Think about the true scope of these errors - $50 billion is a lot of money. It means 50 million Americans, one sixth of the population in the country, are the beneficiaries of $1,000 a year. Did you get your $1,000? Or 10 million Americans are getting $5,000; or 5 million are getting $10,000 per year. We don’t know where all the money is going; we just know it is paid wrong. These errors are big money and so they are also big business now. Those who play fair miss out on the money; those who play fast and loose are too often rewarded. This is no way to run successful government.
If ever there was proof of the ineptitude of an overly complex welfare system, this is it. Can you image a business with that kind of problem in paying expenses? Most would be out of business in a matter of months. How we have evolved to this level of error is a study in the worst of government bureaucracy. We have created 8 independent agencies working 13 unique welfare programs (14 counting Medicaid) all with overly complex rules and thousands of administrators at the federal, state and local levels. Program administrators are all trying to monitor the “low-income” status of their users with no consistency in that definition and very little coordination or sharing of data. We have been doing things the same way for so long now the errors have become status quo. Each year reports are issued and bureaucrats’ establish plans and goals to make improvements. But the public ignores the problem and on we go to the next year never addressing the overall system architecture which is the basis of the errors in the first place.
The IRS is of particular wonderment. Their EITC program has the highest improper payment error rate in all of welfare – 22.7%. The reason as quoted by the Office of Management and Budget is “The complexity of the law contributes to confusion around eligibility requirements, mainly qualifying child relationship and residency rules. Other factors include high program turnover of one-third annually, return preparer errors, and fraud.” Imagine that – the IRS is in charge of compliance with tax law and yet can do no better than a 22.7% error rate. How can this be? How embarrassing. Citizens aren’t allowed that kind of discrepancy in tax reporting – we get fined and can be imprisoned with such incompetence.
This level of improper payments should give us pause to reevaluate our welfare system. Yet for all the problems with improper payments it is still the proper payments that yield an even bigger concern. Our welfare system is so poorly designed that even when it is functioning properly it is both expensive and ineffective. The system is horribly bifurcated, misses those most in need, pays far too much to the middle class, has marriage and work penalties imbedded in it and too often leads to dependency of the users (see the Welfare Issues Page).
Arthur Brooks, president of the conservative think tank the American Enterprise Institute, was quoted in the Huffington Post as saying it is time to declare peace on the Safety Net. He said “One of the things, in my view, that we get wrong in the free enterprise movement is this war against the social safety net, which is just insane.” Does this mean we should not abolish the federal safety net? OK we can agree with that - even Milton Freidman can find good reasons for a well-run, simple federal welfare system (See the Poverty Quote Page). We can declare peace on that issue but then we must move to reconstruction. The system cannot be left alone – it is just too messed up. If reconstruction is considered war, than we have no choice but to go to war.