(Brad Polumbo, Foundation for Economic Education) A group of scammers in New York City allegedly ripped off millions from the state’s super-charged pandemic welfare system. They were busted after (rather foolishly) posting pictures of themselves with massive money stacks on social media and now face prosecution.
“A group of young men is accused of ripping off $2 million in COVID-19 relief funds by stealing personal information from people in the assistance program, funneling their money to personal bank accounts, and withdrawing the cash at banks in Brooklyn and Queens,” Fox Business reports. “The scams began last June and continued through April.”
The scammers’ target was the state’s unemployment benefits system.
During the pandemic, the government greatly increased benefit payouts and hastily expanded eligibility to new categories of workers. In its rush to get taxpayer money out the door, the government created a target-rich system flush with cash and light on verification.
These scammers in New York only got caught because they were particularly, erm, flagrant in their criminal activity. They made multiple unusually large withdrawals at ATMs, triggering monitors, and openly posted the huge influx of cash on social media.
I wish I could tell you that this story was just a one-off. But countless similar examples of rampant fraud have emerged during the government’s massive “emergency” spending spree. The expansion of unemployment benefits alone has lost a truly astounding amount of money to fraud.
A report shows that the federal government has potentially lost up to $200 billion in taxpayer money to scammers ripping off the system. For context, that’s equivalent to $1,400 lost per federal taxpayer. (There goes your “stimmy” check!).
And the total money lost to fraud is more than 5 times as much as the feds spent on vaccine development. According to the American Enterprise Institute, “unemployment fraud” now ranks as the 4th biggest federal COVID expenditure out of more than 17 different categories.
Taxpayers have every right to find such flagrant waste of our money frustrating and demand accountability. But there’s a bigger-picture takeaway here, too.
When politicians are making the case for their next big spending plan, they’re quick to emphasize the upsides, real and imagined, but never mention the ugly realities that will accompany another blowout spending binge. The truth is that when it comes to big government, fraud, waste, and dysfunction are baked into the cake.