The kindness con: Fraudsters exploit America’s safety net
Governments have been handing out public work since men were laying stones on the Appian Way. And wherever government hands out money, people line up to get some.
Abraham Lincoln was said to have faced so many office-seekers and applicants for government favors that he finally complained, in his usual earthy fashion, that “there are too many pigs for the teats.”
The Democratic Socialists of America do not own the word ‘kindness.’
The pigs have multiplied.
During the New Deal, Franklin Roosevelt dramatically expanded Washington’s role in the economy. His administration also strengthened organized labor. The Wagner Act of 1935 guaranteed workers the right to organize and bargain collectively, and unions became a central pillar of the Democrat coalition that dominated American politics for decades.
The same political pattern appeared again during the War on Poverty.
Michael Harrington’s 1962 book, “The Other America,” helped force poverty onto the national political agenda. Lyndon Johnson’s anti-poverty task force later brought Harrington to Washington as a consultant.
The federal government also needed a way to measure poverty. That measure was developed principally by Mollie Orshansky, an economist at the Social Security Administration, whose thresholds became the basis of the official federal poverty measure.
Then came the Great Society: Medicare, Medicaid, food assistance, housing programs, and a vast expansion of Washington’s responsibility over Americans’ lives and livelihoods.
The political argument over those programs has raged ever since. But one fact should not be controversial: Americans have transferred staggering amounts of wealth through government because they believe people in genuine need should be helped.
That is kindness on an industrial scale. And wherever kindness operates on an industrial scale, thieves notice.
The Government Accountability Office estimates that the federal government loses between $233 billion and $521 billion every year to fraud, based on data from fiscal years 2018 through 2022.
That is not “waste” in the loose political sense. The GAO is estimating losses from deliberate fraud.
Look around the country. In Minnesota, the House Oversight Committee says at least $300 million was stolen through the Feeding Our Future child-nutrition scandal. The committee also says federal prosecutors estimate that fraud involving several high-risk Medicaid programs could total billions.
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In New York, federal prosecutors charged 15 defendants in health care schemes involving more than $10.6 billion in fraudulent billings to Medicare, Medicaid, and private insurers.
Arizona’s Medicaid system was hit by another grotesque scheme aimed at programs serving Native Americans struggling with addiction. The state attorney general says losses from the wider scandal reached into the billions. In one recent federal case alone, an addiction-treatment operator was sentenced to 14 years after fraudulently billing Medicaid more than $69 million.
In California, Paul Richard Randall orchestrated a scheme that submitted nearly $270 million in false Medi-Cal claims for expensive medications that were often unnecessary or never provided. Medi-Cal actually paid about $179 million. Randall got 30 years in federal prison.
Across seven Southeastern states, the Justice Department this summer announced 17 cases involving more than $350 million in intended losses involving SNAP, housing benefits, Small Business Administration loans, and tax fraud.
This thieving from American kindness is nationwide.
The Trump administration has now made federal fraud a major target. This month, the government canceled Affordable Care Act policies covering roughly 760,000 people whose enrollments it says were fraudulent or otherwise ineligible. The administration projects about $2.2 billion in savings.
It turns out that industrial-scale redistribution creates industrial-scale opportunities for fraud.
The Biden-era immigration surge adds another political argument. The Congressional Budget Office estimates net immigration at roughly 1.5 million people in 2021, 2.8 million in 2022, 3.3 million in 2023, and 2.7 million in 2024. Much of that increase fell into the CBO’s “other foreign national” category, which includes people who entered without lawful status as well as others admitted under temporary authorities.
But illegal immigrants are generally barred from SNAP, nonemergency Medicaid, SSI, TANF, and most federal housing assistance. States can choose to spend their own taxpayers’ money anyway. California sure does, to the tune of $22 billion a year.
And immigration has a political consequence separate from voting. The census counts residents, not merely citizens, for congressional apportionment. Illegal aliens count in those population totals just like everyone else living in the country.
When Washington spends money on a colossal scale, responsibility becomes diffuse. A federal agency sends money to a state. The state sends it to a provider. The provider bills a program. A nonprofit administers another piece. Somewhere along that chain, the pigs find the teats.
Then everybody expresses shock.
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Perhaps the 50 states should shoulder far more responsibility for caring for their own poor. Perhaps Washington should stop pretending that every human problem requires another federal funding stream.
The alternative is industrial-scale socialism accompanied by industrial-scale fraud.
Something else eventually gets stolen, too: trust. Every dollar stolen from Medicaid makes taxpayers more suspicious of Medicaid. Every fake food-benefit claim makes it harder to defend assistance for the family who actually needs groceries. Every crooked nonprofit feeds the suspicion that “compassion” has become a business model.
That may be the most destructive theft of all.
The Democratic Socialists of America do not own the word “kindness.” Neither does any political party. Americans who work, pay taxes, and agree to help their neighbors have every right to demand that their money reach the people it was intended to help.
And they have every right to be furious with the pigs at the teats who steal it.
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Will the public sector ever come to grips with the scale of the problem?
The current major problems of federal budget pressures and health care affordability for all consumers require action.
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A new Government Accountability Office report provides yet more reasons for Congress not to extend the enhanced Obamacare subsidies that expire at the end of the month.
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