States dole out billions in improper unemployment insurance payments

Eliminating waste wouldn’t necessarily solve the nation’s and states’ budget problems, but it surely couldn’t hurt. Stories like this one from The Wall Street Journal hammer that home:

Nearly $19 billion in state unemployment benefits were paid in error during the three years that ended in June, new Labor Department data show.

The amount represents more than 10 percent of the $180 billion in jobless benefits paid nationwide during the period. (See a sortable chart of each states’ overpayments) The tally covers state programs, which offer benefits for up to 26 weeks, from July 2008 to June 2011. Layers of federal programs that help provide benefits for up to 99 weeks weren’t included.

The figures were released Wednesday as the Obama administration promotes its bid to reduce waste at federal agencies. The federal government foots the bill for administering the programs, and states are supposed to pay for the benefits. Many states exhausted their unemployment insurance trust funds during the long recession and slow recovery, prompting them to borrow from the federal government to replenish their funds.

It’s also interesting information in light of the president’s repeated calls for an extension of unemployment insurance benefits. While these numbers analyze waste at the state level, the federal government made at least $125 billion in improper payments through a variety of duplicative programs and it seems reasonable to assume waste occurs at the federal level of the unemployment insurance program, as well. All question of incentive aside — and of at what point an increase or extension of unemployment benefits actually contributes to the unemployment problem, it seems the president could at least acknowledge it makes little sense to call for more taxpayer dollars to be dumped into the UI program until administrators manage to lower the percentage of improper payments. In fact, the new Labor Department figures shows the president has $19 billion to play with — redirect those improper payments to those Obama says would stimulate the economy if they just had money in their pockets and we’ll have a nice little mini-test of whether an extension of benefits improves anything without wasting any more dollars than we do already. Kidding, of course. Cut the waste completely.