Improper payments, fraud and carelessness

The Milwaukee Journal Sentinel’s “PolitiFact” operation claimed the other day that I made misleading statements about fraud in government benefits programs, spending 1,200 words parsing an off-the-cuff remark I made at Pints and Politics, a casual Friday evening get-together of conservatives in Waukesha. They called my remark “ridiculous.” I won’t comment on the paper’s news judgment.

When someone asked me about how the IRS would enforce the penalties in the Orwellian-named Affordable Care Act, or Obamacare, I pointed out the deficiencies in how the IRS enforces existing tax law: “Do you realize the average rate of fraud, whether it's in the Earned Income Tax Credit or Medicare or Medicaid, across the board, food stamps -- the average rate of fraud in those programs is 20 to 25 percent?”

Oops: I spoke too broadly. I had recently re-reviewed a report from the Treasury Inspector General for Tax Administration on the Earned Income Tax Credit, the program under which low-income taxpayers can get back tax refunds that sometimes equal more than they had withheld. You can see the report here. The Inspector General found that more than a fifth of payments were “improper” – maybe errors, maybe fraud. I should have ended the sentence there.

I said just that to the Journal Sentinel afterward, too. The paper’s article printed a bit of what I said. For the record, my statement was:

“The quote you are checking was primarily referencing fraud in the Earned Income Tax Credit. I had just reviewed a 2012 report from the Treasury Inspector General for Tax Administration during the debate on the Unemployment Insurance extension. That study estimated fraud in EITC was 21%.

“I made too broad a generalization to other mandatory spending programs based on reports in the press and from colleagues that are not supported by other inspector general reports. I strive hard to convey accurate information that is fully supportable, and I was mistaken in making this overly broad generalization.

“This inaccuracy, however, should not detract from the larger point I was trying to make: Fraud is a significant and serious problem. The Government Accountability Office has reported improper payment rates of 8% to 11% in Medicare programs, for example. PolitiFact National found several years ago that a Medicare fraud rate of 20% ‘could indeed be in the ballpark.’ We cannot ask American taxpayers to accept high levels of fraud as the price of helping those in need. We must strive to reduce fraud. We have detailed studies and statistics that illustrate that broader point. Some examples:

“The Government Accountability Office testimony to the Senate on improper payments in benefits programs: http://www.gao.gov/assets/590/589681.pdf

“Health and Human Services on improper payment rates in Medicare: http://www.hhs.gov/afr/2013-hhs-agency-financial-report.pdf

I said I was mistaken; the Journal Sentinel said it was sure I was "grossly misleading" and gave me a rating of "Pants on Fire." Interestingly, they then repeatedly made the point that these are rates of “improper payments” – which could be mistakes or could be cheating – and completely ignored the fact that no one really knows how much cheating actually occurs.

The paper points out, correctly, that agencies often do not break out an estimate for how much is fraud. There are few good estimates, in fact, of how much of the “improper payments” frittering away taxpayer money are criminal fraud, strictly defined. In the case of taxpayer money being wasted, the paper seems to presume it may well be mere mistake. In the case of someone citing figures about it, the paper seems to presume it’s a case of wrongdoing.

The paper is free to do that. At least this time, it isn’t just making up things I didn’t say so it can make its rating more interesting, as it did last month. This time, I actually did err. The Journal Sentinel endorsed my opponent in 2010, so I suppose I can’t expect it to be anything but harsh with me now. I don’t mind that.

What I do mind is that the Journal Sentinel seems to miss the larger point: Whether it’s 21% of government benefit or 10% being paid out wrongly, it’s a grave waste of taxpayer money. And if the government cannot even tell how much is fraud and how much is bureaucratic bungling, how can anyone demand that taxpayers shell out even more?

Americans are generous toward the less-fortunate. The government owes them much more care in how it handles that money generously given. I admitted a mistake on my numbers in a public comment. Washington needs to start owning up to its much bigger mistake – its carelessness when it comes to public benefits.