© David Burton 2013

     The anecdotal stories about welfare frauds get my blood boiling. But it seems that no one else cares – certainly not anyone within our local, state or federal governments. How big is the welfare fraud problem? I don’t know! It’s a crime that ordinary citizens like you and me, those of us who end up paying the bill for welfare fraud, don’t have all the facts to determine if welfare fraud is a major issue or just a trivial abnormality.

     But, the truly troubling facts are: (a) nobody in government really knows the magnitude of the problem, (b)nobody in government really seems to be doing anything to determine the extent of the problem, and, most significantly, (c) the government has a vested interest in never having the magnitude of the problem exposed.

     It was reported that the Massachusetts Attorney General was pushing for legislation that would bar convenience stores from selling cigarettes, alcohol and lottery tickets to EBT holders. EBT (Electronic Benefit Transfer) is an electronic system that allows state welfare departments to issue benefits via a magnetically encoded payment card, supposedly to the needy. Common benefits that are supposed to be provided are food and cash. Food benefits are supposed to be used only to purchase food and non-alcoholic beverages. Food benefits are distributed through the Supplemental Nutrition Assistance Program (SNAP), formerly the Food Stamp Program. Cash benefits include state general assistance, Temporary Assistance for Needy Families (TANF) benefits and refugee benefits.

     Convenience stores are worried. Why? Because they make a ton of money selling cigarettes, alcohol and lottery tickets to EBT card holders. “The proposal could be crippling to a convenience store plundering EBT and food stamps, industry experts said.” (Ref. 1)

     So, EBT users are not supposed to buy cigarettes, alcohol and lottery tickets with their cards, BUT, convenience stores could be crippled if their EBT customers stopped purchasing cigarettes, alcohol and lottery tickets with their cards! This seems to very strongly imply widespread improper use of EBT cards, if not outright fraud. How rampant is this “impropriety”? Who knows? The Massachusetts Department of Transitional Assistance (DTA) certainly doesn’t. According to a Massachusetts state representative, the DTA “work{s} on the honor system. Nobody ever checks. It’s cross my heart and hope to die.” (Ref. 2) According to this same state representative, the motto of the DTA is: “When in doubt, give it out.”[2]

     In response to a report that a welfare recipient had been caught after defrauding the state for some 6 years, a Republican state representative filed a bill earlier this year that would have required the state to conduct asset and identity checks using national databases to ensure people aren’t scamming the state. The bill was defeated![ 1] The messages sent by actions like this are: We, the government, don’t care if you defraud us! We, the government, don’t want to know if you defraud us! “The fact that someone can defraud the system for six years means that our system is broken.” (Ref. 1) The fact that someone can defraud the system for six years more than likely means that the government isn’t interested in finding out who is stealing from the system or how much is being taken.

     Is the government serious about catching and punishing perpetrators of welfare fraud? It’s certainly not obvious that they are! In August of 2013, a Massachusetts couple pleaded guilty to fraudulently cashing in on a $161,000 taxpayer-funded bonanza of food stamps, MassHealth, Medicaid and disability. Their take consisted of: $110,000 in MassHealth benefits, $9,500 in food stamps, and $40,000 in Supplemental Security Income (SSI).[ 2] The 41-year old wife concealed the fact that her 44-year old husband had an $80,000 a year job with health insurance. The wife was able to collect welfare benefits from 2005 to 2011. So, what punishment did this couple receive for violating the law? They were “sentenced” to 5 years of probation and ordered to pay back the $161,000.[1 ] Can you believe that the theft of $161,000 did not earn this couple jail time? “What exactly do you have to do in this benighted state to get thrown in the can for fraudulently using an EBT card. Not to mention ripping off MassHealth and collecting SSI crazy checks?” (Ref. 2)

     Why work here in Massachusetts when welfare pays better and requires no work on the part of the recipient? “Bay State welfare recipients have little incentive to get jobs because government assistance pays better . . . Massachusetts {is} the third-most generous in the nation in doling out welfare funds.
     “Clearly. The level of benefits in Massachusetts acts as a disincentive to work . . .
     “. . . Massachusetts ranks third nationally with $42,515 in welfare benefits handed out to the ‘typical recipient,’ behind Hawaii at $49,175, and Washington, D.C., at $43,099.
      - - -
     “- The pre-tax value of a Massachusetts benefits package, if it were all earned salary would be $50,540.
     “- In pre-tax dollars, Massachusetts awarded the equivalent of a job that pays $24.30 {but without requiring any work to actually be performed by the recipient}.
      - - -
     “These are supposed to be temporary benefits for necessities . . . For too many people it unfortunately turns into a lifestyle.” (Ref. 3 )

     While our government was stupid enough to create this welfare system, welfare recipients are smart enough to use the system to their advantage. They’re not stupid. They are simply responding rationally to incentives that have been created for them.[ 3] The stupid one’s are you and I, the taxpayers!

     The only places in the United States that are more generous to welfare recipients than Massachusetts are Hawaii, which is not in the continental U.S. and the District of Columbia, which is not a state. So, Massachusetts comes in first as the most generous state among the contiguous 48 states and we Bay Staters are now entitled to chant in unison: “We’re No. 1! We’re No. 1!” ( Ref. 4) Quite an honor!

     “A Cato Institute report this week described just how valuable these benefits can be. An income-eligible single mom with kids in Massachusetts could qualify for the equivalent of $50,540 in publicly-funded benefits, including $7,416 in cash assistance, $6,247 in food stamps, roughly $9,000 in Medicaid (MassHealth) benefits, $979 in supplemental nutrition benefits, $450 in heating oil and $17,203 in public housing (Section 8).” (Ref. 5 )

     Other tales of welfare fraud abound. Here are just a few examples.

     “A Connecticut woman was arrested . . . on charges of stealing nearly $100,000 in welfare benefits from New York State.
     “{The 46-year old woman} is accused of using a fake Manhattan address to qualify for public-assistance benefits between 2009 and 2012 — all the while living and working in Connecticut.” (Ref. 6)

     Some 16 people from Philadelphia were charged in a welfare fraud investigation by the Pennsylvania Attorney General's office. A clerical worker at the Philadelphia County Assistance Office was arrested in 2012 for welfare fraud. Investigators have since identified 15 co-defendants and the alleged scheme they participated in.

     The Pennsylvania Department of Public Welfare (DPW) noticed an unusual amount of "Special Allowances of One Time Issuance (OTI)" from the clerical worker’s office.

     The attorney general's office explained that "OTI benefits are received by a welfare recipient in addition to food stamps and cash assistance, and are documented in the recipient's file and entered into the DPW computer system. When a person gets an OTI, the money is electronically transferred to the recipient's EBT account, which allows the recipient to withdraw the money like a debit card."[7] According to a grand jury indictment, the 15 co-defendants would give the clerk their EBT cards, and she would place the OTI money into their accounts.

     Then, the clerk “would withdraw the money herself through an ATM and would share the money with her co-defendants.
     “Investigators say the co-defendants would not have been eligible for the OTI money.
     “In all, {the clerk and her co-defendants} allegedly stole more than $235,000 and attempted to steal an additional $104,000.” (Ref. 7 )

     “Contrary to stereotypes, there is no evidence that people on welfare are lazy. Indeed, surveys of welfare recipients consistently show their desire for a job. But there is also evidence that many are reluctant to accept available employment opportunities. Despite work requirements included in the 1996 welfare reform, the U.S. Department of health and Human Services says less than 42 percent of adult welfare recipients participate in work activities nationwide. Why the contradiction?
     “Perhaps it’s because while poor people are not lazy, they are not stupid either. If you pay people more not to work than they can earn at a job, many won’t work.
      - - -
     “. . . The misimpression {is} that {welfare} benefits provide a bare, subsistence-level income. In reality, the U.S. government funds 126 separate programs for low-income people, 72 of which provide either cash or in-kind benefits to individuals.
      - - -
     “. . . {It’s also important} to “remember that welfare benefits are not taxed, whereas wages are. - - - Welfare pays very well. [Emphasis mine]
      - - -
     “{In the higher benefit states,} welfare pays {the equivalent of} more than a $20 an hour job, or {much} more than the minimum wage.
     “By not working, welfare recipients may be responding rationally to the incentives our public policymakers have established. [Emphasis mine]
     “As a result, if Congress and state legislatures are serious about reducing welfare dependence and rewarding work, they should consider strengthening welfare work requirements, removing exemptions and narrowing the definition of work. Moreover, states should shrink the gap between the value of welfare and work by reducing current benefit levels and tightening eligibility requirements.”(Ref. 8)

     But let’s remember, what Congress may legislate, the President may undo by executive order!

     The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 or the Welfare Reform Act of 1996 as it is sometimes called is credited to President William Clinton and his oft-repeated campaign promise "to end welfare as we know it." The Act required work in exchange for temporary relief; no more than two years could be used before parents would be working or in job training. No recipient could have more than five years of assistance cumulatively.[ 9] The Act therefore required, among other things, that recipients work!

    ”In the four decades prior to welfare reform, the welfare caseload never experienced a significant decline. But, in the four years after welfare reform, the caseload dropped by nearly half. Employment surged and child poverty among affected groups plummeted.” [Emphasis mine] (Ref. 10)

     But, in July of 2012, “the Obama Department of Health and Human Services (HHS) released an official policy directive rewriting the welfare reform law of 1996. The new policy gut{ed} the federal work requirements that were the foundation of the reform law. The Obama directive bludgeon{ed} the letter and intent of the actual reform legislation.” ( Ref. 10)

     One can but wonder what kind of an insane asylum we live in here in these United States. Our president says we should have full employment, but he overrides Congress and guts a law that encouraged welfare recipients to get off the dole and go to work, a law that had seemed to be working. We allow our politicians to put in place laws and programs that encourage people to not work and to go on welfare. We allow our politicians to enact legislation that pays more for not working than for working. Let’s stop criticizing welfare recipients for taking handouts and being lazy – they are the smart ones. We, who pay the bills, are the dumb ones for allowing it to happen. We, the taxpayers, are being taken to the cleaners, not by the welfare recipients, but by our politicians – or better yet – by ourselves. We’re the ones who keep electing these same politicians.

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References:

1. AG OUT TO PUNISH STORES FOR EBT ABUSE, Chris Cassidy, Boston Herald, Page 2, 22 August 2013.
2. No jail time in $161G scheme? What a scam!, Howie Carr, Boston Herald, Page 2, 22 August 2013.
3. Study: Welfare pays better, Antonio Planas, Boston Herald, Page 5, 21 August 2013.
4. Mass, earns distinction as freeloaders’ paradise, Howie Carr, Boston Herald, Page 4, 21 August 2013.
5. Sanctions in store, OpEd, Boston Herald, Page 16, 23 August 2013.
6. Connecticut woman busted for $100,000 in welfare fraud in New York State, Keneth Lovett, New York Daily News, 21 August 2013.
7. 16 from Philadelphia charged with welfare fraud, Keneth Lovett, WPVI-TV Philadelphia, PA, 1 May 2013.
8. Welfare pays much too well, Michael D. Tanner, Boston Herald, Page 19, 27 August 2013.
9. Welfare Reform Act (1996), Hamilton Cravens, Encyclopedia of Children and Childhood in History and Society, Accessed 27 August 2013.
10. Obama Guts Welfare Reform, Robert Rector and Kiki Bradley, The Foundary, 12 July 2012.