Stopping Welfare Fraud

Member Group : Lincoln Institute


Welfare systems and social service systems have expanded substantially since the Great Depression.

Since the depression, the programs available for welfare and aid have expanded exponentially as has the cost of such social welfare programs.

Concerns about abuses in social welfare programs came about almost from the inception of those programs. In the 1996 "Personal Responsibility and Work Opportunity Reconciliation Act" reforms were enacted to curb alleged abuses. A further refinement of welfare reform was passed in 2003 with the intent of encouraging welfare recipients to become independent through planned welfare to work programs. This program expired in 2004.

Welfare program opponents have cited abuses in the welfare system almost from the beginning of such programs. They charge that such programs encourage dependence rather than self-sufficiency.

Segmenting social welfare recipients into three categories will help explain the dilemma facing our nation and the burgeoning costs.

The first segment is that group of people who truly need assistance. They meet all of the eligibility requirements for welfare programs and are making a good faith effort to reduce their need and their dependence on the system of social welfare.

This segment has made a commitment to self-sufficiency and is cooperating in efforts to better the lot for themselves and their families.

This first group was precisely the group for which the social welfare programs were designed.

The second segment of welfare recipients is that group of people who have a need but not a willingness to end their dependency. This group does not meet the welfare criteria that were originally required which is "A commitment to self-sufficiency is necessary before any potential recipient can begin to receive benefits. Heads of household must enter into an agreement they will become self-sufficient within a certain timeframe".

This second segment is not necessarily motivated to leave the social welfare system for any number of reasons. They have the ability to leave the system but not the willingness.

The third segment of welfare recipients includes those who are not in need of assistance but have found social welfare programs to be lucrative and rewarding as a career.

Segmenting welfare recipients into these three broad categories allows us to begin to get control of this runaway system while helping those truly in need.

When a system of social welfare actually encourages dependence, the legacy of such dependence on the children of such families creates an almost perpetual welfare class making it virtually impossible for those children to escape such dependency.

In my experience most Americans seem willing to assist those genuinely in need. I worked extensively as a volunteer in the not-for-profit arena and have found that most Americans want to help those in need.

What concerns most of us who volunteer in social service programs is that the second and third categories of people, those who have become dependent on the system out of convenience and those who are abusing the system out of greed, detract significantly from our ability to help those truly in need.

To get control of social welfare costs and to provide for those truly in need reform is critical by dealing first with those abusing the system. The federal government and state governments must become serious about prosecuting welfare fraud. It is fraud and theft by almost any definition.

Unfortunately, the federal and state governments have typically turned a blind eye to this type of fraud.

If the government will not act, you must. Certain actions can be taken by you as a citizen to help get this abuse under control.

First, if you find welfare fraud, report it.

Second, if you suspect welfare fraud and there is a professional involved such as an attorney, CPA, or Doctor report that as well to the appropriate state licensing board. As with cases of reporting welfare fraud, it is important to be very detailed. The value of this second step is frequently more important than reporting the welfare fraud itself. Professional licensing boards take participating in fraudulent activities extremely serious.

You are more likely to get favorable results for your efforts by reporting the professional who will then turn in the welfare cheats themselves.

Beyond what we can do for welfare fraud, our legislatures need to address the second segment by enacting meaningful reform of welfare benefit phase out. For the citizens who have become accustomed to welfare benefits but merely lack motivation to leave the system, the most effective way to solve this problem is to allow for gradual phase out of benefits as incomes increase rather than a cliff termination of benefits once a certain income level is reached as it currently done for most welfare programs.

To really solve the problem we have to start peeling the onion be prosecuting fraud and allowing for phase out of benefits as incomes increase.

Very few people mind helping those truly in need but most people detest being abused by the very people they are trying to help.

Meaningful solutions are needed to have meaningful reform.

Col. Frank Ryan, CPA, USMCR (Ret) and served in Iraq and briefly in Afghanistan and specializes in corporate restructuring and lectures on ethics for the state CPA societies. He has served on numerous boards of publicly traded and non-profit organizations. He can be reached at [email protected] and twitter at @fryan1951.