Wednesday, November 3, 2010

Government Waste - How to get paid after you die

According to this article from the White House from last week, the American taxpayer funded the dead to the tune of nearly $1 billion over the past decade.  In addition, payments totaling $110 billion were made to the wrong person, in the wrong amount or at the wrong time in last year alone.  Apparently, three things in life are now certain; death, taxes and getting a cheque from the United States government after you die.  Senator Tom Coburn (R - Oklahoma) brought some of the details to light.

With the government running a $1.294 trillion deficit last year, you'd like to think that they could get things straight, wouldn't you?  But then, it's your money that they are spending so it just doesn't seem to be as much of a problem as it would be if you sent the cheque for the phone bill to the utility company. 

While it is obvious that the majority of the $110 billion in erroneous payments were made during the Bush years, the Obama administration has to shoulder some of the blame.  Back in November 2009, the President issued Executive Order 13520 "Reducing Improper Payments" with the following purpose:

" reduce improper payments by intensifying efforts to eliminate payment error, waste, fraud, and abuse in the major programs administered by the Federal Government, while continuing to ensure that Federal programs serve and provide access to their intended beneficiaries."

The Order stated that the first step was to identify which Federal programs had the highest dollar value or volume of improper payments and establish targets for reducing these payments.  After 180 days, the Secretary of the Treasury and the Attorney General were to publish information about the improper payments on the internet.  This data was to include the names of the officials who were accountable for the errors, the current and historical amounts of the improper payments, the current and historical rates of recovery of the improper payments, targets for reducing and recovering the improper payments and the identification of the entities that have received the greatest number of improper payments.  As well, in that same 180 day time frame, the Treasury and Attorney General were to develop an Internet-based method to collect information from the public (i.e. a rat line) regarding suspected incidents of waste, fraud and abuse by an entity that receives Federal funding.

Just in case you weren't aware, the government passed the Improper Payments Information Act of 2002 that was supposed to do the same thing; apparently, it was a colossal failure.

In addition, other measures were undertaken to reduce improper payments.  First, in March 2010, President Obama signed a memorandum directly all Federal government departments to intensify their audits to find and recapture erroneous payments.  In June, the President announced that his Administration, through the Affordable Care Act,  would cut the payment errors within the Medicare Fee for Service program by 50 percent by the year 2010 to $10 billion.  In July, the President signed the bi-partisan Improper Payments Elimination and Recovery Act which will strengthen the government's ability to reduce improper payments.  Here are President Obama's comments at the signing of the Act and here is a key section from his speech:

"This isn’t just about lines on a spreadsheet or numbers in a budget, because when we fail to spend people’s tax dollars wisely, that’s money that we’re not investing in better schools for our kids, or tax relief for families, or innovation to create new industries and new jobs.  When government doesn’t work like it should, it has a real effect on people’s lives -– on small business owners who need loans, on young people who want to go to college, on the men and women who’ve served this country and are trying to get the benefits that they’ve earned.  And when we continue to spend as if deficits don’t matter, that means our kids and our grandkids may wind up saddled with debts that they’ll never be able to repay." (my bold)

Here’s a brief look at a few of the misspending gems that came from Senator Tom Coburn's report Federal Programs to Die For (you've got to love the title!):  

   Social Security Administration sent $18 million in stimulus funds to 71,688 dead people.
   The Department of Health and Human Services sent $3.9 million in assistance to pay heating and cooling costs for 11,000 dead people (depending on where they ended up, the post-death cooling assistance might have been welcome!).
   The Department of Agriculture sent $1.1 billion in farming subsidies to 173,000 deceased farmers.
   Medicare paid $92 million in claims for medical supplies prescribed by dead doctors and paid $8.2 million for supplies prescribed to dead patients.

Here’s the best story of them all:

“In 1996, James Hagner, of Baltimore, Maryland was surprised to open his mailbox and find a birthday card from the White House congratulating his mother on her one-hundredth birthday. The reason for his surprise? His mother, Rose, passed away in 1967.4 Mr. Hagner was surprised again thirteen years later when he found another piece of mail from the government for his mother, this time from the Treasury Department. It was a $250 stimulus check sent to Social Security beneficiaries.5 Unfortunately, Mr. Hagner’s situation was not unique, but only one example among tens of thousands in which stimulus checks were sent to the deceased.”

As I have already stated, with a $1.294 trillion deficit for the last fiscal year, the government may be trying to close the door on an empty barn.  How many times does Washington have to pass legislation that requires them to eliminate improper payments?  For those of you who work at publicly traded corporations, just imagine how long you would retain your job if you sent out numerous cheques to the wrong vendors.  A greater standard of care should be required of those that are dealing with our hard-earned tax dollars.

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