Skip to comments.Government overpaid $14 billion in unemployment benefits
Posted on 07/09/2012 5:48:16 AM PDT by Hojczyk
Don't spend that unemployment check too fast. The government might ask you to pay it back.
Overpayments are a rampant problem in the unemployment insurance system. The federal government and states overpaid an estimated $14 billion in benefits in fiscal 2011, or roughly 11% of all the jobless benefits paid out, according to reports from the U.S. Labor Department. Of the states, Indiana was the worst offender, making more improper payments than it did correct ones.
Now, the U.S. Department of Labor and the states are in the midst of a massive effort to try to recoup some of their lost funds and avoid future overpayments. Where does the money go?
The vast majority of unemployment benefits do go to people in need. In 2010 alone they helped keep 3.2 million Americans out of poverty, according to the Census Bureau.
But of the overpaid funds, most end up in the hands of three types of people: Those who aren't actively searching for a job, those who were fired or quit voluntarily, and those who continue to file claims even though they've returned to work. Any of those circumstances would make a person ineligible for benefits.
The overpayment typically results from an administrative error made either by the government, the employer, the worker or a combination of the three.
In much rarer situations, people deliberately defraud the system, using fake documents or identities. Common scams involve prison inmates, illegal immigrants or even the deceased.
Vice President Joe Biden is charged with leading the Campaign to Cut Waste, an initiative started last year that aims to cut overpayments at federal agencies.
Unemployment insurance boasts the second highest rate for "improper payments" of any federal program, behind the National School Lunch Program.
(Excerpt) Read more at finance.yahoo.com ...
Shocked! Shocked, I tell you. But then again it IS the government running this thing; What did they expect the outcome to be?
Um... I'd like to see numbers and decide myself just how "rare" this is.
Here’s one for you:
I once sat on a grand jury.
Of the many cases heard was a young man who was charged with stealing a couple steaks from a grocery store. He gave himself up and had no record of prior criminal activity. He saw prison time for THIS.
On the other hand, a guy and his wife were charged with welfare fraud... the theft went into six figures and they had been at it for 11 years. It was all documented.
They did NOT see prison time and more or less got a slap on the wrist!!
Ever seen any government program, that concerns money, operate correctly......or within the law?
They probably had chillun' as well, and you and I would have had to have paid for their time with foster care ~ for the next 20 years.
The guy with the steaks? That's shop lifting. That's the two they caught him with.
Lesson about steaks ~ former Vice President Spiro Agnew got into accepting low level bribes way back early in his political career. A grocery store guy (they need zoning permits, et al) would stop by his house once a week and drop off a bag of groceries ~ mostly porterhouse steaks, lobster, that sort of thing ~ and this went on for maybe 30 years.
By the time the federales caught up to Agnew the grocery bag bribes were worth an incredible fortune, and were among the largest bribes he'd ever solicited and been paid.
So, too, with catching a streak thief ~ with no prior record!
These guys gotta' be stopped some time, and if you are a merchant you don't care if it's the first time or the hundredth time, it's part of a lifetime career of crime for which you want the perp punished.
Over the years a large percentage of the working public did that as a matter of course, so it became one of the things a tax auditor would look for if he thought someone was claiming salary paid to someone who didn't actually exist.
Then one day one of the guys in my shop found out that the federal reserve bank in Pittsburgh was having some trouble renting a new, larger warehouse for bond storage. What happened is they'd mail the bonds to the employees, and then, if the employees had moved, the bonds would be returned to the federal reserve bank in Pittsburgh (which ran that particular program).
The number of bonds returned had jumped to a level where they could no longer process them back in!
So, they asked for USPS help ~ maybe we could use our forwarding system to "kinda' hep" them find out if there was a problem and maybe short circuit things so these bonds didn't keep coming back.
So, we "hep'd" ~ and the problem seemed to be exceedingly widespread creation of phony employees ~ who bought bonds!
As these things go ~ new ways to steal ~ word spreads. Crooks are stupid and in this case everybody who had set up a phony worker decided to have the bonds forwarded rather than just delivered to a trusted intermediary. That way they could cash them sooner and get that money back.
So, why create a phony employee? There are several reasons but it gets down to this ~ the marginal tax rates on high income personnel in a small company, e.g. the President, Secretary, Treasurer ~ were then and still are much higher than the marginal tax rates on low income personnel in a typical small company. A clever business owner can create several phony employees at the lowest salary levels and retrieve that salary himself. It will be counted first as a cost of business for his corporate tax, and second as income for someone paying 10% or less ~ and maybe even getting EITC ~ and only that US bond hanging out there naked made it hard to do ~ but that's what would get you past the IRS auditors.
Once the federales knew what was going on they knew exactly what to do ~ and the bonds became prime evidence. I"m sure everybody here knows somebody who got tagged out eh. The bond storage problem gradually disappeared in Pittsburgh.
So, that brings us to the question of just how many employers out there would create how many phony employees ~ and it was less than 2 million!
So, how many employers continue to create phony employees only to put them on unemployment?
This one is a bit tougher since you have to pay unemployment insurance, but I"m sure the tax spread is sufficient to make it worthwhile ~
I think that answers the questions about one of the sources of fraud.
Check on anyone in the unemployment insurance system that has a new Caddy or BMW.
The RNC would do well to have Ron Johnson from WA do an ad about waste in goverment, showing examples of this, farm payments to billionaires who are not farmers, medicare fraud like the guy in Dallas that got 100 million + the ad would look like this, “Everytime you turn on the TV someone is talking about people cheating, why can’t we make government work better? BEcause our friends across the aisle neve allow a bad teacher, a crook in real estate or wall street to be punished.”