Six years ago in the summer of 2018, an automated monitoring system at the US government’s Social Security Agency flagged a questionable transaction and immediately forwarded it to a human worker at the agency to investigate.
It took more than a year for a Social Security employee to look into it. And it was painfully obvious— Social Security was paying too much ‘supplemental security income’ to the recipient.
In fact, the guy receiving the benefits check every month was legally obligated to report this overpayment… but he did not.
The Social Security employee then contacted the recipient to question him. No response. The employee tried a second time. No response.
Then, in the words of Social Security’s inspector general, “the employee took no further action.”
The government worker just shrugged and closed the case. There was no attempt to recoup the overpaid money. The recipient continued to be overpaid. No follow-up.
Today, six years after the waste was discovered, literally nothing has happened to correct the mistake.
And that’s just one case.
It comes from a report that the inspector general just released, in which he audited 100 random transactions that had been flagged by the same automated monitoring system.
Every single one of the 100 flagged transactions were all similar instances of waste or outright fraud.
Yet out of the 100 flagged transactions, Social Security employees simply ignored 63 of them. 17 were marked ‘complete’ when they were not complete. Only 20 out of the 100 were actually handled properly.
That means that Social Security failed to fix fraudulent and/or wasteful overpayments 80% of the time.
Bear in mind that, in total, the automated monitoring system has flagged over 400,000 cases of potential waste and fraud. At a similar 80% failure rate, that’s potentially billions of dollars that taxpayers are flushing down the drain.
And that’s only for Supplemental Security Income; it doesn’t count fraud and waste from the actual Social Security retirement checks. Or Medicare. Or Medicaid. Or anything else for that matter.
Everyone knows about the rampant fraud at Minnesota’s infamous ‘Learing Centers’. And fraud like that requires courageous people to put their safety at risk to document the fraud.
In this case, Social Security’s own internal system flags nearly EVERY SINGLE CASE of fraud and waste. And yet the agency still did nothing 80% of the time.
So taxpayers are essentially footing the bill TWICE— once for the overpayment, and then more money to pay lazy workers who do nothing about it.
Social Security is hardly alone. Earlier this year, Vice President JD Vance said his anti-fraud task force had found 186,000 dead people collecting food stamps.
In January, the FCC’s inspector general found phone companies billing Lifeline, the federal program that pays for low-income phone service, for 94,000 dead customers in California.
And by the government’s own accounting, improper payments— money sent to the wrong person, in the wrong amount, or for the wrong reason— come to about $3 trillion since 2003.
None of this is secret. Yet nothing ever changes.
When the inspector general asked why Social Security employees didn’t work the alerts, he said the agency bureaucrats “could not provide an explanation.”
I’d say the explanation is pretty obvious. They’re either in on it, or they don’t care. Either way it should be grounds for termination.
Unfortunately it’s impossible to fire anyone who works for the federal government.
Remember when the executive branch tried mass layoffs across more than a dozen agencies last year? 20 state attorneys general sued. Judges issued injunctions. And the job cuts were tied up in court for months, with taxpayers footing the legal bills.
A private company full of workers being paid to do nothing would quickly go bankrupt. The federal government just piles on more debt to cover it, and then pretends the exploding debt is consequence-free.
Well, the bond market disagrees.
The 10-year Treasury yield has skyrocketed past 5.25%, its highest level in decades. And one of the reasons is that bond investors are tired of lending to a government that operates like this.
We’re supposed to believe that ‘democracy’ will deliver us from this, that voters will hold politicians accountable and elect a Congress that will cut the deficit. I’m not holding my breath.
Given the astonishing rise in yields, it looks like the bond market is going to hold Congress accountable. As yields continue to rise, borrowing will eventually become so expensive that Congress will be forced to cut spending.
Maybe that happens when government bond yields hit 6%. Maybe 8%. Maybe 10%. Nobody knows for sure. But there is an interest rate that will be so high, Congress will be forced to take action and cut spending.
When those cuts do finally come, they’ll be far more painful than what it would take to fix this now.
Seriously, cutting the deficit today should be simple: fire the people who ignore the alerts. Stop the fraud the government already knows about. It should be pretty easy.
But at the moment, no one seems interested in any meaningful cuts… which means the bond market will keep pushing yields up.
In finance, whenever bond investors get tired of loaning money to governments and push yields higher, they’re known as ‘vigilantes’. In this case, vigilante justice for Congress can’t come fast enough.
P.S. When the bond market finally forces the issue, spending cuts will only be part of the answer.
A government that can’t borrow cheaply prints the difference, and that inflation comes straight out of your paycheck and your retirement account.
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