Fraud and outright theft. But we've known that. Today, I ran into a story by libertarian economist Dan Mitchell detailing how bad it was, by pulling together a few stories.
Dan begins by talking about another thing we all know about: people in general, and politicians in particular don't spend money the same way when they're spending their own money versus Other People's Money (OPM - the world's most addictive drug). Someone on Reddit's Libertarian page came up with this memorable way of describing the situation.
Individuals buying for themselves and governments spending on various giveaways spend in opposite corners of this graphic. Politicians trying to "do something" simply don't care about making sure the money is spent wisely. That's charitable; they may be deliberately spending stupidly so friends, family, and others can get some of that filthy lucre, too.
Axios has a depressing report on how the turbo-charged benefits that were part of the coronavirus legislation triggered staggering levels of fraud.
Criminals may have stolen as much as half of the unemployment benefits the U.S. has been pumping out over the past year, some experts say. …fraud during the pandemic could easily reach $400 billion, according to some estimates, and the bulk of the money likely ended in the hands of foreign crime syndicates… Blake Hall, CEO of ID.me, a service that tries to prevent this kind of fraud, tells Axios that…50% of all unemployment monies might have been stolen… Haywood Talcove, the CEO of LexisNexis Risk Solutions, estimates that at least 70% of the money stolen by impostors ultimately left the country, much of it ending up in the hands of criminal syndicates in China, Nigeria, Russia and elsewhere.
Wait. The money went to Nigeria? And no one got an email that they replied to stupidly?
Mayowa is an engineering student in Nigeria who estimates he’s made about $50,000 since the pandemic began. After compiling a list of real people, he turns to databases of hacked information that charge $2 in cryptocurrency to link that name to a date of birth and Social Security number. In most states that information is all it takes to file for unemployment. …“Once we have that information, it’s over,” Mayowa said. “It’s easy money.” …prepaid debit cards issued by some state unemployment offices paved the way for fraud this year, security experts said. …Asked whether he feels bad about stealing from unemployed Americans, Mayowa pointed out that 70% of his peers in school are working the scams as side hustles, too.
But it wasn't just unemployment money; there were those stimmy checks, too.
The federal government sent nearly 1.2 million “economic impact payments” authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act to people who were dead and, therefore, not qualified to receive them, according to a report published today by the Government Accountability Office. …On its website, the IRS describes individuals who are not eligible for an “Economic Impact Payment”… “Taxpayers likely won’t qualify for an Economic Impact Payment if any of the following apply: … You can be claimed a dependent on someone else’s return. … You are a nonresident alien. … An incarcerated individual. A deceased individual.”
The stimulus checks were sent around the world. A few weeks ago, I read a story about some people in Japan who had worked in the US before 2005 and got checks. NPR has a story featuring people all over the world who got $1200 checks from Uncle Sam.
Who would have guessed one of the big beneficiaries of the US handouts would be Italian luxury carmaker Lamborghini? From a story at Reason magazine:
...carmaker Lamborghini has benefited from the Paycheck Protection Program (PPP)… Within days of receiving $1.6 million in PPP loans for his construction and logistics businesses, Lee Price III of Houston bought himself a 2019 Lamborghini Urus for $233,337, plus a $14,000 Rolex watch and close to $5,000 worth of entertainment at a strip club and various bars around town. …His scheme was audacious but hardly original. The DOJ had already brought similar fraud charges against Miami man David T. Hines, who had allegedly spent his ill-gotten PPP loans on a new $318,000 Lamborghini Huracán EVO. …Loan recipients include companies founded by members of Congress and prominent D.C. lobbying firms. Presidential adviser Jared Kushner’s family businesses, including their media and real estate concerns, received PPP loans, as did the clothing brand of rapper and aspiring president Kanye West.
All of these are yet more examples of a fundamental truth; in the best of times, Government is the worst of ways to get things done. In bad times it's even more worser. “More government” is never the answer to any reasonable question.