PUA Overpays Unemployment Benefits and Forces Citizens to Pay for its Mistakes
Despite the errors that set the overpayments of unemployment benefits in motion being in the hands of the state, the burden has been shifted to the people that the program was intended to help most.
2020 may be in the rearview mirror, but the changing of the year has not ended the global pandemic or its consequences. The latest of those consequences has been a series of notices instructing people to return “excess” unemployment benefits received under the Pandemic Unemployment Assistance (PUA) program. So far, hundreds of thousands of people across the nation have received these notices from their local state government.
For all of them, the question is the same: “How am I going to repay this?”
How Much is “Too Much”
Although the efficacy and consequences of unemployment benefits are worthy of great debate, unemployment programs have strict guidelines for how much someone is eligible for. These guidelines determine both what type of program someone should be enrolled in and where one fits on the range of available benefits within said program. However, internal reviews have since revealed that these guidelines were not enforced with the utmost precision during the onset of the pandemic.
Countless individuals were wrongfully approved for more than what they were actually eligible for. In other words, they were given too much money. And who was at fault? Well, it was not an elaborate bank heist or hackers on the dark web who misdirected the money. No. It was actually a series of administrative errors.
Yet, the oversight here is not like turning in a paper with a typo. If I misspell a word in this essay, I have the luxury of knowing that it may be fixed with a keystroke. However, if Murph and Shelby down the street receive extra money in unemployment benefits, it is unlikely that it will just sit in their bank account. For many, these benefits only just barely cover rent, bills, and food.
And to make matters worse, although one misdirected check would have been manageable, the amount only piled higher with each weekly payment. As 2020 came to a close, hundreds of thousands of people were receiving notices stating that they owed as much as $7,100, $9,770, and even $20,000.
Haste Makes Waste
Unemployment programs have experienced similar administrative errors in the past. Usually state governments “forgive” the mistake as long as there was no fraud involved. But the events of 2020 were anything but business as usual.
To combat the widespread unemployment, Congress included the Pandemic Unemployment Assistance (PUA) program in the CARES Act. As Ryan Bourne has observed, the intent of Congress during the drafting of the CARES Act was to get funding out as quickly as possible and consider the details at a later time. This haste led the PUA to be governed by statutes that ruled out the ability to forgive overpayments.
So despite the errors that set the overpayments in motion being in the hands of the state, the burden has been shifted to the people that the program was intended to help most. Notices were mailed out across the nation to those who were overpaid to let them know their current benefits will be reduced to pay off the difference. In some cases, states may even put liens on homes or garnish future wages. Regardless of one’s stance in the debate over the practice of unemployment benefits, everyone should be able to agree that this is a clear violation of the program’s design.
Two Steps Forward, One Step Back
The bright side of this story is that Congress did not repeat its mistake in the latest round of COVID-19 relief legislation. On page 1,932 of the Consolidated Appropriations Act of 2021, the issue of overpayments is addressed and a solution is offered.
And yet, there is a caveat. The act says that the overpayment must not have been the fault of the individual, and rightly so. This is not a get out of free card for fraudsters. However, the act goes on to say that repayment will be waived if such payment would be “contrary to equity and good conscience.” Because these two conditions are joined at the hip with a carefully placed “and,” both must be fulfilled. And because the latter condition is so vague, it is likely that it will be used to make sure some Americans are forced to pay back the money. This policy may fly the banner of forgiveness, but it seems the devil is in the details.
To be clear, the administrative errors that set this series of unfortunate events in motion were likely honest mistakes. They occurred during an unrivaled period of uncertainty. Unemployment programs across the nation were experiencing record highs in terms of applicants. However, this does not excuse the mistake nor justify the decision to force citizens to pay the price.