Elon Musk’s Stealth War Against the Poor
The New Republic (nprofile…pyzj)
Last week, Elon Musk’s America PAC tweeted a semi-comprehensive list of what the social media mogul held to be wasteful federal spending in 2023. Sadly, it illuminated only one thing, which is that Musk fundamentally misunderstands the federal government. Nearly all of the approximately $900 billion total was caught up in two line items. A significant chunk was $659 billion in interest payments on the national debt, the nonpayment of which would generate an epic international financial crisis. But the other notable line item was slightly more obscure: $236 billion in “improper federal payments.” This is a matter that’s truly been on Musk’s mind lately. “The real number is far higher,” Musk tweeted from his personal account. “The Department of Government Efficiency will fix this,” said America PAC.In September, speaking about what was then a proposed “government efficiency commission,” now-President-elect Donald Trump said, “As the first order of business, this commission will develop an action plan to totally eliminate fraud and improper payments within six months. This will save trillions of dollars.”Unfortunately for Trump’s cost-cutting expedition, a supposed crackdown on improper payments would not produce the desired savings. Even if Republicans are foolish enough to have independent agencies target poor people who have made minor mistakes on forms, the clawback amount would be nowhere close to “trillions of dollars.”Improper payments are a decent rhetorical target because, at first glance, the phrase can just read as “fraud.” Musk briefly pinned a tweet conflating the two. In reality, a payment being “improper” just means that it might have been subject to a range of errors that does sometimes include fraud but also extends to inconsequential administrative mistakes. While it is true that the Governmental Accountability Office, or GAO, reported that the federal government was responsible for an estimated $236 billion in improper payments in fiscal year 2023, it does not follow that the government improperly paid out $236 billion—much less that the government was defrauded $236 billion. For one thing, $11.5 billion of the improper payments total is “underpayments”—money that the government should have paid out but did not. So that’s one area where there’s no real savings for the government, nor is there any fraud. A further $4.6 billion is “technically improper payments,” which the GAO defines as “those in which recipients received funds they were entitled to, but the payment failed to follow all applicable statutes or regulations.” In simpler terms, the money paid was duly owed, but someone filled out a form incorrectly somewhere along the way. Still, the vast majority—nearly three-quarters—of improper payments in fiscal year 2023 were “overpayments,” or payments an agency identified as being in excess of the owed amount. This total, once again, is more due to error than fraud, and in some cases, it is relatively easy to recover overpayments. For example, the Department of Health and Human Services recovered over $15 billion in overpayments last year—roughly the same amount that it identified for recovery. The total improper payments figure that the GAO reports is a gross total rather than a net total; it includes overpayments even if they were later recovered, meaning any estimate of savings based purely on overpayments is an overestimate.But for some programs, the overpayment recovery process can be brutal, as the government tries to claw back money that people in poverty credibly thought they were owed.In 2022, the Social Security Administration, or SSA, was mired in a scandal after Lisa Rein of The Washington Post exposed that, under Trump, it had begun to impose massive fines on poor people with disabilities. Trump’s SSA Inspector General Gail Ennis—whose background was in giving legal advice to big banks and hedge funds—ramped up a program that penalized people on Supplemental Security Income, or SSI, and Social Security Disability Insurance, or SSDI, who had received overpayments from the agency.The SSA doled out five-figure fines to innocent people in poverty under the guise of recovering improper payments and punishing fraud. In one case, a woman with cerebral palsy and an intellectual disability was served a $60,000 bill for overpayments she received, presumably because she had picked up a few extra hours at her job at a nursing home (the SSA itself did not provide a clear reason). In other cases, SSI’s complex and punitive $2,000 asset limit triggered clawbacks after individuals received Covid stimulus payments, despite the fact that the checks were supposed to be exempt from the limit. Many of the people subject to these overpayment recoveries—who, in light of their eligibility for the programs, did not have much income—spent the money they were supposedly being overpaid as it came in. They could not and cannot reasonably be expected to pay it back.The way that the SSA went after improper payments was so cruel that the reporting on the stories of the individuals targeted by the agency—as many as two million people per year—won a bunch of newsrooms a big award. Even some Republicans in Congress sought to stop the SSA’s overpayment clawbacks.To be sure, there are legitimate concerns about some types of overpayments—such as overpayments to Medicare Advantage providers. But at the individual level, it is mostly the administrative complexity of our system that creates the conditions for payment errors, rather than negligence or malfeasance on the part of the agencies or beneficiaries. The more complex the eligibility requirements, the more likely it is that someone will make a mistake on a form. In 2023, the payment error rate in the heavily means-tested SSI program (9.2 percent) was much higher than that of the relatively simpler SSDI and old-age Social Security programs (0.66 percent). A comprehensive solution would need to include simplifying our welfare state and making it more universal (cutting the red tape, if you will), but if I were to guess, Musk is probably not so amenable to that idea.By design, then, the metric of improper payments primarily measures the errors in programs for poor Americans rather than any errors that benefit the rich, since our inefficient system of payments is subject to so much means testing. The Earned Income Tax Credit is a program with one of the highest rates of improper payments, but as the center-right Tax Foundation has noted, this is almost entirely due to program design rather than IRS inaction. By contrast, the improper payments total does not include the roughly $150 billion of evaded taxes that we give to the wealthy annually. Unfortunately, implementing Musk’s playbook on overpayments is something that the Trump administration could do without Congress, unlike the also-concerning cuts to Medicaid and SNAP floated by influential Republicans. The administration could also opt to crack down on waste by going after wealthy tax cheats, or not having the Consumer Financial Protection Bureau dole out as many $1 fines as it did under the first Trump administration, but that seems unlikely. If Trump and Musk follow through on the half-baked idea to go after improper payments, we know who will actually suffer, and it won’t be the billionaires.
https://newrepublic.com/article/188552/musk-improper-payments-poor-war
Last week, Elon Musk’s America PAC tweeted a semi-comprehensive list of what the social media mogul held to be wasteful federal spending in 2023. Sadly, it illuminated only one thing, which is that Musk fundamentally misunderstands the federal government. Nearly all of the approximately $900 billion total was caught up in two line items. A significant chunk was $659 billion in interest payments on the national debt, the nonpayment of which would generate an epic international financial crisis. But the other notable line item was slightly more obscure: $236 billion in “improper federal payments.” This is a matter that’s truly been on Musk’s mind lately. “The real number is far higher,” Musk tweeted from his personal account. “The Department of Government Efficiency will fix this,” said America PAC.In September, speaking about what was then a proposed “government efficiency commission,” now-President-elect Donald Trump said, “As the first order of business, this commission will develop an action plan to totally eliminate fraud and improper payments within six months. This will save trillions of dollars.”Unfortunately for Trump’s cost-cutting expedition, a supposed crackdown on improper payments would not produce the desired savings. Even if Republicans are foolish enough to have independent agencies target poor people who have made minor mistakes on forms, the clawback amount would be nowhere close to “trillions of dollars.”Improper payments are a decent rhetorical target because, at first glance, the phrase can just read as “fraud.” Musk briefly pinned a tweet conflating the two. In reality, a payment being “improper” just means that it might have been subject to a range of errors that does sometimes include fraud but also extends to inconsequential administrative mistakes. While it is true that the Governmental Accountability Office, or GAO, reported that the federal government was responsible for an estimated $236 billion in improper payments in fiscal year 2023, it does not follow that the government improperly paid out $236 billion—much less that the government was defrauded $236 billion. For one thing, $11.5 billion of the improper payments total is “underpayments”—money that the government should have paid out but did not. So that’s one area where there’s no real savings for the government, nor is there any fraud. A further $4.6 billion is “technically improper payments,” which the GAO defines as “those in which recipients received funds they were entitled to, but the payment failed to follow all applicable statutes or regulations.” In simpler terms, the money paid was duly owed, but someone filled out a form incorrectly somewhere along the way. Still, the vast majority—nearly three-quarters—of improper payments in fiscal year 2023 were “overpayments,” or payments an agency identified as being in excess of the owed amount. This total, once again, is more due to error than fraud, and in some cases, it is relatively easy to recover overpayments. For example, the Department of Health and Human Services recovered over $15 billion in overpayments last year—roughly the same amount that it identified for recovery. The total improper payments figure that the GAO reports is a gross total rather than a net total; it includes overpayments even if they were later recovered, meaning any estimate of savings based purely on overpayments is an overestimate.But for some programs, the overpayment recovery process can be brutal, as the government tries to claw back money that people in poverty credibly thought they were owed.In 2022, the Social Security Administration, or SSA, was mired in a scandal after Lisa Rein of The Washington Post exposed that, under Trump, it had begun to impose massive fines on poor people with disabilities. Trump’s SSA Inspector General Gail Ennis—whose background was in giving legal advice to big banks and hedge funds—ramped up a program that penalized people on Supplemental Security Income, or SSI, and Social Security Disability Insurance, or SSDI, who had received overpayments from the agency.The SSA doled out five-figure fines to innocent people in poverty under the guise of recovering improper payments and punishing fraud. In one case, a woman with cerebral palsy and an intellectual disability was served a $60,000 bill for overpayments she received, presumably because she had picked up a few extra hours at her job at a nursing home (the SSA itself did not provide a clear reason). In other cases, SSI’s complex and punitive $2,000 asset limit triggered clawbacks after individuals received Covid stimulus payments, despite the fact that the checks were supposed to be exempt from the limit. Many of the people subject to these overpayment recoveries—who, in light of their eligibility for the programs, did not have much income—spent the money they were supposedly being overpaid as it came in. They could not and cannot reasonably be expected to pay it back.The way that the SSA went after improper payments was so cruel that the reporting on the stories of the individuals targeted by the agency—as many as two million people per year—won a bunch of newsrooms a big award. Even some Republicans in Congress sought to stop the SSA’s overpayment clawbacks.To be sure, there are legitimate concerns about some types of overpayments—such as overpayments to Medicare Advantage providers. But at the individual level, it is mostly the administrative complexity of our system that creates the conditions for payment errors, rather than negligence or malfeasance on the part of the agencies or beneficiaries. The more complex the eligibility requirements, the more likely it is that someone will make a mistake on a form. In 2023, the payment error rate in the heavily means-tested SSI program (9.2 percent) was much higher than that of the relatively simpler SSDI and old-age Social Security programs (0.66 percent). A comprehensive solution would need to include simplifying our welfare state and making it more universal (cutting the red tape, if you will), but if I were to guess, Musk is probably not so amenable to that idea.By design, then, the metric of improper payments primarily measures the errors in programs for poor Americans rather than any errors that benefit the rich, since our inefficient system of payments is subject to so much means testing. The Earned Income Tax Credit is a program with one of the highest rates of improper payments, but as the center-right Tax Foundation has noted, this is almost entirely due to program design rather than IRS inaction. By contrast, the improper payments total does not include the roughly $150 billion of evaded taxes that we give to the wealthy annually. Unfortunately, implementing Musk’s playbook on overpayments is something that the Trump administration could do without Congress, unlike the also-concerning cuts to Medicaid and SNAP floated by influential Republicans. The administration could also opt to crack down on waste by going after wealthy tax cheats, or not having the Consumer Financial Protection Bureau dole out as many $1 fines as it did under the first Trump administration, but that seems unlikely. If Trump and Musk follow through on the half-baked idea to go after improper payments, we know who will actually suffer, and it won’t be the billionaires.
https://newrepublic.com/article/188552/musk-improper-payments-poor-war