A federal inspector general sent a stark warning to Congress, saying they are leaving a massive amount of stolen taxpayer money in scammers’ pockets because lawmakers haven’t extended the statute of limitation on pandemic unemployment fraud.

Labor Department Inspector General Larry D. Turner said he’s already let staff go, shut down some potential cases and put 150,000 cases on hold as he waits to see whether Congress gives him more money and more time to complete the investigations.

As a result, the OIG has been forced to wind down its pandemic oversight work.

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“I remain concerned that these actions will have detrimental results, thus leading to fewer OIG audits and recommendations, lost opportunities to hold fraudsters accountable, and hundreds of millions of taxpayer dollars left unrecovered,” Mr. Turner said last week in his latest semiannual report to Congress.

Congress opened up the national wallet in March 2020 to pump money into the economy through three big assistance programs. Two were small business lending and the third was expanded unemployment benefits, which saw some $800 billion doled out.

Analysts say hundreds of billions of those dollars were stolen by fraudsters who filed applications in others’ names, taking advantage of ancient state systems and lax identity checks.

The result was a pay-and-chase model where the government paid most claims and figured it would try to claw back wrong payments.

Except the statute of limitations is five years, and that means the first claims will start aging out early next year.

Mr. Turner said his office has already spurred 1,700 cases, but it has some 150,000 more open complaints. And now it’s starting to shelve them.

“Despite our dwindling resources, the OIG anticipates continuing the investigation of already open pandemic-related UI fraud matters until the statute of limitations expires,” he said. “However, due to the lack of resources and impending expiration of the statute of limitations, we will significantly curtail the opening of any new pandemic UI fraud investigations. Further, we will continue the pause in reviewing the approximately 150,000 open UI fraud complaints we currently have awaiting review.”

Congress has doubled the statute of limitations to 10 years for fraud in the two small business lending programs, but for some reason has been unable to agree on an extension for unemployment fraud.

“It’s the taxpayers’ money and Congress should do everything possible to get some of it back. But investing in those kinds of activities doesn’t make headlines back home,” said Thomas A. Schatz, president of Citizens Against Government Waste.

The House did pass legislation last year to extend the statute of limitations.

It cleared on a 230-200 vote with just 10 Democrats joining the GOP in backing it. Most Democrats objected to some provisions the GOP added, including cuts to money already allocated to states to improve their unemployment systems.

Some Democrats have also fretted about a focus on fraud, worrying it would sour Americans on the importance of government assistance programs.

Still, there seems to be general agreement that those who did bilk the government should be held to account.

Key senators have announced their own bipartisan plan to double the statute of limitations, and President Biden touted the idea in his State of the Union address, which makes the lack of action all the more striking.

Mr. Turner, the inspector general, said Congress also gave him less money than he’d anticipated for last year and this year.

Mr. Schatz said it should be easy for lawmakers to find the money. His group will soon release its latest “Pig Book,” an annual compilation of pork-barrel spending, and he said there’s more than enough money in there to cover what the inspector general would need to claw back.

“It’s multiple return on the investment,” Mr. Schatz said.