The late Supreme Court Justice Louis Brandeis once famously
referred to state governments as laboratories of
democracy. It is at the state level that lawmakers who are closer to their
constituents than the Congress craft legislative solutions to solve the
pressing issues of the day.
If that’s the case, then there are a lot of state lawmakers
walking around places like Springfield, Albany and Austin in their white lab
coats trying to discover how to eradicate the thorny issue of welfare fraud.
In early 2012 as a sidebar to the Middle
Class Tax Relief and Jobs Creation Act Congress for the first time sought
to reform the Temporary
Assistance to Needy Families, or Tanf, program. This is the grant program,
jointly funded by the states and the federal government, that provides cash
subsidies to poor families and is often called as welfare.
The law cracks down on the use of Tanf money by
beneficiaries at what I call vice locations: liquor stores, casinos and adult
entertainment (read strip clubs) venues. That all sounds well and good, but it
is going to be difficult if not impossible to enforce the law from Washington,
which seems to have its own law enforcement issues these days.
So rather than waiting, a host of states are getting into
the act, looking for their own solutions to the misuse of cash benefit programs
like Tanf. A recent survey shows that there are some 40 bills pending in state
legislatures across the country that would in one way or another tighten up on
misuse of welfare reform. Some states have multiple bills pending. New York and
Illinois, for example, are considering three bills. Tennessee legislators are
sorting through four.
Three states—California, New York and Indiana—are
considering whether to mandate a “systemic” solution to misuse of benefits.
Since many benefits, like Tanf, are delivered to beneficiaries via an
electronic benefits transfer system, a systemic solution would vest in the EBT
system the intelligence to decide whether a payment card was issued by the
government and therefore should not be honored at a specific location.
At least seven states—Illinois, Massachusetts, Oregon,
Pennsylvania, Rhode Island, Tennessee, and Texas—are looking to strengthen
security in these benefit programs by switching in some way to photo I.D.s.
The problems with the new federal law is that states will be responsible for policing fraud according to yet unwritten rules into
which they have had limited input. The effect on fraud will be limited at best. Those states which fail to clean up their acts
will see their Tanf grants cut by five percent. This ancient moribund solution, which
penalizes everyone for the sins of a few, dates back to the days of imperial Rome.
States, on the other hand, are closer to the problem. They can take enforcement
down to the level where it should be: the beneficiary and the sin venues where
the EBT cards are used.
For example, in Arizona, liquor stores could lose their
licenses for accepting EBT cards. In Missouri, beneficiaries who use their
cards for purchase of forbidden goods or services could lose their benefits for
up to three years. Rhode Island would suspend retailers from the Snap, formerly
food stamp, program who fail to validate the identity of shoppers presenting
EBT cards for payment.
Perhaps most creative is an Illinois bill that would force
the state’s Human Services Department for the first time to share recipient
information with the Department of Corrections to prevent cons from receiving
public aid while they’re locked up.
Most of these bills will never make it out of committee, let
along make it to a floor vote. But they show the ingenuity that lawmakers are
using to solve a local problem that has become a national one. Congress was
right to address this problem, but states know welfare fraud first hand. They’re
the ones better positioned and more experienced in crafting longer lasting,
more effective solutions to the misuse of taxpayer dollars.