Mississippi Swindle: Brett Favre and the Welfare Scandal that Shocked America turns out to answer some background questions on how American taxpayers ended up funding fake day cares. The author, Shad White, is the State Auditor of Mississippi. Phil Bryant, the governor at the time, received a insider’s tip that prompted an investigation by White’s team.
The root cause of the Mississippi fraud seems to be the same as the root cause of the Minnesota fraud: state officials allowed to make decisions about how to spend federal money. The author says that Clinton administration technocrats in D.C. were concerned that they’d destroyed the Black American family. Children born to “single mothers” went from roughly the same percentage as in the white population to over 60 percent (current data: 25 percent for whites; 65 percent to Blacks) in response to the Great Society “marry the government” programs introduced under Presidents FDR and Johnson, e.g., Aid to Families with Dependent Children. The Clinton geniuses implemented Temporary Assistance for Needy Families (“TANF”) in which states would get block grants and then could do whatever they wanted to with the money. They could, for example, give cash directly to “families” that didn’t work, but could also give money to nonprofit organizations that purported to assist those who didn’t work, e.g., by helping them write resumes or delivering other nebulous services.
The Mississippi DHS folks decided to give roughly 10 percent of the TANF funds to poor people and then 90 percent to friends’ nonprofit orgs whose executives spent the money on new houses, luxury vacations, kickbacks to state bureaucrats, etc. Only about $100 million was stolen from federal taxpayers, but the mechanism seems to be the same as in the much larger Minnesota fraud. The core prerequisites are (1) letting state officials decide how to spend federal money, and (2) the ability of officials to hand over taxpayer funds to nonprofit orgs.
There are some other good insights into the bureaucratic lifestyle. Some families in Mississippi living in $1 million houses and with six-figure incomes were enjoying Medicaid (an angel/VC-investor friend in a $2 million (pre-Biden dollars) house Maskachusetts was doing this about 15 years ago; he answered all of the questions on the Mass Health Connector accurately and the system kicked out that he was entitled to superlative MassHealth (Medicaid) coverage at $3/month). When the auditors pointed this out to the Medicaid bureaucrats their response was to push back rather than admit any bureaucratic errors or shortcomings. Even the people in the welfare bureaucracies who were corrupt or personally benefitting had a powerful desire to obstruct auditing and to preserve business as usual.
If you don’t want to read the book, Wikipedia offers a summary.
Loosely related, a thoughtful perspective from U.S. Senator John Kennedy of Louisiana:
Suppose a homeless person comes up to you and says, “Spare some Jacksons? I’m hungry.” Its far more effective to offer to buy them lunch, if you are concerned about their hunger, than to give them $20. Someone who is grifting probably won’t interrupt their revenue stream with the opportunity cost lost to lunch. A hungry addict will get fed instead of a fix. The issue in this posting really is just a matter of scale.