When taxpayer dollars that are reserved to protect the most vulnerable of our society are siphoned off by able-bodied fraudsters, it’s time to rethink the system. Here’s one creative way to stop the crooks.
Last weekend, Senator Tom Coburn (R-OK) was interviewed on 60 Minutes regarding his investigation into claims of Social Security Disability fraud. While such fraud is clearly not a new phenomenon, what is new is that the Federal government is actually taking the threat of people gaming the entitlement system more seriously.
I highly encourage you to watch this interview. If you are like most people, you will be disgruntled, if not outraged.
SSDI fraud takes on many forms, including:
- Making false statements on an application for disability
- Using falsified documents in an effort to obtain benefits
- Concealing information to prevent a loss of benefits. (For example, not reporting your Uncle Louie’s death while you continue to cash his checks)
- And the misuse of benefits by those entrusted with providing care to the disability recipient
Throw in some shrewd attorneys who know the system’s weak points and you have a major fraud on your hands.
What makes these revelations so egregious is that some of the latest projections show that the Social Security Disability Trust Fund is expected to be depleted within 18 months. When the money runs dry, what then?
(Source: Cato Institute)
As you can see from the above chart, the number of people on disability is growing at a breakneck pace.
During President George W. Bush’s eight years in office, annual government spending on Social Security disability benefits (SSDI) exploded by over 90%, from $56 billion in 2000 to $107 billion in 2008.
Over the last five years under President Obama, spending on SSDI has increased another 34%. And based upon current trends, SSDI benefits will continue to engulf an even larger portion of taxpayer dollars in the future.
As of this writing, the Social Security Administration (SSA) provides disability income benefits to just over 14 million Americans.
This summer, the SSA acknowledged it’s sending out checks to 1.3 million beneficiaries without even verifying they are still disabled.
According to Tad Dehaven of the Cato Institute:
“The number of people enrolled in SSDI has expanded rapidly in recent years, even as the share of the U.S. working-age population reporting a severe disability has remained stable. In addition, medical advances have aided people with disabilities and fewer workers are engaged in hard physical labor… The ratio of SSDI beneficiaries to all working-age people has doubled in the last two decades.”
As an American taxpayer, I want to live in a society that protects the weak and the vulnerable. The widows and orphans should be cared for. And I believe that those who have debilitating diseases or ailments that prevent them from engaging in economic activity should be protected.
But when the money being extracted from taxpaying citizens to protect the most vulnerable of our society is being siphoned off regularly by able-bodied fraudsters due to lax oversight and internal corruption, it’s time to rethink the system.
The Government is Bribing You With Your Own Money
Everyone needs an incentive. In fact, the entire world economy is driven by incentives. In his voluminous work, The Wealth of Nations, 18th century political economist Adam Smith referred to man’s propensity towards self-preservation and self-interest as the “hidden hand” that guided a free and open marketplace.
As rational economic creatures, we all seek to maximize our own benefits, and those of our clan, albeit to a lesser extent.
Put simply, if given a choice in dictating government policy, nearly all Americans would opt to receive more benefits than they have actually paid for. Who wouldn’t?
In fact, it is this driving self-interest that leads to both the rise and fall of an economic power.
It was once said this way:
“A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.”
This explains why America has entered such treacherous economic waters. In essence, American politicians have come to the realization that they can bribe the people with their own money!
A Simple Solution – Create an Incentive to End the Fraud
Several years ago, the Department of Homeland Security rolled out its “See Something, Say Something” campaign. While I personally find the concept repugnant, I have no problem with it, if it is specifically used to save taxpayer money.
It is worth noting that current Federal law prohibits the Social Security administration from paying a financial reward to an American citizen who reports a case of Social Security disability fraud.
The government can immediately address this issue by providing Americans with a monetary reward for alerting authorities to a specific act of fraud, assuming that it leads to the recovery of taxpayer money.
Medicare provides such a reward. Those who report a specific act of Medicare fraud that leads to a recovery of at least $100 in Medicare money can receive up to $1,000 financial incentive payment.
Even cable theft is taken much more seriously than disability fraud! If you get caught stealing cable TV, you can face up to a $10,000 fine and/or prison time. Some cable companies even offer a financial reward for tipping them off to a genuine act of cable theft.
My suggestion? The Social Security administration should begin by launching a full-scale “See Something, Say Something” advertising campaign offering a $1,000 reward to anyone who rats out a friend or family member that is gaming the system.
These ads should be placed on daytime television for the maximum effect. I’m talking the Price is Right, The View, and all of the other mind-numbing programming that unemployed or retired Americans subject themselves to on a daily basis.
To begin weeding out the fraud, the Social Security Administration could provide a 90 day grace window allowing those who are knowingly receiving benefits in a fraudulent manner to opt-out of the system and get a job.
Then, once the 90 day grace window is gone, the ads begin running on daytime television.
SUGGESTED AD COPY: “Do you know someone who is receiving disability payments despite being completely able to work? Call the Social Security Fraud Hotline right now at (800) 269-0271 with your tip and receive up to $1,000 in COLD HARD CASH!”
I believe an ad like this would work magic in weeding out many of the scam artists who make their living by gaming the system.
Currently, the Social Security Act provides steep penalties for those who commit acts of fraud. SSDI beneficiaries who receive a monthly disability check despite being healthy can face a fine of a few thousand dollars. If the act is determined to be a felony, the fine can soar up to $250,000 and/or imprisonment!
If the government wants to stop fraud, it has to provide Americans with a clear channel to report such fraud along with a financial incentive. After all, many Americans pay relatively little in federal taxes and would never think to report fraudulent activity unless cold hard cash were dangled in front of their face.
Of course, such a solution would likely fall on deaf ears in Washington. After all, their goal seems to be making Americans more, not less, dependent upon the government.
Regardless, I appreciate Sen. Coburn’s efforts to keep the topic of Social Security Disability fraud in the spotlight. But if the Senate fails to recognize the power of a well-laid incentive in combatting the robbery of taxpayer dollars, I am afraid that their best solutions will fail in accomplishing their goals: namely, protecting those who desperately need disability benefits from the crooks and cons that seek to game the system into a state of complete bankruptcy.
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