The Poor Don’t Lie and Cheat Any More Than the Rest of Us

Those no-good, dirty, rotten poor people. They lie, and they steal, and they spend our money.

Or so I’ve been told by readers since my last op-ed column, where I did the math proving that government benefits aren’t generous enough to make people want to be poor.

But you’re just doing the legal math, said one reader. What about what goes on under the table? Surely all that welfare fraud is proof that poverty can be the good life, if only you have the gumption to bilk the taxpayer.

Food Stamp Error RateFirst of all, the government has conducted investigations of fraud in programs like welfare and food stamps, and they’ve found it to be shockingly low. Less than 2 percent of the programs’ budgets get ripped off. That’s lower than the private sector, where the average business loses 5 percent of its annual revenue to fraud.

Second, and perhaps more surprising, investigators have found that the majority of government fraud is committed by the middle class and the rich, not the poor!

After Hurricane Katrina, for example, the investigative reporter Eric Schnurer discovered that most of the $500 million lost to fraud did not go into the pockets of the poor people who lost their homes but rather to the “shifty contractors” who were supposed to be rebuilding the homes.

Similarly, reports Schnurer, “Medicare and Medicaid fraud is largely committed not by patients — very few people are trying to rip off taxpayers to obtain unneeded spinal taps or root canals — but by providers: unscrupulous (or sometimes just incompetent) doctors and hospitals billing for procedures the patient didn’t need or didn’t receive.”

Throw in another $100 billion a year in defense contractor fraud, and you quickly find that fraud is more likely to make the rich richer than it is to make the poor want to be poor. It’s redistribution alright, but the wealth is moving up, not down, the ladder.

Once upon a time, I might have been surprised by these findings, but in writing my new book Letter to the One Percent, I found a consistent pattern in the research literature. Psychologists have conducted many experiments on the rich and the poor, and they’ve found that the rich are less likely to have empathy for other human beings. They’re more likely to break the rules and feel that they’ve earned the right to do so. They’re less likely to think of the moral consequences of their actions, especially when money is involved, and they’re more likely to put their own needs ahead of others’.

The notion that the poor are uniquely morally deficient, it turns out, is completely backward. They’re actually more virtuous, on average, than the rich.

And yet, we have politicians who assume that the poor are less trustworthy and therefore less deserving of our help. On the 50th anniversary of the War on Poverty, they took to the floor of Congress and criticized “single mothers” and “deadbeat dads” for dropping out of school and having babies and cheating the system. Then they proposed a budget that would cut government benefits for tens of millions of Americans.

Meanwhile, in Florida, they’re fighting a recent court decision that struck down a law requiring drug testing of all welfare applicants. But they don’t seem concerned about corporate executives who apply for billion-dollar subsidies. They’re not clamoring for drug testing doctors who receive Medicare payments or retirees who receive Social Security checks or Congress members who receive six-figure salaries.

Why? Because they assume that the poor are more likely to waste taxpayers’ money on drugs. Well, I’ve got news for them: The rate of illicit drug use is no higher among the poor than it is among the rest of us, and the rate of alcohol addiction is actually lower.

Human nature is human nature. There are liars and cheaters in every walk of life. But the facts are irrefutable: The poor are not poor because they lie and cheat, nor are they responsible for high taxes and mounting debt. If anything, they have contributed less to fraud and waste than the rest of us. The next time you hear Senator Marco Rubio and his Republican colleagues say otherwise, remember: That’s a stereotype, and it’s wrong.

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This op-ed was published in today’s South Florida Sun-Sentinel and Huffington Post.

Reader Requests: Why Aren’t We Prosecuting Fraud?

A reader asks: Each year American taxpayers lose billions of dollars to fraud, yet nobody in Washington wants it stopped. Why?

Yes, fraud is a continual challenge with government programs. However, it’s not true that nobody in Washington wants it stopped. The Patient Protection and Affordable Care Act of 2010 (a.k.a. “Obamacare”) improved the government’s ability to detect and crack down on Medicare fraud. As a result, earlier this year, the Obama administration announced the largest anti-fraud takedown in history, totaling $452 million. The Obama administration has also tried to increase the IRS’s budget to crack down on tax fraud, but Republicans in Congress blocked it. The IRS estimates that they can collect an additional $200 in tax revenue for each dollar added to their budget. They know how to combat fraud. They just don’t have the resources to do so.

In response, another reader asks: Do you know why Republicans blocked it?

They want to cut the budgets of all the major regulatory agencies. They’re fanatically opposed to regulation, and they don’t want to collect more tax revenue, even if it means letting cheaters get away with their crimes. They want to “shrink [the government] down to the size where we can drown it in a bathtub,” as one of their leading lobbyists famously said.

Many of them campaigned on eliminating the IRS altogether. “Getting rid of the IRS is something we’d all love,” said Mitt Romney in a 2007 primary debate. They’ve been waging this war since the 1990s, when the Republican Senate leaders compared the IRS to the Nazi secret police.

It’s also worth noting that the rich have the most to gain from lax tax enforcement. They can afford accountants who hide their income in dubious tax shelters, a luxury not available to the poor or middle class. In the Republican mindset, the rich are producers and the rest are moochers, so anything the rich do to avoid paying taxes is their right as the anointed kings of capitalism.