As you may have heard, Charlie Baker announced his “Baker’s Dozen” yesterday – 13 proposals (PDF) that he says will save a billion bucks a year.
One of the funniest of them — honestly, one wonders whether this one is a practical joke — is his proposal to scrutinize in detail not only the income, but also the “lifestyle,” of anyone seeking state benefits.
8. Conduct forensic financial analysis for benefits eligibility – Between $10M to $20M in savings
State agencies need to consider more than just tax returns when determining individuals’ eligibility for public benefits and services. A lifestyle analysis quantifies the living expenses of individuals – such as credit card bills, recreation activities, auto loans, grocery bills – and compares the expenses to known sources of income. If the money spent during the period analyzed exceeds the known funding sources, it is quite possible that there is another source of income. The state should conduct this analysis on a pilot basis for a few services – such as public defendants and public housing – before individuals are deemed eligible for the benefits.
“Lifestyle analysis.” I really love that. The libertarians out there who back Baker must be suffering some nasty heartburn. Governor Patrick issued a statement taking issue with the philosophy of this idea:
[H]is proposal to create a new state bureaucracy to scrutinize people’s ‘lifestyles’ to make sure they are behaving according to his view of how poor people should behave before they can receive state aid is a step way too far.
Aside from the philosophical objection to government-dictated behavior modification that I’d imagine many might feel both on the left and the right, the most obvious practical problem with this proposal is that the cost of administering it will likely exceed the money it saves. It’s easy to enough to look over a tax return and confirm that income falls below a certain threshold. But to conduct a “lifestyle analysis” that takes into account “credit card bills, recreation activities, auto loans, grocery bills,” and God knows what else, you need trained specialists. You need to gather, organize, and analyze a ton of data. You need — a new state agency! Let’s call it the “Bureau of Lifestyle Analysis and Monetary Evaluation,” or BLAME for short.
I guess the way this would work is that, first, the Commissioner of BLAME would issue regulations explaining how, in the view of the all-knowing and beneficent state, a family ought to manage its resources. Then, a family seeking benefits — say, access to public housing — would submit the required dozens (if not hundreds) of documents, whereupon a BLAME analyst would conduct a detailed analysis to determine whether, according to the Commissioner of BLAME’s regulations, the family managed its meagre resources in a state-approved manner such that it could receive benefits. But if, according to the BLAME analysts, the poor family in question took the kids out for ice cream one too many times last month, well, no public housing for them.
Sounds like a bureaucratic nightmare — the nanny state at its absolute worst. Frankly, I’m astonished that someone who considers himself a “conservative” would even consider a monstrosity like this.
Just think of the man…or woman…hours needed from state employees to DO this, supposedly this happens int eh Court system before appointing counsel…no wait…isn’t that “don’t ask, don’t tell” – the indigency lottery???
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p>See Chapter 54 of the Acts of 2005
He knocked me off the top BMG spot.
I’ll be here all week, try the feesh.
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p>No better compliment.
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p>Thanks guys
Kimosabee
where he said he gives homeless people money for a sandwich, but then follows them to make sure they actually buy a sandwich?
Grocery bills? Is he implying that people will need to keep a few months of grocery store receipts before they can apply for welfare?
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p>I can see this now.
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p>Seriously, you know that Baker is sucking up to the not-insignificant number of voters who say they know someone who knows someone else who sees all these welfare recipients buying steak and lobster in the grocery store, then getting into their Cadillac Escalade and driving to get a French Nail job before stopping off at the package store for a bunch of Heineken 40’s, then settling into their taxpayer-funded apartment with their flat-screen plasma TV. Because life on $200/week in welfare checks is like one big party.
“…which shows poor cost management on your part, and poor judgment in terms of vehicle choice; and since the major arteries leading to your neighborhood are state-maintained, we’re going to have to ask you never to leave your driveway again, or at least until you sign up with ZipCar or can have a Prius delivered.”
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p>Oops; he forgot we’re all on welfare in some form or other.
$39.50.
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p>This politician’s red tie, also $39.50.
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p>Having your wardrobe approved as “poor enough” by the State of Massachusetts … priceless.
…of finger-wagging moralistic authoritarian and libertarian impulses.
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p>He should be careful what he wishes for. Needless to say, if they probed the “lifestyles” of Baker and his country-club crowd, then taxed them proportionately, the state could hand out money on the street corners without any of the bureaucracy.
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p>Or we could just levy a surcharge per lesbian bondage club visit, and retire the deficit in short order…
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p>You are too kind. Sound like this champion of small goverment wants to do a little job creation and build his own secret police force like the famous Stasi in East Germany. Well maybe not so secret, this is the land of the free after all.
After Charlie submits to forensic accounting for the Big Dig and Hahvahd Pilgrim submit to it. After all, Charlie, a few billion in family, local, state, and federal government dollars went out the door with your name on it.
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p>Wanna justify YOUR income? Let’s see the receipts that support that freakin’ bonus of yours? The double digit premium increases?
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p>I don’t care how much Hahvad bling you’re wearing; you’re still an arrogant idiot.
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Scott Brown proposed the “Lifestyle Analysis
Factor” (“LAF test” — get it?) in last year’s Senate budget.
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p>Brown Amendment
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p>Folks may not be shocked to learn that the idea originally came from Dan Winslow, Legal Counsel to Former Gov. Romney, who wrote about it in Commonwealth Magazine.
Do you have a link?
End of trail
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p>Not sure what’s up with this link. But I have a PDF of the article (it’s from 2008, I think) that I can email.
I welcome a thoughtful discussion about entitlement reform in Massachusetts and will post a link to the essay later today (it’s copyrighted by Commonwealth Magazine, so I needed to secure permission to repost the essay, and the Magazine is going to fix that broken link too since both Baker and Patrick have joined the discussion). At the outset, can we agree on several basic premises?
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p>1. Direct and indirect spending on entitlement programs which depend on income eligibility constitutes a significant portion of the Massachusetts budget;
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p>2. There is fraud in such programs by people who misstate their actual income. The amount of fraud will be subject to debate, but given the dollars spent on entitlement programs, even a fraud rate of 10% or less equates with hundreds of millions of dollars of value;
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p>3. The state currently engages in limited, if any, verification/independent audit of stated income by people who claim eligibility for entitlement programs;
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p>4. The truly needy–that is, people who in fact are income eligible for entitlement programs–are not being fully served because of limited resources and Massachusetts has failed to extend a helping hand to all people truly in need (Judith Meredith, back me up on this one please);
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p>5. People who cheat the system thus are depriving the truly needy of the resources necessary to provide social services. If savings are reimbursed to taxpayers rather than expanding program scope, then people who cheat the system are depriving taxpayers of money that belongs in their pocket. We can have the debate about how savings should be allocated, but let’s assume 50-50% between program scope and cost savings for now.
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p>Agree on these as a starting point?
Your math stinks.
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p>1% is less than 10%. Heck, 0.03% is less than 10%. The amount lost to fraud may or may not be hundreds of millions of dollars — you’ve asserted it with bad math and no citations. Might be right, might not be, but I certainly won’t agree to it “as a starting point.”
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p>Likewise, you’ve asserted number 3 without any reference. Maybe you’re an insider who knows, but I surely don’t. Got a reference?
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p>Finally, 5 is just bizarre. You start each point with something reasonable, and then you make an assertion or a policy suggestion, as if agreeing on the first part means agreement on the second part. Of course people who cheat the system are depriving someone who is needy. But what the heck does that have to do with reducing the size of the program by 50% of the amount recovered in fraud, and why should we agree that this proposal of yours is a good idea merely because we agree that people who are cheating the system are taking from the needy?
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p>I don’t know if the tactic is accidental or intentional, but it isn’t upstanding.
… that the ‘solution’ is supposed to reduce the size of the programs. I think there are some assumptions that can be inferred from this. Why are we assuming the correct course of action from any recouped savings is to reduce the cost of the programs in question? Why are we not assuming that such savings should be reinvested in the program and thus applied more efficiently? One might infer that a preference toward cutting versus reinvestment might be based on an assumption that the needs of those in the programs who are not fraudulent are being covered as is and thus the ‘savings’ are not needed to bolster the program. But that is an assumption.
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p>If that’s true, why does Charlie Baker only propose to recover $10-20 million with his program? Is he incompetent or have you overestimated the amount of fraud going on?
As others have said on this thread, anything like a 10% fraud rate is quite a shocking assumption — that 1 in 10 MA residents who receive benefits is committing fraud (which is presumably a crime). Unless you can show some data to back it up, I respectfully suggest you walk that one way back.
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p>Hundreds of millions of dollars? Please. Again, without data, I simply don’t believe you.
http://danwinslow.com/position…
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p>The 10% estimate is derived from the cash economy estimate by the IRS. Interestingly, that estimate does not include the illegal economy, so the actual percentage of population where income tax returns do not accurately reflect actual need is higher. Ten percent assumes that the population served by entitlement programs in Massachusetts is reflective of the general population in terms of the cash economy, a fair assumption I believe. The sad reality is that we need to estimate because we have no current empirical data on the extent of fraud in entitlement spending; there is no organized and consistent effort to identify and prevent fraud in programs where eligibility is based on income tax returns. Charlie Baker proposes to pilot the concept first, which is why he estimated $10-20 million of savings in his Baker’s Dozen list of reforms. Whether 100%, 50% or none of monies recovered/saved from cheaters should be reinvested in serving an expanded population in need is a policy debate we can have, but the bottom line is that found money is found money, regardless of what next one does with it. Have at it.
This is from your essay:
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p>Sure, that makes sense. If someone has a fleet of yachts but paid no income tax, or is claiming that they can’t afford alimony, that’s an indication that there is something wrong.
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p>But from your own essay, it sounds to me like “lifestyle analysis” has generally been used to determine whether basically rich people are hiding assets. Is there any evidence that the same kind of “analysis” is an efficient, fair, and cost-effective way of determining whether low-income people have substantially more income than we would otherwise know about? I mean, if this big “analysis” is going to show that a family of four is earning $22,000 rather than $20,000 a year, I’m not sure that’s worth the investment. If, on the other hand, there really is massive fraud going on, maybe we should think about it.
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p>Also, I find your reliance on the “underground economy” numbers to be unconvincing. The Governor’s executive order, to which you refer in your essay, seems focused mostly on rooting out unscrupulous practices by employers who misclassify employees in order to avoid paying payroll taxes on their behalf. Yes, there is also a problem of employees (paid in cash, presumably) who don’t report income and therefore underpay income and other taxes. But how significant is the overlap between those people and people who are receiving state benefits to which they are not entitled? Are people really working hard to game the system such that they are both making significant unreported income and also applying for benefits?
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p>Your response, I suppose, will be that we won’t know for sure until we start looking. Well, maybe. But there will be substantial start-up costs for our new Bureau of Lifestyle Analysis and Monetary Evaluation, and we should think hard about whether creating a new state bureaucracy is a worthwhile investment of resources.
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p>One more thing: you need a better acronym if you want anyone to take this proposal seriously. Your essay says that the test should be based on “lifestyle analysis factors, or LAF.” That is, you are proposing with a straight face that applicants need to pass a LAF Test before receiving benefits. That is a non-starter, I’m afraid. 😉
Thanks David. The closest thing we have to a lifestyle analysis questionnaire in Massachusetts is in supplmentary proceedings (i.e. collections cases) where a person has been ordered to pay, says they cannot afford it, and the judge needs to determine what–if any–amount can be paid. I developed the form, since adopted statewide, during my service as a judge. It asks questions about assets along the lines of the lifestyle analysis. The closest proof we have that it can work is the Trial Court retained revenue budget line item (the topic of a running debate between my friend Amberpaw and me, but most recently embraced and expanded by Governor Patrick). Nearly all of the criminal defendants in the District and Municipal courts are deemed to be “indigent”, so Romney and I were roundly criticized when we proposed to have a portion of the Trial Court budget depend on how well the courts collected mandatory fees and assessments. It would never work, according to the opponents, to seek money from people who were found to be indigent based on their stated income levels. The result was $40 million yearly of additional revenue each year ever since, mostly from people who–on paper–have no income. Boiled down to its essence, the lifestyle analysis questionnaire (2 pages max) would simply ask a person if they own real estate, own more than one motor vehicle, own any boat or RV, own stocks, have any credit cards, and other basic purchases/assets that would be inconsistent with a stated claim of poverty. The form would have a consent form for the information to be verified. I disagree that a $2,000 savings is insignificant, btw, and I personally believe that people who defraud the state should worry about criminal prosecution (they don’t now) which would help deter fraud in the first place. Are BMG readers suggesting that people who own real estate, RVs, boats, and other non-necessities of life, entitled to taxpayer-funded benefits? Scott Brown’s version included people with outstanding arrest warrants as ineligible for publicly funded benefits. Do people really disagree? My Democratic opponent in the House seat likely will announce soon, I expect, so I hope to have at least some substantive debate about policy and the direction for Massachusetts in the campaign. Win or lose, it’ll be good for voters to hear reasoned discussion about solutions to the problems confronting our communities.
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p>To paraphrase F. Scott Fitzgerald, “the poor aren’t like the rest of us”. I would assume that the “entitlement” population is different, and that their lifestyle analysis would differ as well. But, I don’t know that, and neither do you:
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p>This is just the same old GOP “welfare queen/they’re all faking and lying/lazy/won’t work” BS we’ve heard for 30 years; and still with nothing to substantiate it. If you say it enough, enough people will believe it. And that’s all that matters.
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p>- Joseph “Original Lying Republican” McCarthy
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p>My assumption is that the level of fraud is the same percent as Charlie’s bonus is to Harvard Pilgrims expenses: “trivial”, “insignificant”, “round off error”. Or some other made up number.
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p>16 years of GOP governors running these agencies, tearing them apart to find savings and expose fraud. And what did you find? What empirical evidence did you uncover?
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