thought your brain circuits were already blown out by the monstrosities of the 2009 porkulus bill, prepare for them to be blown out again. Stephen Meister writing in today’s
another whole dimension of porkulus: a vast set of transfer payments to individuals, including illegal aliens, in the form of tax credits.
And when you vote tomorrow, please remember that the House Republicans voted unanimously against porkulus, just as they did a year later against Obamacare. Whatever the Republicans’ flaws, they deserve much credit for that.
A stimulus to fraud
On top of everything else, it turns out the stimulus was an invitation to tax fraud: J. Russell George, the Treasury’s inspector general for tax administration, just reported that he’d identified more than 125,000 individuals who got $111.4 million in undeserved tax-credit refunds, thanks to the 2009 Recovery Act.
We already knew that the stimulus failed to produce the miracles that President Obama, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid had promised—the unemployment numbers alone are proof of that. Much of the cash went to the states, to roll back welfare reform and to allow states to avoid cutting their spending. Now George’s audit of the IRS’s handling of the 16 new or increased “refundable” tax credits has exposed yet another mess:
* 10,581 people got $65.6 million in Homebuyer Credits they didn’t qualify for.
* 109,665 individuals got $29.7 million in Making Work Pay and Government Retiree credits they didn’t qualify for.
* 5,345 people wrongly received $15.6 million in Plug-in Vehicle credits.
* 171 got $453,220 in erroneous Nonbusiness Energy Property credits.
* 2,933 received more than $95.8 million in excessive Qualified Motor Vehicle Tax deductions.
Democrats rushed the massive “stimulus” package through Congress within a month of Obama’s taking office. More than one in every three dollars of “stimulus”—$252 billion worth—took the form of “refundable tax credits” (many to “taxpayers” who paid no taxes).
And now George has shown that the burden of processing these vast giveaways overwhelmed even the IRS’s 100,000 employees and contractors, operating on a budget exceeding $12 billion this year.
We now know the Homebuyer’s Tax Credit didn’t stop housing’s slide. Instead, we simply paid a couple million people $7,000 to $8,000 apiece to buy homes they would have bought anyway.
Worse, over 10,000 people got an $8,000 Homebuyer’s Credit fraudulently. Many were under 18 years old—the youngest was just 4. Thousands were incarcerated prisoners. Thousands more never bought homes or bought them before the law took effect.
Even IRS employees got in on the action—George has (so far) found 53 of them who fraudulently claimed the credit.
The inspector general also identified nearly 40,000 people who got $15.2 million in Making Work Pay Credits (a credit designed to reduce payroll withholding taxes), despite not having a valid Social Security number.
Most of these people were likely illegal aliens working with fake documents. Almost none of them even tried to claim the tax credit—IRS software automatically computed and paid the credit. The computers weren’t told to check for valid Social Security numbers.
To recap: Obama and Congress’ Democratic leaders promised us they had a solution to the recession and the 7.6 percent jobless rate he inherited—vast “stimulus” spending. His top economic adviser, Christine Romer, told us that the spending bill would generate 3,650,000 jobs—keeping unemployment to 8 percent or less, when it would otherwise go to 9 percent.
But the only thing “shovel ready” was what the Democrats were dishing out—none of the jobs showed up. Instead, unemployment skyrocketed to and has stayed near 10 percent as a battered private sector was pushed aside by big government and Obama waged his war against business.
But the Recovery Act didn’t just waste the better part of a trillion dollars of the taxpayers’ hard-earned money and balloon the deficit. It further complicated an already staggeringly complex tax code and, in the process, invited fraud and IRS mistakes in spades.
THE IRS last year collected individual income taxes of $915 billion from 47 percent of the taxpayers, only to give back one of every three dollars collected ($292 billion) in large part to the other 53 percent of the “taxpayers” through a staggering 101 million “refunds.” That’s no way to run the government.
If Republicans gain control of one or both houses on Tuesday, they should be proud to be called “the party of no.” Given the results so far, someone needs to teach Obama the “audacity of nope.”
Stephen B. Meister is a partner of Meister, Seelig & Fein LLP.
Rufus W. writes: