WHO ARE THE FRAUDSTERS?

Definition of Fraud - Black’s Law Dictionary:

A knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment.

The All-In podcast consists of a group of business insiders batting the breeze on a variety of topics ranging from venture capital to gambling. Come to think of it, maybe the topics aren’t as varied as I thought.

Recently, Howard Lutnick, late of Canter Fitzgerald and currently our Secretary of Commerce, appeared as a guest on the podcast. His main qualifications for his current position are that he’s a big proponent of tariffs, was a big Trump fundraiser in 2020 and 2024, and he often serves as Ed McMahon to Trump’s Johnny Carson. Ayyy Oh!

And if you’re at an age where you understood this reference, this piece is for you.

At any rate, Lutnick was asked about possible disruptions in Social Security services due from Musk/DOGE mucking about. Howard responded:

“Let's say Social Security didn't send out their checks this month, my mother-in-law — who's 94 — she wouldn't call and complain. She'd just think something is messed up and she’d get it next month. A fraudster always makes the loudest noise, screaming, yelling and complaining.”

Does this “fraudster” sound like anyone we know? Hint: He lives in a big White House in Washington D.C.

For extra credit, do you think for one nanosecond that Lutnick wouldn’t scream to the highest heavens if his Social Security check didn’t arrive on time?

There’s lots to unpack in Lutnick’s remarks. First, mother-in-law dearest has nothing, I mean nothing, to worry about. If she was so strapped for funds, her billionaire son-in-law would cut her a check to tide her over.

But what is this “fraudster” shtick? Howard went on to say, “The easiest way to find a fraudster is to stop payments and listen. Whoever screamed is the one stealing.” The source for this bit of wisdom was Lutnick’s billionaire bro, Elon Musk.

I call bullshit. Using Lutnick’s term, “fraudsters” are not the ones who scream, yell, and complain. They’re committing felonies. The last thing a rational, experienced criminal would do is call attention to themselves. More likely they would keep their mouths shut, grab the money already received, and move on to the next criminal opportunity.

It must be nice to live and work in fantasyland.

To say the least, people on Social Security are not fraudsters. In 1935, not wanting to see vulnerable elderly Americans starve or freeze to death, or be rendered homeless, at the president’s urging the Congress enacted the Social Security Act.

We know how the program works. Employers and employees each pay 6.2% (for a total of 12.4%) of taxable wages (up to a maximum wage of $176,100/year) into a fund that will pay a monthly pension upon retirement. And because in 1965 we didn’t want to see the elderly and poor die from a lack of medical care, the Medicare Act provided that another 2.9% tax, split evenly between the employer and employee, to be paid in support of the Medicare and Medicaid programs.

Just to be clear, the maximum taxable annual wage for Social Security purposes is 176,100 dollars. This means that Lutnick, Trump, Musk et al., are done paying into the system by the end of January, at the latest. But when the time comes, they’ll have their hands out to receive their monthly checks.

Wouldn’t it helpful to expand the annual taxable income ceiling to encompass these veritable free riders and better fund this vital retirement program? This is a rhetorical question.

As we’ll see, most of us, perhaps 90% percent of us, need to receive that payment each month. Seeing people who have more money than Croesus tinker with a program that we’ve paid into, and that is vital to our economic stability, is at best distressful in the extreme.

Due to the focus of my legal services organization, we served many low-income clients in matters affecting their Social Security benefits. In addition to the programs mentioned above, we also assisted people with their disability claims and appeals.

I knew these people, I worked with these people, and these people were anything but fraudsters. It is a gross insult to characterize good and decent people in the most vulnerable time of their lives as “fraudsters.”

Each year the Social Security Administration disburses approximately $1.6 trillion to those who paid into the system.

Let’s look at the people receiving these earned benefits. Excerpts from a study performed by the Social Security Administration published in 2017 (survey results attained in 2014/2015):

“… the estimated proportion of respondents aged 65 or older for whom Social Security provided at least 50 percent or at least 90 percent of their family income. In 2014, about half (52 percent) of aged persons lived in families that derived at least half of their total income from Social Security benefits… About one-quarter of the aged population lived in families that received 90 percent or more of their family income from Social Security benefits…”

“In 2014, 55 percent of women and 48 percent of men lived in families receiving at least half of their income from Social Security benefits, and the corresponding estimates for the 90 percent threshold are 27 percent and 21 percent. Similarly, nonmarried (sic) respondents in 2014 relied on Social Security substantially more than married respondents did.”

“Reliance on Social Security income decreases with higher education levels. Around two-thirds of aged respondents with less than a high school degree or with a high school degree relied on Social Security benefits for at least half of their income in 2014, compared with about one-third of college graduates.”

To put this last education indicia into stark relief:

          Less than high school   high school   some college   college graduates

>50%   68%                                57%                50%                    35%

>90%.  41%                                28%                21 %                    14%

To complete the picture:

“Across race/ethnicity groups, non-Hispanic blacks were more likely to receive at least half of their income (57 percent) and at least 90 percent of their income (33 percent) from Social Security. … than were respondents in other groups.”

That’s it, no more numbers. But looking at the breadth of people who receive Social Security benefits, do these folks scream “fraudsters?”

As Barack Obama might say, “c’mon man.”

Most people who receive Social Security benefits rely on them to live. It has long been established the Americans are notoriously poor savers. Recent reports show that 40% of Americans don’t have accessible funds to cover a $400 emergency repair to their automobile.

Such emergencies can be economically devastating to fixed income households. If such households can’t cover a $400 unplanned expense, imagine the adverse impact of not receiving a monthly $1000 Social Security payment – a payment earned by years of paying into a system that promised a modicum of security during the recipient’s retirement years.

Meanwhile, the head of DOGE, Elon Musk, calls Social Security a ponzi scheme. He says that to justify the cuts made to the administration of the Social Security Administration. Local offices have been closed down. Phone lines have been disrupted.

Elders have been told that if they have a question or problem, they would either need to go online or visit an SSA office. Too often some of these offices are regional offices, some hundreds of miles away from the elders’ homes. Many recipients may not be as computer savvy to go online and navigate through a sometimes confusing web site.

Musk claims that the money saved from reorganizing the SSA by rooting out “fraud and corruption” would result in benefit recipients receiving more money each month. Maybe Musk was right to call Social Security a Ponzi scheme in the sense that his “efficiencies” are indeed a con, one designed to free up dollars to fund tax cuts for him, Lutnick, and their oligarch cronies.

But this is just one part of a broader con. There is a narrative that government should be operated like a business. If that means running it effectively and efficiently, that’s a laudable goal. But if it means laying off experienced people operating vital programs providing services to millions, and then taking the dollars saved to fund tax cuts, then it exposes the lie of government as business.

Government is a service organization designed to provide a variety of services to meet the needs of the people. The purpose of government, specifically our government, is to provide for the security of the governed. Government is not a profit-making entity, with profits derived from slashed programs distributed to a select few.

So, one final question: who are the real “fraudsters?”