“Don’t spend that unemployment check too fast,” CNN Money warns. “The government might ask you to pay it back.”
A new report shows that the federal government and states overpaid unemployment benefits by $14 billion in 2011 — or approximately 11 percent of all benefits paid. Now the various governments are trying to recoup their embarrassing losses.
The overpaid benefits typically ended up in the pockets of the ineligible: people who had dropped out of the job hunt, who were fired or quit voluntarily, or who continue to file unemployment claims after returning to work.
More worrisome than the large-scale fraud, though, is the government apparatus unable to catch it. Indiana made more “improper payments” than correct ones. The only federal program with more improper payments than the unemployment insurance program was the National School Lunch Program.
But fear not: Joe Biden is on it. “Unemployment checks are going to people in prison,” he said. “Unemployment checks are going to graveyards.” He is heading the Campaign to Cut Waste, begun last year, to eliminate overspending among federal agencies.
The Labor Department suspects that only half of the $14 billion is recoverable, and experts suspect they’ll recoup significantly less than that.
But not to worry. As Paul Krugman says, “We’re talking as if a billion dollars was a lot of money.”