S-4378-119
Read the second time. Placed on Senate Legislative Calendar under General Orders. Calendar No. 401.
Sponsored by Joni Ernst (R-IA)
What it does
This bill would create a broad package of measures to reduce fraud and improper payments across federal programs. It would require attendance-based billing for child care subsidies, mandate fraud-triggered audits in Medicare, Medicaid, CHIP, and ACA exchange plans, rescind unobligated balances from six major COVID-era relief laws, and extend statutes of limitations for pandemic-era fraud prosecutions. It would also bar entities controlled by agents of foreign governments in 22 designated countries from receiving federal financial assistance, prohibit public assistance recipients from conducting international money transfers (remittances), create financial incentives for federal employees who identify surplus agency funds, and strengthen reporting and data standards for the Temporary Assistance for Needy Families (TANF) program.
Who benefits
Federal taxpayers broadly, through reduced improper payments and rescission of unspent COVID funds directed to deficit reduction. Legitimate small businesses that compete against fraudulent SBA loan recipients. Whistleblower employees at federal agencies who would be eligible for cash awards for identifying surplus funds. Veterans, through a new anti-fraud officer position. Defense and non-defense contractors, through expanded whistleblower protections. State TANF administrators who gain clearer data standards. Prosecutors pursuing pandemic-era fraud, through extended statutes of limitations. Communities harmed by Medicare and Medicaid billing fraud. Afghan women and girls, indirectly, through the Taliban-opposition strategy.
Who is hurt
Child care providers who currently receive enrollment-based payments and may face cash flow disruptions under an attendance-only reimbursement model. Recipients of public assistance who send remittances abroad — a practice common among immigrant communities — who would be prohibited from conducting such transfers. Organizations or nonprofits with any operational ties to the 22 designated "covered nations" that may lose federal funding even if their work is humanitarian. States and localities that relied on unobligated COVID funds for ongoing programs, which would be rescinded. Small business owners with past fraud convictions (including associates) who would be permanently barred from most SBA assistance. Federal agencies that may face operational disruption if surplus-fund identification processes are applied broadly. Entities currently receiving federal grants that may face new compliance burdens under the foreign agent restrictions.
Supporters argue
Supporters argue that the federal government loses an estimated $175–$521 billion annually to improper payments, according to the Government Accountability Office, and that COVID-era programs alone saw over $200 billion in potentially fraudulent disbursements per the SBA Inspector General. They contend that attendance-based child care billing, fraud-triggered health care audits, and extended statutes of limitations are targeted, evidence-based tools to recover stolen funds and deter future fraud. They further argue that rescinding unspent COVID appropriations — years after the public health emergency ended — is fiscally responsible, and that barring foreign-agent-controlled entities from federal funding closes a genuine national security vulnerability.
Opponents argue
Opponents argue that several provisions sweep far broader than their anti-fraud rationale. The remittance ban would cut off legal financial transfers for millions of lawful immigrants and public assistance recipients who support family members abroad — a restriction critics contend is punitive rather than fraud-preventive, with no demonstrated link between remittances and federal program abuse. They further contend that rescinding unobligated COVID funds could terminate ongoing public health, housing, and infrastructure projects that communities depend on, and that the foreign agent funding ban's broad definition of "controlled" could inadvertently defund legitimate nonprofits and research institutions with any foreign national involvement.
Constitutional context
The remittance prohibition and foreign agent funding restrictions raise potential Fifth Amendment Due Process concerns, as they impose financial disabilities on individuals and entities based on status rather than individual conduct. The rescission of unobligated COVID funds implicates Congress's broad spending and appropriations power under Article I, Section 9, though courts have generally upheld congressional rescissions. Post-Loper Bright (2024), any agency rules implementing the bill's broad delegations — such as OMB guidance on improper payment recovery or HHS regulations on TANF data standards — would face independent judicial scrutiny rather than deference.
Checks and balances
Congress gains authority to rescind executive-branch appropriations and impose new conditions on federal spending; the executive branch (OMB, HHS, SBA, State Department) retains implementation discretion, and the President holds a national security waiver over COVID rescissions, preserving some executive flexibility.
Historical precedent
The Improper Payments Information Act of 2002 and the Improper Payments Elimination and Recovery Act of 2010 established the foundational federal framework for identifying and recovering improper payments that this bill would significantly expand.