Opinion

The welfare cowboys

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You’ve seen Charles Binder and his 10-gallon hat on the late-night TV commercials. You may mistake him for an ambulance chaser, but he isn’t. He’s the Welfare Cowboy, vowing to ride the high country on your behalf. You want to live on the ranch of the state, nuzzling the sweet green grass of government aid? Give him a holler. He’ll wrangle you a regular check.

Binder & Binder, the Hauppauge, NY, law firm founded by brothers Harry and Charles, make for a clownish presence with their $20 million a year worth of TV spots. But what they’re doing is serious business: Last year they pocketed $88 million of taxpayer dollars by being the nation’s leading advocate for individuals seeking disability benefits from the government.

A-Rod had Scott Boras; your mysteriously non-industrious neighbor whose career seems to be “smoke weed and watch Skinemax all day” has the lawyers of late night. The difference is that A-Rod is shaking down a private company for all he can get. Your lazy “disability case” is, via two intermediaries, one public and one private, helping himself to what’s in your wallet. All told, disability lawyer pimps pocketed $1.4 billion in taxpayer money in 2010.

Google “Binder and Binder” and up pops an ad: “Nobody wins as many Social Security Disability cases!” That’s true, and what they’re doing — seeking disabled clients and applying for SSI disability payments on their behalf in exchange for a cut — is perfectly legal.

That’s the disturbing part. A 2004 law relaxed the rules to help people hire private firms to do their disability applying for them.

That removed one of the basic defenses our wallets have against big government, which is its own bureaucratic ineptitude: Every welfare check has to get processed through the morass of slow-moving government employees keeping one eye on the clock in between long coffee breaks. They get paid the same whether they handle one application or a thousand. They have little incentive to streamline anything. Backlogs pile up. People who qualify for benefits may not even know about them and fail to apply in the first place. Other people who are perfectly capable of working but might be willing to exaggerate their aches and pains if it means early retirement may not be aware that simply picking up the phone and spinning a sob story could lead to a steady flow of income, forever. (Or at least until retirement, when ordinary Social Security kicks in.)

So, hey, what about partially “privatizing” the system? Sounds beautiful, doesn’t it? What about a “public-private partnership?” The process sounds appealing to free-marketers and the results (more people on welfare) please left liberals for whom more involvement of the state in everything is a basic goal.

Enter clever, highly motivated lawyers who both rustle up lots of benefit-hungry customers on one side and skillfully hook up the pails to the government teat on the other.

Don’t believe me? Take it from those heartless conservatives at NPR, which headlined its recent story on the topic, “Moving people from welfare to disability rolls is a profitable, full-time job.” Or those notorious social Darwinists at the Atlantic: “Disability Insurance: America’s Secret $124 Billion Welfare Program.”

The involvement of more paid advocates has indeed greased the wheels: Since 2008, the average time to clear a case has fallen from 508 days to 360.

The program, which started up in 1956, was meant to be small and cover those workers who suffered a debilitating injury on the job. But since the 1980s, when the number of recipients of disability essentially held steady at roughly 2.8 million throughout the Reagan administration, the program grew in the Bill Clinton years, surged under the “compassionate conservatism” of Bush 43 and skyrocketed under Obama. There are now more than 8.5 million disability checks going out, a 200% increase since the Reagan years, or double the mid-’90s tally.

The cost is up to $183 billion — $124 billion for disability checks and another $59 billion for the Medicare that goes along with disabled status.

We’re spending $1,500 a year on disability for each household in the US, notes MIT economist David Autor, who wrote the academic paper, “The Unsustainable Rise in the Disability Rolls: Causes, Consequences and Policy Options.”

And that number is going to grow rapidly: In 2011 alone, 2.9 million more people applied for SSDI benefits, and hardly anyone ever leaves the system.

Equally troubling is that SSDI is funded in a regressive way, via a 1.6% payroll tax. But it isn’t 1.6% for everyone; a millionaire would wind up paying a tenth of that because payroll tax maxes out at $113,700.

That’s right: The working poor are being hardest hit so that some other poor people can give up working.

If your goal was to cut off the bottom rung of the economic ladder, SSDI would make an excellent saw. In the name of “compassion” we are rapidly building up a permanent underclass of those who will, sensibly, choose to remain both poor and government dependent indefinitely (average benefit is about $1,100 a month, plus after two years a Medicare card that is worth about the same) instead of moving up and out of both categories.

In 2011, less than 1% of SSDI recipients gave up their government checks and returned to formal work (the number who do off-the-books work is unknown.)

One reason the disability rolls are exploding is that there is no one fighting for the taxpayer. Binder & Binder, according to five ex-employees, routinely withheld from the government information damaging to its clients’ claims of woe, the Wall Street Journal reported. The paper also reported that Charles Binder emphasized to underlings in a 2005 memo that the information they submit to the government be “not harmful” to the client.

The government is required by law to give highest credence to the claimant’s argument. That’s a little like asking Donald Trump what level of income tax he would like to pay.

Kenneth Nibali, a former high-ranking disability agency official who retired in 2002, told The Wall Street Journal that at the court hearings where benefit decisions are made, there aren’t any government lawyers arguing against what benefit seekers claim.

At the hearings, judges make a decision after hearing from only one side. In what other kind of court would that hold up? Call it a miscarriage of social justice. “Does it raise questions about whether we are getting the most objective information? I think that’s a legitimate issue,” Nibali told the Journal.

In the early 1980s, the Reagan administration cracked down hard on fraud by requiring beneficiaries to keep proving their claims were valid in repeat reviews. Many couldn’t be bothered, and as word got out the number of claimants began to fall.

But some 20 state courts pushed back, arguing that the government wasn’t allowed to be too picky about who qualified for its largesse. And in 1984, Congress “reformed” the system by making it much easier for claimants to win. As recently as the early 1990s, a majority of those receiving the benefit had non-fakeable, life-shortening illnesses such as cancer and heart disease. Today most of those entering the system have highly fakeable musculoskeletal (i.e. “my back hurts”) or mental (i.e., “I’m depressed”) disorders.

Building the SSDI rolls has the added benefit, to Obama, of making the unemployment figures look better than they are; once you are signed up you are counted as simply “leaving the workforce” instead of “unemployed.” Workforce participation was over 67% in 2001, was 65.7% when President Obama was inaugurated and fell yet again last month to 63.3% — this, nearly four years after the recession ended and with the unemployment rate (deceptively) billed as falling also.

Meanwhile (as columnist Jonah Goldberg pointed out this week), automation means work has gotten much less strenuous and much less dangerous. The Bureau of Labor Statistics notes that fatal work injuries are down 21% just since 2006 and have been on a long downward slope. The number of nonfatal injuries and illnesses reported by private sector stood at 3.5 per 100 full time workers in 2011. In 1992 that figure was 8.9 per 100 full-time workers.

Not that you actually need to be “disabled” to qualify for disability; Autor has explained that if you are an aging low-skill worker and the job you are trained for goes away (say, because the local factory closes), the government figures it’s too late for you to be retrained for another job and uses the SSDI system to essentially declare your career totalled: Welcome to early retirement.

The main surprise about well-documented cases of phony disability claimants defrauding the system is that anyone is surprised by them. The system is set up to invite abuse.

Cowboy Charles Binder personally earned $22.8 million in 2010 from the SSDI program alone, the Journal reported. You can expect that SSDI will prove to be just one of many innovative public-private partnerships that will streamline the government’s efforts to spend more of your money.

Economist Russ Roberts calls it a classic “bootleggers and Baptists” coalition: A broad group that is sensitive to the plight of the poor (but don’t look too closely at the details of a program) line up with a small group of rapacious business interests (who structure the rules to maximize their profit).

Few would argue that “you’re on your own,” as President Obama kept summarizing the Republican position during last year’s campaign, is what the government should say to the poor. But nor should the government just take your word for it when you say you’re in need. A federal disability program for those physically unable to work is a fine, noble idea. Ensuring that every recipient genuinely qualifies for it every year is an equally good one.