Changing the Rules of Welfare

Monday May 7th, 2012   •   Posted by Craig Eyermann at 1:48pm PDT   •  

How can changing the rules by which welfare benefits are doled out save taxpayer dollars while making sure that only the people who are eligible for welfare benefits can receive them?

It’s a trick question, because the key to making it work is to make the bureaucrats who operate the federal government’s welfare dispensing programs make sure the people to whom they hand out these unearned benefits are eligible to receive them! Saving taxpayer dollars is just something that would result from imposing this kind of fiscal discipline on the people who are supposed to exercise fiscal discipline!

The Washington Examiner‘s Paul Bedard explains:

Rule changes under President Obama that have allowed for a huge “stealth expansion” of welfare benefits would be reversed under legislation taking center stage this week in the House.

As part of a package of legislation aimed at avoiding the year-ending threat of sequestration, a budget requirement that would crush the Pentagon and order across-the-board cuts, Speaker John Boehner and his GOP team is taking aim at several welfare-expanding moves pushed by the administration that could save a total of $77 billion over 10 years.

The proposed simple rule changes consist of four separate reforms, which are aimed at reducing welfare application fraud. Bedard continues:

First, it closes a loophole that allows states to give food stamps not just to those who need them but to anybody who hints they want them simply by asking for a food stamp brochure or calling the food stamp 1-800 hotline. That could save $11.7 billion over 10 years.

A second move would close the “heat and eat” loophole that lets states expand eligibility for food stamp by up to $130 a month for those who also receive home heating fuel assistance. The scam here: Some states send just $1 assistance checks, making families who apparently don’t need much fuel assistance eligible for bigger food stamp help. Savings: $14.3 billion over 10 years.

The third initiative would prevent abuse of the refundable child tax credit by those immigrants ineligible to work in the United States for a 10-years savings of $7.6 billion.

And the largest money saver would be requiring Americans to repay overpayments of their Obamacare subsidy to buy insurance. The issue: eligibility for aid is based on two-year-old employment info, meaning that those who recently got jobs and receiving aid are still registered as unemployed and will be provided with more support once the full law goes into effect. What’s more, there’s a cap of $250 for singles and $400 for families on overpayments that have to be returned to Uncle Sam. Projected 10-year savings: $43.9 billion.

We would suggest one additional reform: require the government agencies that administer welfare programs to issue 1099 forms for the full cash value of the benefits provided to the recipients, because the recipients really ought to have to report this kind of income to the IRS on their tax returns.

If it turns out that they’re not really eligible for the benefits they’re receiving, we’re pretty sure that the IRS has the means to recover the money that should never have been doled out in the first place.

As for how to pay for the IRS’ role in all this, whenever a misspent dollar is found by the IRS, the government agency that improperly transferred the money without correctly determining the eligibility of the welfare applicant should pick up the tab for the IRS’ compliance services from its employee recognition and bonus programs, which will help incentivize their employees to do a better job in screening welfare benefit applicants in the first place.

And that would have the additional benefit of getting the IRS to work for honest taxpayers for a change instead of against them!

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May 2012