Personal Finance

White House, Senate Democrats unveil bill to battle pandemic aid fraud

Published

11 months ago

April 10, 2024

Senate Democrats on Tuesday unveiled a sweeping, roughly $1.3 billion bill that would expand the federal government’s powers to find and prosecute pandemic fraud, as Washington scrambles to recover the federal aid stolen by scammers during the worst economic crisis in a generation.

The measure, which would deliver on an earlier budget request from President Biden, arrived as the Justice Department announced that its efforts to date had resulted in charges against more than 3,500 defendants and the seizure or forfeiture of more than $1.4 billion in illegally obtained coronavirus relief funds.

But the new spending package immediately faced the prospect of a tough slog on Capitol Hill: Even though lawmakers often complain about waste, fraud and abuse, they have failed for years to overhaul government benefits, upgrade computer systems or take other steps that would safeguard federal funds in a future emergency.

The newly proposed legislation would devote about $675 million toward guarding protecting programs from identity theft, aiming to ward off criminals who often use real Americans’ stolen information to collect government aid. With it, lawmakers would allocate roughly $550 million to the Justice Department and leading inspectors general to bolster their oversight of federal spending.

The bill is authored by Sen. Dick Durbin (D-Ill.), the majority whip; Sen. Gary Peters (D-Mich.), who leads the chamber’s Homeland Security and Governmental Affairs Committee; and Sen. Ron Wyden (D-Ore.), the chairman of the Finance Committee. The trio of lawmakers coupled their proposed new spending with additional powers for federal law enforcement officials, who would gain more time to investigate crimes targeting certain pandemic relief programs.

“Bad actors got their hands on money that was meant to help our communities get through what was an incredibly difficult time,” Peters told reporters, adding that the proposal would help the government “get back stolen funds.”

The legislation follows four years after the U.S. government first marshaled its historic response to the pandemic, adopting aid packages that would total more than $5 trillion in federal aid. The money ultimately rescued the economy, helping workers who were out of a job and preserving businesses from shuttering forever. But the funds also became a tempting target for criminals, who seized on Washington’s haste and generosity starting in the Trump administration and racked up billions of dollars in fraud.

At the height of the pandemic, scammers targeted the nation’s unemployment insurance program, stealing the identities of real people to obtain benefits they did not deserve, according to a year-long investigation by The Washington Post, the Covid Money Trail. Last year, federal officials estimated that fraudsters stole $135 billion from the program, amounting to $1 of every $7 spent on jobless benefits.

Others beginning in 2020 deceived the Small Business Administration using fake tax records, ineligible Social Security numbers and names of the dead, obtaining low-interest loans that were supposed to help companies maintain their payrolls during the economic crisis. Two relief funds — the Paycheck Protection Program, or PPP, and the Covid-19 Economic Injury Disaster Loan, or EIDL — together may have been responsible for more than $200 billion in fraud-related losses, the agency’s inspector general has found.

Gene Sperling, a senior adviser to the president, attributed the rampant theft of taxpayer dollars to a lack of investment in federal technology, an overwhelming demand for federal aid and “the removal of several basic anti-fraud safeguards” at the start of the pandemic. That, he said, “led the Biden administration to inherit historic levels of fraud.”

In response, Biden in 2022 announced a new chief prosecutor for pandemic fraud at the Justice Department. The following year, he asked Congress to approve a $1.6 billion package that would toughen federal enforcement against coronavirus-related crimes, while bolstering U.S. aid programs to prevent future identity theft.

Under Biden’s watch, the Justice Department has also ramped up its enforcement efforts: In August, for example, federal prosecutors announced that they had brought 718 charges and other sanctions during a three-month sweep, totaling about $836 million in alleged fraud. On Tuesday, Attorney General Merrick Garland highlighted some of those prosecutions, stressing that the government’s work is still “far from over.”

But the activity has stood in stark contrast with the delays on Capitol Hill, where lawmakers for years have failed to deliver on Biden’s requests, leaving federal watchdogs underfunded. Often, House Republicans have blasted the president for misspending coronavirus relief money, even though federal investigators have found the worst abuses occurred during the Trump administration. No GOP lawmakers signed onto the new bill unveiled Tuesday, though party lawmakers have backed some of the proposed changes to unemployment insurance and other federal benefit programs.

Personal Finance

Social Security plans to cut about 7,000 workers. That may affect benefits

Published

6 hours ago

March 3, 2025

Business Finance News

The Social Security Administration office in Brownsville, Texas.

Robert Daemmrich Photography Inc | Corbis Historical | Getty Images

The Social Security Administration plans to shed 7,000 employees as the Trump administration looks for ways to cut federal spending.

The agency on Friday confirmed the figure — which will bring its total staff down to 50,000 from 57,000.

Previous reports that the Social Security Administration planned for a 50% reduction to its headcount are “false,” the agency said.

Nevertheless, the aim of 7,000 job cuts has prompted concerns about the agency’s ability to continue to provide services, particularly benefit payments, to tens of millions of older Americans when its staff is already at a 50-year low.

“It’s going to extend the amount of time that it takes for them to have their claim processed,” said Greg Senden, a paralegal analyst who has worked at the Social Security Administration for 27 years.

“It’s going to extend the amount of time that they have to wait to get benefits,” said Senden, who also helps the American Federation of Government Employees oversee Social Security employees in six central states.

Officials at the White House and the Social Security Administration were not available for comment at press time.

The Social Security Administration on Friday said it anticipates “much of” the staff reductions needed to reach its target will come from resignations, retirement and offers for Voluntary Separation Incentive Payments, or VSIP.

More reductions could come from “reduction-in-force actions that could include abolishment of organizations and positions” or reassignments to other positions, the agency said. Federal agencies must submit their reduction-in-force plans by March 13 to the Office of Personnel Management for approval.

Cuts may affect benefit payments, experts say

Former Social Security Administration Commissioner Martin O’Malley last week told CNBC.com that the continuity of benefit payments could be at risk for the first time in the program’s history.

“Ultimately, you’re going to see the system collapse and an interruption of benefits,” O’Malley said. “I believe you will see that within the next 30 to 90 days.”

Other experts say the changes could affect benefits, though it remains to be seen exactly how.

“It’s unclear to me whether the staff cuts are more likely to result in an interruption of benefits, or an increase in improper payments,” said Charles Blahous, senior research strategist at the Mercatus Center at George Mason University and a former public trustee for Social Security and Medicare.

Improper payments happen when the agency either overpays or underpays benefits due to inaccurate information.

Top Social Security official exits after refusing DOGE access to sensitive data

With fewer staff, the Social Security Administration will have to choose between making sure all claims are processed, which may lead to more improper payments, or avoiding those errors, which could lead to processing delays, Blahous said.

Disability benefits, which require more agency staff attention both to process initial claims and to continue to verify beneficiaries are eligible, may be more susceptible to errors compared to retirement benefits, he added.

Cuts may have minimal impact on trust funds

Under the Trump administration, Social Security also plans to consolidate its geographic footprint to four regions down from 10 regional offices, the agency said on Friday.

Ultimately, it remains to be seen how much savings the overall reforms will generate.

The Social Security Administration’s funding for administrative costs comes out of its trust funds, which are also used to pay benefits. Based on current projections, the trust funds will be depleted in the next decade and Social Security will not be able to pay full benefits at that time, unless Congress acts sooner.

The efforts to cut costs at the Social Security Administration would likely only help the trust fund solvency “in some miniscule way,” said Andrew Biggs, senior fellow at the American Enterprise Institute and former principal deputy commissioner of the Social Security Administration.

What President Donald Trump is likely looking to do broadly is reset the baseline on government spending and employment, he said.

“I’m not disagreeing with the idea that the agency could be more efficient,” Biggs said. “I just wonder whether you can come up with that by cutting the positions first and figuring out how to have the efficiencies later.”

Personal Finance

Student loan borrowers pursuing PSLF are ‘panicking.’ Here’s what to know

Published

7 hours ago

March 3, 2025

Business Finance News

Students walk through the University of Texas at Austin on February 22, 2024 in Austin, Texas.

Brandon Bell | Getty Images

As the Trump administration overhauls the student loan system, many borrowers pursuing the Public Service Loan Forgiveness program are worried about its future.

“There’s a lot of panicking by PSLF borrowers due to the uncertainty,” said higher education expert Mark Kantrowitz.

PSLF, which President George W. Bush signed into law in 2007, allows certain not-for-profit and government employees to have their federal student loans canceled after 10 years of payments.

Here’s what borrowers in the program need to know about recent changes affecting the program.

IDR repayment plan applications down

Some borrowers’ PSLF progress has stalled

While the legal challenges against SAVE were playing out, the Biden administration paused the payments for enrollees through a forbearance, as well as the accrual of any interest.

Unlike the payment pause during the pandemic, borrowers in this forbearance aren’t getting credit toward their required 120 payments for loan forgiveness under PSLF. It’s unclear when the forbearance will end.

But while the applications for other IDR plans remain unavailable, borrowers in SAVE are stuck on their timeline toward loan forgiveness, Kantrowitz said. If you were on an IDR plan other than SAVE, you will continue to get credit during this period if you’re making payments and working in eligible employment.

The Education Department is now tweaking the applications to make sure all their repayment plans comply with the new court order, an agency spokesperson told CNBC last week.

It will likely be months before the Department has reworked all the applications and made them available again, Kantrowitz said.

Those who switch to the Standard plan will continue to get PSLF credit, but the payments are often too high for those working in the public sector or for a nonprofit to afford, experts said.

‘Buy back’ opportunity can help

While it’s frustrating not to be inching toward loan forgiveness for the time being, an option down the road may help, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.

The Education Department’s Buyback opportunity lets people pay for certain months that didn’t count, if doing so brings them up to 120 qualifying payments.

For example, time spent in forbearances or deferments that suspended your progress can essentially be cashed in for qualifying payments.

The extra payment must total at least as much as what you have paid monthly under an IDR plan, according to Studentaid.gov.

Borrowers who’ve now been pursuing PSLF for 10 years or more should put in their buyback request sooner than later, Kantrowitz said.

“The benefit is likely to be eliminated by the Trump administration,” he said.

Keep records

Borrowers have already long complained of inaccurate payment counts under the PSLF program. While the student loan repayment options are tweaked, people could see more errors, Kantrowitz said.

“A borrower’s payment history and other student loan details are more likely to get corrupted during a transition,” he said.

As a result, he said, those pursuing PSLF should print out a copy of their payment history on StudentAid.gov.

“It would also be a good idea to create a spreadsheet showing all of the qualifying payments so they have their own count,” Kantrowitz said.

With the PSLF help tool, borrowers can search for a list of qualifying employers and access the employer certification form. Try to fill out this form at least once a year, Kantrowitz added.

Personal Finance

Treasury Department halts enforcement of BOI reporting for businesses

Published

10 hours ago

March 3, 2025

Business Finance News

The US Treasury building in Washington, DC, US, on Monday, Jan. 27, 2025.

Stefani Reynolds | Bloomberg | Getty Images

The U.S. Department of the Treasury on Sunday announced it won’t enforce the penalties or fines associated with the Biden-era “beneficial ownership information,” or BOI, reporting requirements for millions of domestic businesses.

Enacted via the Corporate Transparency Act in 2021 to fight illicit finance and shell company formation, BOI reporting requires small businesses to identify who directly or indirectly owns or controls the company to the Treasury’s Financial Crimes Enforcement Network, known as FinCEN.

After previous court delays, the Treasury in late February set a March 21 deadline to comply or risk civil penalties of up to $591 a day, adjusted for inflation, or criminal fines of up to $10,000 and up to two years in prison. The reporting requirements could apply to roughly 32.6 million businesses, according to federal estimates.

The rule was enacted to “make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures,” according to FinCEN.

In addition to not enforcing BOI penalties and fines, the Treasury said it would issue a proposed regulation to apply the rule to foreign reporting companies only.

President Donald Trump praised the news in a Truth Social post on Sunday night, describing the reporting rule as “outrageous and invasive” and “an absolute disaster” for small businesses.

Other experts say the Treasury’s decision could have ramifications for national security.

“This decision threatens to make the United States a magnet for foreign criminals, from drug cartels to fraudsters to terrorist organizations,” Scott Greytak, director of advocacy for anticorruption organization Transparency International U.S., said in a statement.

Greg Iacurci contributed to this reporting.