Social Welfare and Fraud

My friend and I recently discussed his frustrations with government assistance programs.  We supervise inmates from the local county jail and many inmates mention their past participation in one or more welfare programs and, occasionally, one of them admits to welfare abuse and fraud.  Between the Supplemental Nutrition Assistance Program (SNAP), disability, and the Housing Choice Voucher Program (formerly Section 8), some inmates have said they don’t have to work at all.  My friend confided in me that he believes welfare programs are riddled with fraud and promote living a good quality lifestyle off of free government handouts.  He believes the U.S. government needs to seriously reduce the budget for or completely eliminate these programs. His frustration stems from the perceived abuse that shifts the burden of financial support of welfare recipients to hard working taxpayers.  He believed a majority of people who utilize social welfare programs are abusing the system.  As he couldn’t give me anything but anecdotal evidence, I decided to look into the issue.

Social welfare programs are government run programs “designed to protect citizens from the economic risks and insecurities of life.” Many of us are fortunate enough to hold a good paying, steady job and be in good health. But what happens when either of those things fail unexpectedly? Almost everyone of working age has paid into programs that assist those who have experienced financial or health failures.  The U.S.  government redistributes this mandatory charity donation, paid in the form of taxes, to single mothers through the Women, Infant and Children program (WIC) and SNAP,  to children through the School Breakfast Program (SBP) and National School Lunch program , to the disabled through Supplemental Security Income (SSI), poor college students (PELL Grants) and to low income families through Temporary Assistance for Needy Families (TANF) (many know this as welfare) and Housing Choice Voucher Program .

The Unites States government has a very difficult time documenting fraud within social welfare programs. But the United States Government Accountability Office (GAO), an “investigative arm of Congress charged with examining matters relating to the receipt and payment of public funds” does keep track of what they call “error rates”.  These include, but are not limited to known fraud; they encompass overpayments and underpayments between the government and the recipient of assistance. These errors could be intentional and conscious effort to commit fraud, or a mistake due to lack of understanding of who gets benefits or improper paperwork.

In the 2012 Improper Payments summary, compiled by the U.S. G.A.O, found significantly less fraud committed to gain entry or benefits from social welfare programs than has been claimed by those who oppose federal funding of the programs. Senator Ron Johnson claimed “… across the board…the average rate of fraud in those programs is 20 to 25 percent.” But fortunately, for supporters of social welfare programs, there is no evidence to substantiate a claim like this.  While a handful of programs, like the SBP, have error rates (again, not the fraud, which represents a small percentage of error rates) at 25.0 percent, most fall between 5 percent and 16 percent. The SNAP error rate was 3.8 percent, SSI error rate was 9.1 percent and the Unemployment Insurance error rate was 12.0%. In this summary, the G.A.O. also cited the top reasons for errors in each program. The only program in which fraud or “misrepresentation by program participants” was cited as the primary cause for errors was the National School Lunch program.

So what does this mean for actual taxpayer dollars wasted? Just “ 10 percent of the annual federal budget, or 362 billion dollars” is spent of “Safety Net Programs” or social welfare programs, not including health insurance.  Of this, there is just a 4.7 percent error rate, just over 17 billion dollars. Considering a vast majority of the error rate can be attributed to human error in over or under payment, and not fraud, taxpayers should be more concerned with government workers wasting taxes, not fraud and abuse by recipients.

While the percent of fraudulent claims is very low, the idea that recipients live a relatively pampered life paid for by the government is simply wrong.  The SNAP averages $1.40 per meal per person. The average family with children receiving the SNAP benefits grossed 58.4 percent of the poverty line- just over $13,000 for a family of four. The TANF requires that single parents work 30 hours per week and couples work 35- 50 hours in order to qualify for the program. Unemployment insurance recipients average income is $7,392 per year. These are individuals and families living on the edge or below the poverty line are not enjoying an easy, care free life funded by taxpayers; they are barely getting by and need the life vest of social welfare programs to help keep their head’s above water.

The accusation of fraud by welfare recipients is unfounded; there is no evidence to suggest this is a large waste of taxpayer dollars in the annual federal budget.  Error rates are both over and under payments to recipients and a majority of overpayments are due to government worker errors in filing paperwork, not fraud. Such a small percentage of the budget is actually spent on social welfare program and those receiving assistance are certainly not living the “high life”, as many are still straddling the poverty line. Reducing the budget for, or eliminating these programs would put already financially disadvantaged and sensitive populations at greater risk.

This article was written by Erin Benton, a writer for dusk magazine. 


1 Comment on Social Welfare and Fraud

  1. I understand the frustration, but most people do not sincerely believe this argument.

    How many right-wingers accept that we should disband our military because of military fraud?

    How many right-wingers accept that we should get really strict on corporate taxes because of corporate fraud?

    Whenever it’s not someone’s pet project, we recognize that fraud in a system is inevitable. If the outcomes of the system are still efficient even with fraud, you still do them. You make reasonable efforts to stop that fraud, incorporating that enforcement cost into the total cost for the system, and if the cost-benefit analysis still has more benefits than cost, you do the program. Does anyone not open up a grocery store because there’ll be shoplifting?

    The government has enforcement power no other institution can dream of. If the goal was actually to enforce against fraud, government could do so, spending more on individual cases than the return to the taxpayer to act as a deterrent. Precisely no one proposes getting extremely tough on welfare fraud while maintaining or increasing the size of welfare. They just use it as a lame excuse to cut the program, and then ideological partisans accept the argument uncritically because it confirms what they already said. Many of those repeating the argument are either intentionally obfuscating the issue of or unaware of the massive scale of corporate welfare.

    Even if welfare fraud were not a minute phenomenon, the above arguments would apply.


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