I Pay Dead People

How Washington Managed to Lose $67 Billion in a Single Year

May 2021

Script

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One’s a young hip-hop artist from Southern California. One’s a middle-aged healthcare mogul from South Florida. Their lifestyles couldn’t be more different. You’d think that they have absolutely nothing in common. And you’d be right—except for one thing. Probably unbeknownst to you...both of them were robbing you blind.

This is Nuke Bizzle. He’s a rapper based out of Los Angeles. And he’s looking at up to 22 years in prison.i

His charge? Running a scam that allowed him to steal $1.2 million worth of unemployment benefits.

But his real crime was probably being, let’s say, ‘confident’ enough to write a song about his theft—and then filming a music video that featured actual evidence of the scam.

          I just been swipin' for EDD

          Go to the bank, get a stack at least

          This $%@# here better than sellin' Ps

          I made some racks that I couldn't believe

          —“EDD” (Employment Development Department) by Nuke Bizzle & Fat Wizza

Now we can—and should—blame Nuke Bizzle for this, but we should also ask the question, “How was this possible?” Could the government really pay out that much money incorrectly before someone found out?

The answer to that question, by the way, is no. The amount of money the government pays out incorrectly is way, way more.

The federal government spends a lot of money every year: a trillion dollars for Social Security; over $675 billion for national defense. In 2019, it all added up to $4.4 trillion.ii And when you’re moving that kind of cash—and doing it through a cumbersome bureaucracy—it’s maybe inevitable that some of it is going to end up in the wrong place.

The question, of course, is how much?

The answer...well, you might want to sit down.

In just 2020 alone, the federal government lost $67 billion to payments it should never have made. iii

So how does this happen? Sometimes the problem is criminals gaming the system. That South Florida health mogul we mentioned earlier? He used the assisted living facilities he owned to make $1.3 billion in fraudulent Medicare and Medicaid claims before he got caught.iv

Other times, it’s because the government can’t keep its information straight. In 2018, Washington paid nearly a billion dollars...to dead people. v

[Just to be clear: We are describing a scenario in which you earn money at your job. The government removes some of that money from your check. And then the government sends that money to a person...who is not breathing. And hasn’t been for a while.]

And it’s worth noting that the victims here aren’t just taxpayers. It’s also the very people these programs are meant to assist; because the same kinds of errors can result in the people the government is supposed to be helping actually getting underpaid.

One government report estimated that simple mistakes like misentering data are responsible for about $40 billion in incorrect payments—either too much or too little—a year.vi

In a time when it doesn’t seem like the two major parties can agree on anything, fixing this system may just be one area where there’s hope for bipartisanship. Remember, the total amount the government lost in 2020 was $67 billion. Whether you’re a conservative Republican or a progressive Democrat, you can almost certainly think of better ways to use that money.

$67 billion could put 335,000 new doctors at the VA. It could forgive student loans for over 2 million people. Or it could build 11 border walls. Not sure what’d we use the extras for, but we’re keeping an eye on Canada.

Debates about how much money the government should be spending have been going on since the earliest days of this country. They’re probably not going to stop anytime soon. So let’s just enjoy for a moment that we can all agree on at least one thing: The correct level of government spending stops somewhere short of paying for Nuke Bizzle’s music video.

To find out more about how your tax dollars are spent, visit sites like USAspending.gov or openthebooks.com. And let us know if you find other topics there you’d like us to explain. They don’t have to involve rap videos, but...if we’re being honest, it helps.

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