Government programs that breed waste and fraud

seem to be finding out about fraud against government programs all over the place. Here are three examples.

First, Kevin Hassett tells us what happened when Congress rushed through tax credits of up to $8,000 for first-time house buyers but neglected to put in any checks to see if the people receiving the money were actually first-time homebuyers. This was all part of that stimulus bill that had to be passed quick, quick, quick. In fact all people had to do was assert that they were first-time buyers and didn't need to provide any documentation.

That’s right: Congress passed a law that made it possible to have the IRS mail you a check for $8,000 if you claimed you were a first-time homebuyer. That’s all you had to do -- assert that you deserved the credit. The IRS didn’t require you to provide proof that your claim was genuine before your check was put in the mail. Sound like a recipe for fraud?

The tax fraud was so widespread and egregious that it almost makes you laugh.

Did you forget to buy a house before claiming the credit? Not a problem. “We identified more than 19,300 electronically filed 2008 tax returns on which taxpayers claimed the First-Time Homebuyer Credit for a home which had not yet been purchased,” reported J. Russell George, the U.S. Treasury inspector general for tax administration, who testified about his department’s investigation.

Prior Home Ownership

Did you claim the credit even though you owned a home previously? Not a problem. George said his office found almost 74,000 claims “by taxpayers who had indications of prior home ownership within the preceding three years.”

Were you unable to purchase a home because you haven’t finished preschool and don’t know how to read the forms? Not a problem. George cited the “more than 580 taxpayers younger than 18 years of age who claimed almost $4 million in First-Time Homebuyer Credits. The youngest taxpayers receiving the credit were 4-years-old.”

The shocking facts go on and on. About 3,200 claims were filed with individual taxpayer identification numbers, rather than Social Security numbers, suggesting that alien residents joined American citizens in partaking in this rip-off.

Ed Morrissey links to this story from the Las Vegas Review-Journal about how the economic stimulus package, once again rushed, rushed through Congress, included a tax credit of $4,700 to %5,500 for people purchasing road-worthy electric cars. But they didn't specify anything more about which electric cars would qualify. So guess what people are buying? Golf carts.

As part of the huge $878 trillion (Or was it $787 billion? Can anyone remember, anymore?) "economic stimulus" created in Washington last winter, Congress OK'd a tax credit of between $4,200 and $5,500 for Americans who purchase an electric vehicle.

Some controversy arose as to which vehicles, exactly, qualified. The IRS recently ruled any electric vehicle qualifies for the subsidy, so long as it is road-worthy.

That means the model in question needs to have side and rearview mirrors and three-point seat belts, and be capable of going at least 15 to 25 mph. Meet those requirements, combine the federal credit with similar incentive plans in many states, and many a creative subject of the realm has discovered the government will now pay virtually the entire cost of acquiring a new ... golf cart....

"This golf-cart fiasco perfectly illustrates tax policy in the age of Obama, when politicians dole out credits and loopholes for everything from plug-in cars to fuel efficient appliances, home insulation and vitamins," The Wall Street Journal concludes. "Democrats then insist that to pay for these absurdities they have no choice but to raise tax rates on other things -- like work and investment -- that aren't politically in vogue. If this keeps up, it'll soon make more sense to retire and play golf than work for a living."

Was that really what the stimulus was about - to help rich golfers buy their own personal golf carts? Is that the type of program we needed to put in place while we put our children into unimaginable debt?

It's not only the stimulus that rushed through all these opportunities to get undeserved money out of the government. Medicare has also provided lots of opportunities for outright fraud. Sixty Minutes reported on Sunday on how easy it has become for criminals to set up outfits to defraud the government out of Medicare funds.

BRIAN WATERMAN, FBI: There's a healthcare fraud industry where people do nothing but recruit patients, get patient lists, find doctors, look on the Internet, find different scams. There are entire groups and entire organizations of people that are dedicated to nothing but committing fraud, finding a better way to steal from Medicare

KROFT: Is the Medicare fraud business bigger than the drug business in Miami now?

KIRK OGROSKY, JUSTICE DEPARTMENT: I think it's way bigger.

KROFT: What changed?

OGROSKY: The criminals changed...

WATERMAN: Sophistication.

OGROSKY: They've figured out that rather than stealing $100,000 or $200,000, they can steal $100 million. We have seen cases in the last six, eight months that involve a couple of guys that if they weren't stealing from Medicare might be stealing your car.

WATERMAN: You know, we were the king of the drugs in the '80s. We're king of healthcare fraud in the '90s and the 2000's.

As Newsbusters summarizes, it appears to be quite easy to screw massive amounts of money out of the government.

Kroft then spoke to a man who claimed to have defrauded Medicare out of $20 million, after which Kroft said, "According to the FBI, all you have to do to get into this business is rent a cheap storefront office, find or create a front man to get an occupational license, bribe a doctor or forge a prescription pad, and obtain the names and ID numbers of legitimate Medicare patients you can bill the phony charges to."

WATERMAN: There's a whole industry of people out there that do nothing but provide patients.

Kroft narrated, "Once the crooked companies get hold of the patient lists, usually stolen from doctors' offices or hospitals, they begin running up all sorts of outlandish charges and submit them to Medicare for payment, knowing full well that the agency is required by law to pay the claims within 15 to 30 days, and that it has only enough auditors to check a tiny fraction of the charges to see if they are legitimate."

Later, Kroft asked Waterman, "There's something I don't understand. I mean, you're saying essentially people just fill out the phony paperwork, they send a bill to Medicare and they pay it."

WATERMAN: That's why you have companies that can run for 60, 90 days, and bill for ridiculous things. Because there are very few checks and balances to even determine whether these things a, were medically necessary, b, were ever given, or c, even physically possible for a patient with the kind of conditions they have.

And this is the model that liberals want to create for everyone's health care...

Perhaps, to show that the Democrats are more serious than all the previous presidents who have vowed to cut waste, fraud, and abuse in federal medical programs, they could demonstrate their efficacy by getting rid of this sort of fraud in Medicare. But Attorney General doesn't seem to have any special ideas of how to fix this problem.

ERIC HOLDER, ATTORNEY GENERAL: We have to understand this is a major fraud area. [...]

KROFT: Why do you think it's been so attractive for the criminals?

HOLDER: Because I think it's been pretty easy. I think that they have found a way in which they have been able to get pretty substantial amounts of money with not a huge amount of effort and at least until now, without the possibility of great detection.

KROFT: With much fewer risks.

HOLDER: Much fewer risks. You'll see some of these people and they'll say "You know there is not a chance that you are going to have some other drug dealer shooting at you." The chances of being incarcerated were lower, the amount of time that you would spend in jail was smaller. All of which is different now.

And, as Newsbusters points out, he doesn't even seem to understand human nature.

As the segment drew to a close, Holder told Kroft something that should scare the heck out of everyone who wants government run insurance for all Americans: "I think people I don't think necessarily thought that something as well intentioned as Medicare and Medicaid would necessarily attract fraudsters. But I think we have to understand that it certainly has."

That's a typical liberal assessment of how people think: we're providing all this money for a good cause and we just never thought that people might figure out a way to defraud the government out of hundreds and hundreds of millions of dollars. Duh! And they don't seem to have learned their lessons as they rushed through the stimulus without thinking through how people might take advantage of money provided by the government without many or even any controls.