The federal government in the United States is spending more money now than at any other point in history. To the surprise of absolutely no one, a lot of those funds are being mismanaged.
The California payout of over $11 billion in fraudulent unemployment claims was just the tip of the iceberg. One computer security firm, ID.me, which specializes in identifying worker identities for roughly 75% of the U.S. population, found that in excess of $200 billion in federal assistance for the unemployed could have disappeared down the black hole of fraud during the COVID-19 pandemic.
Here’s the breakdown:
- Roughly 20% was linked to compromised or breached personal data, i.e., identity theft.
- Up to 10% was stolen through social engineering—email phishing, fraudulent telephone solicitations, etc.
- Then there’s a whopping fraudulent 30% of claims under the Pandemic Unemployment Assistance program for the self-employed and contractors.
According to the American Enterprise Institute, unemployment assistance fraud has now become the fourth largest funds expenditure, lagging just behind the Paycheck Protection Program.
California, Washington, and Massachusetts led the way as targets for fraudsters. As previously mentioned, California’s $11.4 billion in fraudulent payout amounted to about 10% of total benefits paid. Still another 17% is currently under investigation. Massachusetts paid out about $687 million. Washington was no slacker with $600 million, or 122,000 suspected or known fraudulent claims.
Since the beginning of the pandemic, Congress has committed over $485 billion to help unemployed Americans. The latest $1.8 trillion has $209 billion in unemployment with another $94.3 billion to further expand eligibility for unemployment assistance.
The old adage that success has many parents, but failure is an orphan, holds true with the new Biden Administration. President Biden has promised a crackdown on fraud and waste as his administration plans to throw another $1.9 trillion into the fiery maw of the federal government’s spending furnace.
The President promised to “stay on top of every dollar spent” on the American Rescue Plan. Promising “fastidious oversight,” the new administration hopes to ensure there is no waste and fraud.
There’s plenty of blame to go around. However, the fraud was at the state level. Managing and targeting the billions of federal largesse in times of economic stress went far beyond any president’s span of control. The fraud was a result of poor state unemployment payment oversight.
In any case, the next huge federal spending bill may well be another example of the definition of insanity: doing the same thing over and over and expecting different results. President Biden’s chapter 2 is a $2 trillion infrastructure plan. His vision is that our federal government’s bottomless money laundering tax-and-spend (with an emphasis on spend) role can work any better at the trillion-dollar level than it did with $200 billion in easy money for computer scammers.
President Biden wants to prime the nation’s crumbling infrastructure with “investments,” public housing, agriculture and conservation, and, yes, environmental justice. And don’t forget the power sector where he hopes that he’ll be more successful than President Obama’s bankrupted solar energy plan.
The President wants the Obama 2.0 version of renewable energy—windmills, solar energy, and reemploying West Virginia coal miners to be computer programmers. On the campaign trail, Biden actually said, “Anybody who can throw coal into a furnace can learn how to program, for God’s sake!”
Loretta Lynn, the quintessential coal miner’s daughter, might not agree.