The $2.5 Trillion Welfare Fraud
The $2.5 trillion Welfare Industrial Complex has been making headlines with reports that Minnesota Somalis siphoned over a billion dollars in welfare fraud ranging from food stamps to housing, addiction services, children’s autism and the ever-popular medicaid fraud.
We can only guess the voting fraud.
“Income Security” and Free Healthcare are almost all Federal spending
Welfare Fraud: One of America’s Biggest Industries
The running theme has been how shockingly easy it is to defraud welfare. To snag hundreds of thousands of taxpayer money and tens of millions of federal grants.
Of course, it’s not just Somalis -- federal auditor GAO estimates up to $500 billion is stolen in fraud.
For perspective, $500 billion could abolish the income tax for 90% of Americans -- everybody up to $125,000.
Instead, it goes to fraud.
Up to 98% of Welfare is by Choice
Of course, fraud’s just the tip of the iceberg. Because almost all welfare goes to people who don’t actually need it -- they could work but choose not to.
We know this because the world existed before welfare. In the 1950’s, before Democrats turned means-tested programs into the greatest vote-buying scheme since bread and circuses.
Back then welfare focused on people who could not work -- blind, disabled, impoverished seniors.
Roughly 5 million Americans were on welfare -- about 3% of the population.
Today, that’s ballooned to almost 30% of Americans who are on some means-tested program, from Medicaid and SNAP to Section 8 and TANF.
42 million are on SNAP alone.
It’s even worse in dollars. In the 1950’s welfare cost about $40 billion dollars a year. Today it’s -- 60 times more even after adjusting for inflation and population size
In other words, literal fraud may be a fifth of welfare. But 85 to 98% is fraud in the sense it’s not necessary. It’s vote buying.
Vote buying that destroys the recipients, who are bribed to remain poor.
One Cato Institute study estimated the full welfare package pays better than half the median income nationwide. It pays three quarters the median in blue states like California. It pays 90% of median household income in Hawaii.
So the real mystery is why so few people are on welfare. Perhaps they’re too proud. Or don’t know any Somalis.
What’s Next
The welfare industrial complex is bankrupting the country, and it’s why illiterate illegals get jobs -- welfare bribes low-skill natives out of the job market.
Elon tried to use DOGE to flag fraud, but the much bigger problem is 98% who just don’t want to work.
Republicans nibble at the edges, trimming medicaid for the able bodied in the Big Beautiful Bill and standing up to Democrats on medicaid for illegals during the shutdown.
But in that shutdown we also saw the awesome power of the welfare industial complex when Republicans cowered before the might of 42 million food stamp recipients who may not have a pocketbook to vote but they’ll certainly vote yours.
The wider concern is if a third of the population is on welfare and another 15% of voters work for government, that’s an overwhelming head start for the party of big government with tens of millions of clients on the payroll.
.
Every week I write on Economics and Freedom here on Prof St Onge Weekly. Consider becoming a free or paid subscriber.
I also make 3-minute daily videos on economics and freedom:
20 minute Roundup Podcast of all the week’s videos. Just search Peter St Onge on all major Podcast platforms.
Is there a word other than disturbing to describe this…..