Use Federal Government Waste to Pay Unemployed Americans?

Don’t expect much change in the number of terminally unemployed when the September jobs report comes out on Tuesday (Update: 4.1 million, “little changed” says the Bureau of Labor Statistics). Month after month over four million people have reached the 27 week benchmark, jobless long enough to end their prospects for finding work. The only solution seems to be to wait for them to drop off the Labor Department’s unemployment radar, erasing a stain on the president’s legacy.

Federal employees who just ended an unscheduled paid vacation do not have the same worries, though listening to public officials one would think the furloughs were a national catastrophe. The president welcomed government workers back to their jobs last week:

Whether you have been working without pay, or you were forced to stay home without pay, I know it has been a frustrating and stressful few weeks for you and your families. It should never have happened. So I hope it comes as some solace that you will be paid in full for what you should have earned since the shutdown began.¹

Back pay is more than solace. If having your paycheck delayed for two weeks is frustrating and stressful, how about 27 weeks with no income and no hope for the foreseeable future?

The lost incomes of long-term unemployed Americans, many of them older workers discarded by the Obama economy, put the billions in Federal Government waste into perspective. If you want a really good sense of how much public money is wasted or spent by mistake, think about how many American incomes could be paid by the tax dollars that slip through Uncle Sam’s fingers.

The most recent Labor Department number for the country’s mean annual income is $45,790.00.² If we paid the salaries of unemployed Americans with the wasted tax dollars from federal programs, how many could we support?

Spend wasteful improper payments on the unemployed?

Medicare high error program improper payments were equivalent to paying $45,790.00 to 967,460 Americans for one year. Medicaid improper payments would have paid 419,305 Americans.³*

Unemployment insurance bad payments for 2012 would, ironically, have supported 224,939 Americans for one year⁴ and a whole lot more if paid out at unemployment insurance rates. Hilda Solis blamed states for doling out $17.5 billion in unemployment benefits errors in 2011, waste that would have supported 382,179 job seekers (see: Government Blames States While Illegals Collect Benefits).

There’s more Federal Government waste to choose from.

Improper payments are only a small part of federal waste. The $4.2 billion in additional child tax credits paid out to illegal immigrants would have supported 91,723 American citizens. The $6.5 billion in fraudulent refunds the IRS paid out in 2011 would send paychecks home to 141,952 Americans (see: Government Spending on Fraud and Waste Boosts Our Bad Economy). How about the $450 billion IRS tax gap? 9,872,473 jobs could be supported for one year (see: Buffett Rule Will Not Apply to Tax Gap Deadbeats).

Our president was back on the stump yesterday, talking about spending and tax hikes disguised as a “balanced approach” on behalf of the people. Given the Democratic reliance on social insurance and safety nets to cover for economic failures it is surprising that he hasn’t thought to collect all that Federal Government waste and give it those who need it. Mr. Obama has always liked the idea of the government buying jobs, especially for labor union members. Perhaps we could have the unemployed fund their federal waste handouts by helping to collect the money the government loses. Even though our money has no value to federal agencies it still has value to us, particularly those who are paying taxes and penalties on the 401ks and retirement accounts they have to cash in so they can eat while looking for work.

*Paymentaccuracy.gov points out that most of the currently estimated $108 billion in improper payments are overpayments but “a significant chunk”⁵ are underpayments and therefore do not represent a loss. For 2012 the figures were $98 billion in overpayments and $10 billion in underpayments⁶ which, presumably, we had to pay federal employees to fix.

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