The Department of Government Efficiency, led by Elon Musk, has reportedly identified hundreds of millions of dollars in fraudulent unemployment claims, which it promotes as a significant instance of governmental overspending.

However, a significant challenge arises: federal investigators seemingly uncovered an identical fraudulent scheme years prior, executed on a considerably larger magnitude.

In a recent post on X, the social media site owned by Musk, DOGE said that a first look at unemployment insurance claims since 2020 showed some unusual things. It found that 24,500 people over 115 years old claimed $59 million in benefits. Also, 28,000 people between 1 and 5 years old collected $254 million. And 9,700 people with birthdates more than 15 years in the future received $69 million from the government.

The tweet elicited a predictable partisan response of either doubt or acclaim, including from Musk himself, who described his team's findings as "so extraordinary" he reviewed them multiple times before fully comprehending their significance.

"The statistics are notably concerning," he remarked.

However, Chavez-DeRemer could check with her department's Office of the Inspector General, as this kind of fraud had already been reported there by the same type of federal workers DOGE has criticized.

"They are attempting to portray a narrative suggesting government inefficiency and incompetence, claiming to uncover issues that eluded governmental detection," states Michele Evermore, who specialized in unemployment matters at the U.S. Department of Labor during the previous Biden administration. "They are identifying fraudulent activities that were already flagged as such, presenting it as a discovery of fraud."

The Social Security Act of 1935 established unemployment benefits within the federal legal framework, yet delegated to individual states the responsibility for creating systems to gather unemployment taxes, handle applications, and distribute assistance.

Even though states mostly manage their own unemployment systems, special aid programs – especially the much bigger benefits started by the first Trump administration when the COVID pandemic began – bring more direct federal help and a lot of new people needing benefits into the system.

Under normal circumstances, state unemployment systems exhibit a range of performance from "very well" to "terribly," according to Stephen Wandner, an economist at the National Academy of Social Insurance and author of "Unemployment Insurance Reform: Fixing a Broken System." With the economic shockwave of COVID and the resulting deluge of claims overwhelming state capabilities, Wandner observed a significant increase in systems functioning "quite terribly."

President Trump enacted COVID unemployment relief legislation on March 27, 2020, and from its inception, it proved highly susceptible to fraudulent activity. Approximately two weeks later, a Department of Labor memorandum cautioned state officials that the augmented benefits rendered unemployment programs "a prime target for fraud, with substantial numbers of imposter claims being submitted using purloined or fabricated identities."

The memo also suggested a way for states to help people whose identities were stolen to get unemployment benefits illegally. To record the fraud but stop innocent people from being connected to it, the memo said states could make a 'pseudo claim'.

These false claims led to records showing very young children and people over 100 years old getting money. The Labor Department's inspector general counted about 4,895 unemployment claims from people over 100 between March 2020 and April 2022. But another memo from the department said these claims happened because states changed birth dates to protect people whose identities were used.

According to the 2023 memo, many of the claims found were not payments to people over 100 years old, but were actually 'fake records' of claims that were already known to be fraudulent.

A spokesperson for the Labor Department did not address inquiries regarding Musk's assertions, and the DOGE provided no specifics on the method used to detect the alleged fraud or if it replicates previous findings.

While DOGE purportedly scrutinised a longer timeframe than federal investigators had previously, it only identified $382 million in fraudulent unemployment claims, a negligible amount compared to what investigators had already uncovered.

In 2022, the Department of Labor said that they thought unemployment fraud during the COVID-19 time was more than $45 billion. Later, the Government Accountability Office said the real amount was probably much higher, between $100 billion and $135 billion.

"I doubt this comes as a surprise to anyone," states Amy Traub, an authority on unemployment at the National Employment Law Project. "It has been extensively documented. Numerous congressional hearings have been conducted."

If the recent claims about DOGE seem familiar, it's probably because they are similar to its earlier claims about Social Security payments to people who were dead or very old. Those earlier claims were proven wrong.

Consequently, Doge becomes an unreliable medium of communication even in instances of documented deception, such as fraudulent unemployment claims.

Jessica Reidl, who works at the conservative think tank The Manhattan Institute, is a strong supporter of saving government money. She has written 600 articles about getting rid of federal waste. She thinks there is a lot of fraud in unemployment insurance, but she finds it hard to trust anything from DOGE. She says DOGE has not worked well and may have acted against the law.

"When DOGE says that very old dead people are getting unemployment benefits in large numbers, I start to doubt it," Reidl says. "DOGE hasn't been reliable about that before."

Traub suggested that the significant rise in unemployment fraud during the pandemic prompted states to introduce enhanced security protocols, and she found it puzzling that Musk's team was publicizing past fraud as if it were a recent revelation.

Business leaders and economists are warning about a national recession, so it makes sense to think about unemployment, Traub says. He adds that this is an attack on the reputation of a very important program, and maybe an attempt to reduce public support for unemployment insurance when it is needed most.