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High Fraud Levels in Unemployment Programs

President Obama’s review of wasteful federal spending is digging up some unsettling numbers. According to the Labor Department, at a time of high unemployment and tight budgets dozens of states are fraudulently helping too many people, not too few. The WSJ reports:

Nearly $19 billion in state unemployment benefits were paid in error during the three years that ended in June, new Labor Department data show…

The figures were released Wednesday as the Obama administration promotes its bid to reduce waste at federal agencies. The federal government foots the bill for administering the programs, and states are supposed to pay for the benefits…

The amount represents more than 10% of the $180 billion in jobless benefits paid nationwide during the period… Layers of federal programs that help provide benefits for up to 99 weeks weren’t included.

Some of the violations are technical rather than substantive, but it’s clear that many state governments aren’t doing their jobs.  Uncle Sugar isn’t made of money these days, and $20 billion is a lot of money to fall through the cracks.  States that can’t be bothered to stop fraud and abuse in their unemployment programs should have their funds cut; the threat alone would ensure better accounting.

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  • Anthony

    Above directly related to “The New Costs Of Blue” and begs the qusetion why? How is it state governments are not doing their jobs. Violations, whether technical or substantive, speak to democratic governance and blue model alone cannot be held accountable – perhaps we are accountable also.

  • Toni

    There is no truer truism: Create a pot of government money, and swindlers go to work. Whether Medicare, Medicaid, Social Security Disability, food stamps, or Unemployment Insurance, all are prey for crooks.

    Remember, too, the recent food stamp scandals. State bureaucrats were taking payments to falsify forms or look the other way when the wrong people got aid. Like campaign money in California, pots of government money are siphoned by crooks and pols alike.

    This is another argument for smaller government. The less money the government hands out, the better the payments can be overseen, and the less loot the swindlers get.

    Not all the missing $19 billion Unemployment Insurance went for “fraud” and “abuse.” (What’s the difference?) But surely a lot did.

  • Luke Lea

    The real scandal isn’t unemployment insurance but disability, both SS and workmen’s comp. Especially in Puerto Rico but no doubt everywhere. The incentives are all wrong. You can fake back pain, carpel tunnel; the real cost is born by the other employees in case of workmen’s comp, but they don’t even know it. In big cities it is hopeless. Disability insurance ideally would be financed and administered at the local community level where everyone can keep an eye out on everyone else.

  • krugginator

    But it’s all good, right?

    I mean, the more money paid out by the government, the faster the economy improves. So why stop at $19 billion in overpayments? Why not $190 billion?

    If you doubt me, ask Paul Krugman. He has one of those Nobel thingies.

  • Steve W from Ford

    I’d say that 20 B probably understates the problem. I know a number of unemployed people and every one of them scams the system by using multiple ways of making sure they don’t get a job until the 99 weeks runs out. This (and most) programs are run by bureaucrats that don’t want to find fraud. Finding and dealing with fraud just makes more work and they already believe they are overworked. It is far easier to just go with the flow and shovel out the $$. Was ever thus and will not change no matter how many investigations the politicians launch.

  • Kenny

    Food stamps, Head Start, etc. etc. are all riddled with waste, inefficiency and outright corruption (fraud, bribes, etc.)

  • Toni

    @Luke Lea: Some people really DO need Social Security Disability. Like me.

    I got multiple sclerosis in 1984. Over the years, it progressively disabled me so that I had to give up a fabulous job (Forbes senior editor) in 2000. And I really did have to quit. I’d been getting 4-6 hours of sleep a night, trying to cope with all my symptoms AND do a demanding job. I didn’t know how bad I’d felt until I started sleeping eight hours a night.

    I have private long-term disability insurance through Forbes. Periodically they send me to my neurologist for him to certify that my permanent disability is still permanent. MS doesn’t cure itself.

    Think of breadwinners who get in wrecks and become quadriplegics. When my sister-in-law was diagnosed with Stage 4 cancer, she qualified; of course, she could no longer work. A friend’s son is schizophrenic. Plenty of people do encounter extreme misfortune and need Social Security Disability.

    Is there “fraud and abuse”? SURE. it needs to be weeded out and prosecuted. But the program really does serve some of your fellow citizens.

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