the
first things is agencies making sure they get data.
Another is what GAO found, in a report they did about PPP and
the furtherance of the PPP program, by ensuring that Community
Development Financial Institutions were available to distribute
loans. That was an important step forward, a very important GAO
report in that regard.
Also, with regard to how programs were run, operated, and
money was distributed, what we found is those who did not have
internet service, those who did not have the ability to apply
through the processes set up could not get it, and that harms most-
ly those in rural communities and in underserved communities,
generally, because of broadband issues.
Senator PADILLA. That is a classic example, where it might have
been well intentioned, not completely thought through. Efficiency is
to be gained by being primarily digital, but without recognition of
yes, a digital divide is still alive and well in America. We are only
worsening those pre-existing gaps and inequities.
29
Mr. HOROWITZ. Can I add one other——
Senator PADILLA. Please.
Mr. HOROWITZ [continuing]. Which is the fraud we have talked
about. It not only victimizes the program, but particularly for sev-
eral of these programs it victimizes those who they were intended
for, which often are those most in need. We actually had a meeting
about this just the last couple of weeks, on the identity theft
issue—we heard from representatives of underserved communities
about how what happens when people in underserved communities
seek to apply for those benefits, that they are the ones legitimately
entitled to but their identities have been stolen. It turns out they
are the ones being in question, as if they are the fraudsters. They
are the ones that struggle to get their identities back.
It is actually a very big issue. When we talk about identity theft
we think about how the programs have been defrauded, but they
harm the people whose identities were stolen.
Senator PADILLA. I would like to follow up with you on what we
are doing after the fact to assist those who have been victims of
identity theft, as opposed to, sorry, we are going to make this hard
for you, and we leave them on their own to figure it out.
I know my time is limited. I do want to put one more issue on
the table here, and that is the use of facial recognition, and more
specific to how it has been brought up earlier in the hearing.
As we continue to combat fraud, to your point, in Federal pro-
grams, it is important that our efforts to provide program integrity
do not come at the cost of privacy and accuracy. I recently joined
Senator Menendez and other colleagues in sending a letter to the
IRS, highlighting well-documented concerns about the use of facial
recognition technology, especially for individuals who have poor
internet service at home, who rely on computers in public libraries,
for example, or who use older phones, or for whom English is not
their first language.
I am pleased that the IRS has taken initial steps to transition
away from the use of facial recognition technology to verify iden-
tity. However, given the gravity of the threat to civil rights and
civil liberties by this technology, especially against immigrants and
people of color, and other vulnerable communities, I remain con-
cerned about the continued use of this technology and the vast
amount of biometric data that agencies and contractors are man-
aging.
Question for Comptroller Dodaro. How do you think agencies can
best uphold the integrity of the programs without undermining the
civil rights and civil liberties of program beneficiaries?
Mr. DODARO. They have to make sure that they first address
those issues, they recognize what those issues are and properly ad-
dress it. They need to go through the due process of hearing from
different people. But you have to understand the technologies. Fa-
cial recognition, a lot of agencies are using it now, mostly in the
law enforcement communities. We have made several recommenda-
tions about this, and some of the technologies have built-in limita-
tions in them. You have to understand the limitations in the tech-
nology, particularly for people of color for facial recognition tech-
nologies and others.
30
There are ways to do it, but it has to be a very thorough, delib-
erative, careful process that make sure that it is only used with
proper understanding of not impinging on people’s civil liberties.
Senator PADILLA. Obviously I have a lot to follow up on there,
in a deeper dive on specifics. I would argue because it is not in
more widespread use among other departments, other agencies,
other sectors, not just the Federal Government, does not mean that
it is not problematic in those areas as well. Let us not point to it
is being used in law enforcement as to a reason to forge ahead
without the thoughtfulness required.
Mr. DODARO. I understand, and that is what I am saying. I am
saying that even in law enforcement it needs to be careful. We
have made recommendations on making sure people understand
the information that they are getting. But if you go outside that
area you need to have due care. We are in agreement on that.
Senator PADILLA. Thank you.
Mr. DODARO. Can I add one thing on that, because there has
been a lot, and there is a lot to be concerned about it. But it cannot
also paralyze us and agencies from taking steps to prevent identity
fraud and identity theft. There has to be that kept in mind. There
are often times that we cannot use this tool so we will stop trying,
and I just encourage, because it has such wide ramifications, the
identity theft. We have seen it endemic in these programs over the
last few years, and it is hurting those who the money should go to.
Senator PADILLA. Thank you.
Chairman PETERS. Thank you, Senator Padilla.
Senator Scott, you are recognized for your questions.
OPENING STATEMENT OF SENATOR SCOTT
Senator SCOTT. Thank you, Chair Peters. This is an important
hearing and I want to thank everybody for being here, and I want
to thank each of you. I have read your reports and they are very
helpful, and thanks for working with my office to get us informa-
tion.
My first question is for Mr. Miller, and it might have been asked
before. I was not here for the whole hearing.
The Biden administration asked for another $30 billion in
COVID relief and did not ask that it be taken out of unspent
COVID dollars. If you look at the numbers I think it is hundreds
of billions of dollars that is unspent. Can you explain why the
Biden administration does not think we should use unspent dol-
lars?
Mr. MILLER. Sure. So 90 percent of pandemic relief funds have
been obligated. The Administration requested $22.5 billion in funds
for additional action to support our needs going forward—vaccines,
tests, treatments, supporting the uninsured. Like other emergency
funding, we do not believe it needs to be offset. We think this is
absolutely imperative, and we will work with Congress. OMB
would be happy to provide technical assistance to you and Congress
to move forward.
Senator SCOTT. I have been up here three years and I have been
talking about this excessive government spending is going to cause
inflation, and I am concerned about the Federal debt. The Com-
mittee for Responsible Federal Budget recently found that ongoing
31
COVID relief under the Biden administration is definitely contrib-
uting to inflation. They estimated these ongoing COVID programs
will cost $160 billion this year and cause a rise in the Consumer
Price Index (CPI) inflation by 68 basis points if these policies con-
tinue.
Mr. Miller, could you talk about exactly where we are with CPI
and PPI, and what the Biden administration is doing to bring infla-
tion down?
Mr. MILLER. Sure. I think first, stepping back, when you look at
GDP over the last year it is at 5.7 percent. Unemployment rate is
down to 3.8 percent. It was the largest year of job growth on the
record. We have strong overall economic performance but real chal-
lenges, absolutely, with rising prices. The President laid out three
actions to deal with that: supply chains, which throughout the pan-
demic have continued to create challenges; the second, competition,
making sure that we have appropriate competition in the market
to drive down prices; and third, investing in things that matter, for
families that are impacting their bottom lines, like prescription
drugs, like childcare.
Of course, the Fed plays an important role with its dual man-
date, stable prices and full employment.
Senator SCOTT. Do you know where CPI is now and PPI, what
the numbers are now?
Mr. MILLER. Yes. The number was quoted earlier by Senator
Portman, 7.9 percent.
Senator SCOTT. What is it?
Mr. MILLER. 7.9 percent.
Senator SCOTT. How about the Federal debt? Can you talk about
where we are now and what do you think ought to be happening
with the Federal debt?
Mr. MILLER. I think the President has been clear on this. We are
putting forward budgets that are responsible, where increased
spending proposals and tax cuts are paid for. That was true with
the fiscal year 2022 budget. That will be true for the fiscal year
2023 budget.
Senator SCOTT. What is our debt now?
Mr. MILLER. It is over $20 billion.
Senator SCOTT. Also, can you talk about deficits? The Biden ad-
ministration has run significant deficits. Can you talk about what
the deficit was last year and what you anticipate, how you antici-
pate to reduce it?
Mr. MILLER. So deficit is on its way down. The most important
thing is driving an economic recovery, putting forward budgets that
are responsible, as this President is committed to doing. Those are
going to be our steps.
Senator SCOTT. The deficit was $2.8 trillion. I mean, that is the
second-biggest deficit in the history of the country.
Mr. MILLER. Yes.
Senator SCOTT. I mean, this is not sustainable.
It is my understanding that the Biden administration made the
decision to not require the States to go after individuals that com-
mitted fraud with regard to the unemployment under COVID. Is
that accurate?
32
Mr. MILLER. That is not accurate. States should be going after
individuals that committed fraud under the unemployment insur-
ance program.
Senator SCOTT. OK. There is nothing the Biden administration
has put out to tell the States that they do not have to go after peo-
ple for unemployment fraud?
Mr. MILLER. If somebody has committed fraud, someone should
go after them, and we should put resources behind doing it.
Senator SCOTT. If States did not do the right thing to watch how
the money was spent, do they owe the money back to the Federal
Government?
Mr. MILLER. These systems were overwhelmed. The systems
were fully overwhelmed. They were underfunded. They were under-
resourced, period. We saw that. We saw huge claims backlogs. We
saw people attacking these State systems. We put money into the
unemployment insurance system, critical lifeline for millions of
Americans.
But clearly—and you saw this with the rise in improper pay-
ments—it showed that we need to fix these systems, and one thing
that I hope that we can do together is really take a serious look
at how are we going to fix these systems. I believe the Comptroller
General talked about the number of years which we have had im-
proper payment rates, at inflated levels in UI, and we need to fix
it going forward.
Senator SCOTT. Will the Biden administration go after States
that violated the law?
Mr. MILLER. States that violate the law?
Senator SCOTT. Yes. If States did not comply with the law, are
you going to go after them?
Mr. MILLER. The President does not have any tolerance for
fraudsters. He does not have any tolerance for not complying with
the law.
Senator SCOTT. If States decided to allow people to go on unem-
ployment, even though they were employed, gainfully employed,
would the Biden administration go after those States for allowing
that to happen?
Mr. MILLER. You have a combination of actions that happened.
During the early stage of 2020, where you had overwhelmed sys-
tems, you sometimes had undertrained employees making substan-
tial numbers of mistakes, sometimes someone who is eligible mak-
ing an overpayment or an underpayment, and other times an indi-
vidual committing fraud on the system. We should go after the
fraudsters, first and foremost, and dedicate our resources accord-
ingly.
Senator SCOTT. If anybody intentionally did not enforce the law,
you will go after them also?
Mr. MILLER. If someone identified that there is fraud, they
should go after those who are committing fraud.
Senator SCOTT. But somebody intentionally did not enforce the
law, will you go after them? If a State decided not to enforce the
law?
Mr. MILLER. If the State decided not to enforce the law.
33
Senator SCOTT. Right. If they decide to say, they are going to let
people go on unemployment that did not have any right to go on
unemployment, that is against the law.
Mr. MILLER. If that individual fraudulently obtained dollars
through the unemployment insurance system then yes, they should
be prosecuted accordingly.
Senator SCOTT. Mr. Turner, I am thankful the OIG initiated an
audit of the Department’s oversight of unemployment insurance in-
tegrity activities, and your team does a great job. Is your ongoing
investigations into the pandemic-related unemployment program,
in your investigation what have you uncovered so far?
Mr. TURNER. What we have uncovered is that, again, to go with
what Mr. Miller mentioned, there is a lack of training, a lack of
modernization, and in some cases there has been uneven distribu-
tion of the rules and regulations when it comes to unemployment
fraud by the States because there are obviously 54, 53 entities.
Senator SCOTT. So is it accurate that the Administration issued
guidance to the States saying they are not required to recoup erro-
neously disbursed funds?
Mr. TURNER. No, I have not seen anything. I know they put out
a waiver that the Department has recently sent out, and that waiv-
er specifically stated that fraud would not be tolerated.
Senator SCOTT. Do you believe the Administration is going to go
after States, the people that erroneously collected unemployment?
Mr. TURNER. I would expect they would. We plan on putting that
on our audit, in terms of looking at that area.
Senator SCOTT. All right. I thank all of you. Thank you.
Chairman PETERS. Thank you, Senator Scott.
Votes have been called. I am going to proceed to vote. Senator
Rosen will take the chair, and prior to her moving over here, Sen-
ator Lankford, you are recognized for your questions.
OPENING STATEMENT OF SENATOR LANKFORD
Senator LANKFORD. Thank you, Mr. Chairman. Thank you.
Thank you to the witnesses. Thanks for being here.
Mr. Miller, I want to follow up as well. Senator Scott had men-
tioned before that there had been some questions just on spending
and what has happened already with the spending that has oc-
curred, what is left of different accounts. You had mentioned before
you did not feel like some of the new spending for COVID needs
an offset. We are still trying to get answers to questions of what
has been spent, and what category.
Some pretty basic things. Obviously, COVID vaccine acquisition,
the distribution of the COVID vaccine, research and development
(R&D) for COVID vaccine, test production, test acquisition, thera-
peutics production and acquisition, PPE purchased. I mean those
are pretty standard questions to be able to go through on it, to be
able to get total dollars, to be able to see what has been spent from
each account and then what is unspent on it. How could we best
get those totals?
Mr. MILLER. Sure. First, overall, over 90 percent of funds have
been obligated over pandemic relief efforts. USAspending.gov as
well as the PandemicOversight.gov captures spending by recipient,
by State. In addition to that, at the request of Congress, OMB has
34
been providing ARP balances, ARP obligations, to budget commit-
tees, both parties.
Some specifics, $30.4 billion spent on COVID–19 vaccines; $13.5
billion spent in vaccine support, like distribution and tracking and
promoting vaccine. I am happy to provide that information. Senator
Romney also sent a letter to the White House, as you may be
aware, along similar lines.
Senator LANKFORD. Right. So we are trying to figure out, can we
also get what has been spent versus what is obligated?
Mr. MILLER. We sent a response to him with regards to the spe-
cifics, going through some of the key categories. Those online, our
USAspending.gov, has obligations as well as outlays, in terms of
what has been spent.
I would note, one of the things that is an important distinction
in some of the funds that have been unobligated, they may have
been allocated. For example, the biggest buckets within ARP is the
State and local relief fund at the Treasury Department. Because it
was tranched, a lot of States and counties know the amount of
money they are expected to get, and those tranches and the dates
are defined in the statute. That means in most cases they have ac-
tually budgeted for those resources, even though they have not yet
been obligated.
Senator LANKFORD. Do we have a listing of what has been repro-
grammed?
Mr. MILLER. Do we have a listing of what has been repro-
grammed? I would be happy to follow up with you on the specifics
of the question around that.
Senator LANKFORD. Beautiful. There are multiple different cat-
egories. We hear that monies are reprogrammed into other areas.
For instance, HHS moved money over to Office of Refugee Resettle-
ment (ORR), dealing with unaccompanied minors. We are trying to
get details of what has been reprogrammed, where were those re-
programmed.
DHS has been particularly difficult to be able to get repro-
grammed dollar amounts and what has been moved from HHS
down to the border. We understand quite a bit was moved to the
border. Obviously there are pandemic issues related there as well,
and they are still ongoing, but we are trying to be able to figure
out what was actually reprogrammed and sent down there. Can we
get a listing on that?
Mr. MILLER. I am happy to follow up with you on that.
Senator LANKFORD. That would be helpful.
Gene Dodaro, good to see you again.
Mr. DODARO. Good to see you, Senator.
Senator LANKFORD. Thanks for your extended work for so many
years and so many things. There are lessons to learn from this as
we go through. One of them, it deals with a topic that you and I
have talked about for years, and it is the taxpayer’s right to know,
that OMB has been very engaged in trying to be able to apply.
OMB has been engaged in trying to be able to determine cat-
egories, to be able to list out for taxpayer’s right to know. That is
an ongoing work behind the scenes for them, that I think they are
doing a really good job on trying to get done.
35
There are a lot of challenges in that. Are there lessons we can
learn from trying to categorize things through COVID relief to be
able to develop buckets of money in categories that could be
transitioned in lessons learned for the long term, for taxpayer’s
right to know obligation?
Mr. DODARO. Yes. There are always lessons to be learned out of
these activities. I think the main thing, though, that I am con-
cerned about, that I have been trying to deal with is getting more
timely information, regardless of the categories. This could help on
the categorization, particularly for emergency spending, and they
could adjust the codes that they use to code with Treasury on the
money.
But part of the problem is that to get the information you re-
questing, to get it up to date, you have to get it from each indi-
vidual agency. It is not on USAspending.gov, and it is delayed. You
really do not have that information available. To me, the timeliness
of this.
Now in the Recovery Act, when that was passed, the lesson
learned out of that is you had direct recipient reporting to a
website. You did not have to go through the agencies. In this case
that was not used, as the important part of this. We are still going
to have trouble finding out what the States did with the two funds
that they had, because they are going to distribute it to sub-recipi-
ents. There is no auditing done of sub-recipient data.
One of the recommendations I make in today’s testimony is to
have the IGs—their requirement for auditing the data on
USAspending.gov has expired, and unless Congress reinstates that
requirement, very few IGs will audit the data. The quality and
completeness of the data is still at risk. Of 57 or 56 entities that
the IGs looked at, 44 IGs found problems with completeness, accu-
racy of that information. That needs to be a requirement. Nobody
is auditing the sub-recipient data. I am going to take a look at
what we can do at GAO, working with the IG community or what-
ever.
The basic lesson learned out of all this is better categorizations,
as you suggest, and I think we have learned some things on that,
not only coding the spending data but the procurement data in the
systems. We have had some recommendations on that. But the
main thing is the quality, the completeness, and timeliness are still
major issues for all Federal spending.
Senator LANKFORD. Because we can get a big category and say
X amount of dollars has been allocated, but trying to be able to get
what it was spent for or where it went, how it went, was it actually
used for that purpose at the end of it, we are not able to see at
this point.
Mr. DODARO. No. You need better systems. One of the other rec-
ommendations that I recommended today, statutorily, is that Con-
gress reaffirm the requirement for OMB and the agencies to have
5-year system modernization plans. A lot of the systems, financial
management systems, are not able to produce that type of timely
information. They can do it once a year, to get an audited financial
statement, but to get the type of data, real-time data that you
have, we need better systems. There needs to be better plans to get
there.
36
Senator LANKFORD. Yes, we cannot do oversight of what we can-
not see. To go back to Mr. Turner’s comment earlier, billions of dol-
lars are allocated to States years ago to be able to improve their
unemployment systems, and those dollars were not actually allo-
cated in actually improving systems. Then every State was ham-
mered in 2020, and trying to be able to figure out how to be able
to deal with this. Secret Service and everyone else was engaged in
trying to be able to chase down fraud by the billions of dollars in
unemployment systems because the States did not actually allocate
the dollars toward actually modernizing their system. Additional
dollars were allocated to the States to be able to improve their sys-
tem, but we do not know if that is really being done at this point,
other than States putting pressure on individuals to say that can-
not happen again.
Mr. Turner, is that correct?
Mr. TURNER. That is correct, Senator.
Senator LANKFORD. Yes. That is an area that we are going to
have to be able to work on long-term in how we handle the over-
sight on it. Thank you to all of you. Mr. Horowitz, you got off clean
with me, so I apologize for that. We will visit another day.
Mr. TURNER. Although I would like to make one clarification.
Earlier we talked about improper payments as far as being $160
billion, and I think it was confusing as to whether that was im-
proper payment or fraud. The $160 billion was improper payment,
and there was a smaller subset that they have not figured out yet
what the fraud rate is.
Senator LANKFORD. Yes. It is still undetermined on how high the
fraud rate. We know it is in the billions, but it is still undeter-
mined what that number is.
OPENING STATEMENT OF SENATOR ROSEN
Senator ROSEN [presiding.] Thank you, Senator Lankford, for
bringing up IT modernization, and the reason the real need for
having systems that are nimble and flexible and work together,
and I am all for that and will work with anyone on trying to im-
prove that.
Thank you all for being here today. This is really an important
topic of accountability, how we spend our money, what the data is,
what we learn from it, what we do with it for the next time we
need to react to whether, God forbid it is not a pandemic, but react
to whatever situation that we have to do. We have an oversight re-
sponsibility.
We know when COVID–19 shut down our economy, almost ex-
actly two years ago, Congress did act quickly to provide support for
American workers and families in the form of enhanced unemploy-
ment assistance, direct tax credits, support for small businesses,
and other programs. Of course, we made sure that these laws had
unprecedented requirements around transparency, oversight, and
auditing, that make this hearing possible today. I think we prob-
ably need to extend those timeframes as they are about to expire.
But I want to talk a little bit about the SBA, because over the
past two years Federal relief programs, such as the Paycheck Pro-
tection Program, EIDL program have helped so many businesses,
so many small businesses in Nevada, across the Nation, keep their
37
doors open, keep their workers on the payroll. In my State of Ne-
vada, approximately 79,000 small businesses participated in the
PPP program, and for you to know that 99 percent of businesses
in the are small businesses. So it is particularly important to us.
But the PPP program helped us keep the doors open, helped peo-
ple pay their employees, and I really want to thank Nevada’s SBA
office, their employees, all our financial institutions. Everybody
worked hard to be sure their friends, their community members,
had all the proper tools to see it through, and we are not quite
through yet.
Mr. Dodaro, every program, every agency is different. We are leg-
islating in a crisis. Of course, we just had to go out and do what
we needed to do. We set up a number of new programs. How
should agencies like the SBA, which never before has stood up such
a large program in such a short amount of time, how can we help
them better develop strategies to prevent fraud? Can GAO provide
a general framework or assistance? Because I hope this is the last
time we have to do something so quickly but it may not be. And
so the lessons learned, how can we help the SBA help our small
businesses?
Mr. DODARO. Yes, Senator Rosen. First, we have developed a
framework for helping agencies prevent fraud and how they could
follow that process. Congress legislated GAO’s framework be imple-
mented in 2016. Unfortunately, a lot of agencies, including SBA,
did not implement that legislation as intended. They were sup-
posed to designate an entity to focus full-time on anti-fraud activi-
ties, do fraud risk assessments.
SBA, just in February 2022, designated their anti-fraud agency,
after I recommended again during the pandemic. They have done
their first risk assessments, but it is all done after all the money
has been spent.
There were expectations that these things be addressed before
the pandemic occurred, but the agencies did not move. There needs
to be more assertive encouragement, both from OMB and the Con-
gress, to focus on this going forward.
SBA also resisted overtures that I made early in the pandemic
to help them. During the global financial crisis we worked with the
Treasury Department to put in internal controls right in the begin-
ning of the Troubled Asset Relief Program (TARP). They were able
to get a clean audit opinion. We got most of the money back from
the banks.
SBA did not heed any of our recommendations. We even had dif-
ficulty getting information out of SBA on who was getting the loans
initially. I had to go to the Congress and try to get support from
the Congress to get basic information out of them. I have talked
to every administrator that has been there. It is better now than
it had been. But in the beginning they needed to accept some help,
and they needed help but they rebuffed it.
I think the lesson to me out of this thing is that it is better if
Congress, in legislating future emergency spending, make it very
clear about how the agency is to accept recommendations from the
oversight community and get some help, because we all have, col-
lectively, lots of experience. We could have helped them avoid a lot
38
of these pitfalls, and they need to aggressively implement and deal
with these fundamental management weaknesses ahead of time.
Senator ROSEN. I think you are exactly right. No time to waste.
When there is a crisis we need to have an all-hands-on-deck ap-
proach in order to do the right thing, particularly by taxpayer dol-
lars.
I know that all of my colleagues ahead of me talked a lot about
unemployment, and so I am not going to belabor the point about
that. But we know there was some fraud in unemployment. Of
course, there are always people who try to game the system, what-
ever the system.
Mr. Turner, could you talk about how fraud may have threatened
not just the taxpayer dollars but how it could have slowed down
legitimate applications? Because I know in Nevada we had people
who legitimately were waiting for their unemployment, and the
system, of course, was flooded with so many others. How does
fraud impact people who really deserve to get it, like in my State
of Nevada, and, of course, these outdated systems, maybe what role
that had to play in it?
Mr. TURNER. What it did, it delays those claims, is actually what
happens. I think the Department shoots for trying to get claims out
at 87 percent by 14 to 21 days. And so that did not occur in the
first couple of months, due to fraudulent attempts. That was part
of the challenge. It slowed the actual people that needed those ben-
efits from actually getting them.
We did some work on that and we found out—and we actually
put out an alert on that, to the Department, because we were con-
cerned about, obviously the goal is to get those out very swiftly,
and when that does not happen then you have people that are ac-
tually losing homes and other things like that.
The Department also identified, a few months later, that out of
53 entities, only five had met that requirement of getting it out in
14 to 21 days. So that is a challenge the Department understood,
and we did make them aware of through our audit reports.
Senator ROSEN. Thank you. As I said, as a former computer pro-
grammer systems analyst, I want to have nimble systems that col-
lects the data and supplies the data to all of us to do the appro-
priate audits. Because data tells a story if you know how to analyze
it correctly. This is case, again, for IT modernization, for us to be
nimble, to help us all do our jobs better.
I thank you all for being here today. It is a really important dis-
cussion. I thank you for your work and your insight, and ensuring
the effective use of the nearly $7 trillion in COVID–19 funds. It
was no easy task. But we look forward to working with each of the
witnesses here today on critical steps to ensuring that taxpayer
dollars are spent efficiently and effectively, because they deliver
critical services to the American people. The testimony we have
heard today will help inform our legislative efforts and I appreciate
it.
The record for this hearing will remain open for 15 days, until
5 p.m. on April 1, 2022, for the submission of statements and ques-
tions for the record.
This hearing is now adjourned. Thank you.
[Whereupon, at 12:18 p.m., the hearing was adjourned.]
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