Disability: One Giant Scam
The Market Ticker ® - Commentary on The Capital Markets
Posted 2013-01-08 07:46
by Karl Denninger
in Editorial
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Disability: One Giant Scam
 

Oh, so Bloomberg's OpEd columnists are finally willing to talk about something real with other than a "gimme more handouts" line?

The conversation in Washington is shifting from taxes to entitlement spending and, in particular, how to slow the unsustainable growth of Social Security and Medicare.

Central to that discussion should be an overhaul of Social Security Disability Insurance, a vital safety-net program for millions of disabled workers. It has gotten too big and too costly. Worse, it has shifted the incentive for those with physical impairments to choose government dependency over work. Oh, and it will be insolvent in three years if nothing is done.

Notice how they're dancing around this -- the definition of "disabled" no longer really means disabled, as in "unable to perform any sort of renumerative work."

The program blew $124 billion last year, with more than 10 million "beneficiaries."

Now I don't doubt for a minute that some people who receive benefits actually are disabled.  However, many people -- and I'm willing to bet that this is the majority of recipients -- could perform some sort of market-based work (that is, something that earns at least minimum wage.)

The problem with any combination of "benefit programs" that provide more, on a tax-adjusted basis, than a minimum wage job is that there is some percentage of the population who would prefer to sit on their ass rather than work for that minimum wage. As soon as you make it possible to do that all of the persons who are willing to do so immediately leave the workforce and choose to do exactly that.

A "minimum wage" in and of itself sets a floor below which labor is unable to be deployed.  It is a non-market function that states as a matter of law that if the work you can perform provides less benefit to an employer than $X/hour that work has no value in the marketplace at all, because it is (by fiat) illegal to pay less than that amount of money for labor.

This by definition means that those who are able to contribute something to the economy instead contribute nothing.  That's bad enough.

But what's worse is when you then put together a "social welfare" program that provides more than said "minimum wage" in tax-adjusted income.  As soon as you do that those people who can work for a wage all the way up to to the parity level between those benefit programs and the private-sector parity wage have every reason to sit on their ass instead.

There is no means available to prevent this other than reducing benefit programs and prohibiting "stacking" of benefits such that any of these alleged "social benefit" programs never exceed the mandatory minimum wage in tax-adjusted terms.  You can try to allegedly "test" for the so-called "disability" but there are myriad people who will scam the system if they're able and it's profitable to do so, and there will always be some who can. 

The only way to stop this is to make it unprofitable.

But that's "mean", you see, which makes "inappropriate" a public debate about exactly where that parity level is (hint: It's about $45,000/year for a single person with dependents!), as that would likely lead to a taxpayer revolt and demand that these practices be ended.

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User Info Disability: One Giant Scam in forum [Market-Ticker]
Agau
Posts: 4922
Incept: 2010-06-04

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Right on!
We have a couple ex employees who tried this scam with minor injuries and we fought it successfully.
Mo
Posts: 12158
Incept: 2007-06-26
Silver
Pa.
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Everyone is tired of the same things: working to support other people.

The only way out of the trap is to become a collector from those still stupid enough to keep working.

Ka ching.

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Pubstar
Posts: 8
Incept: 2010-06-27

Johnstown, Ohio
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All you need to do is watch the documentary "The Wild and Wonderful Whites of West Virginia." All of them are "disabled" and get their check.

http://www.imdb.com/title/tt1396227/
Vicious_cycle
Posts: 253
Incept: 2009-03-10
Gold
Chardon, OH
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I know of 3 people in my very small circle of ex-friends who are milking this system with fake disabilities. Two of them are physically capable of holding down desk jobs at the minimum. Their problem is that they aren't intelligent and / or educated well enough to earn a living that exceeds what they can receive for free from the government by playing sick. The third makes a point of never becoming able-bodied.
Richardebel
Posts: 96
Incept: 2010-11-15

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I agree, but where do you find jobs for disabled people when able people can't even find work. Our economy needs more jobs. Who would ever hire a disabled person when there are more able workers available than are needed?
Vitchilo
Posts: 4576
Incept: 2011-04-27

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$45 000 with how many dependents (children)? 1-2?

America is turning into France, welfare wise...

Hell women in France are paid welfare the moment they are pregnant and they can even get free government houses... so a lot of immigrants come in France and just have babies and are making 50 000+ euro a year with a free house.

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"Every normal man must be tempted at times to spit upon his hands, hoist the black flag, and begin slitting throats." -- H.L. Mencken
Bertdilbert
Posts: 2655
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CA
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Had an ex employee get in a motorcycle accident where he got hurt pretty bad.

He got on SS disability and got I think around $1,900 a month. He wanted to work for cash under the table and I told him to blow it. He could have come back to work and made better than that but he chose the free money for nothing to sit on his ass. He has probably found something to do on the side and is not reporting it would be my guess.

I believe they use past earnings to calculate the benefit payout. Not sure what they do for a minimum payment.

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Dear Euroland: Relax, Germany has a plan for your money!

Political Capital Defined: We are out of money but will tax our citizens for whatever it takes to "SAVE" the Euro.
Crzymorse
Posts: 1186
Incept: 2010-06-25

Maryland
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I noticed the USDA is over a month behind publishing the food stamp numbers. Just a coincidence, maybe. Its the best indicator whenever I feel greenshoots euphoria. I believe the social security recepients are going to increasing add food stamps to their retirement portfolio.

Think about how many million jobs are created by extending unemployment benefits, disability and food stamps. It certainly props up the food and rental markets.
Msheffi972
Posts: 133
Incept: 2008-12-07
Green
Houston, TX
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My mom has a friend that just got approved for disability. She will be getting around $3k a month. She has a heart condition and can no longer work at her job as a chemical plant operator. I asked my mom why she couldn't get a desk job with no heavy lifting? Answering the phone somewhere or something like that? She had no answer. I told her this was unsustainable and was going to collapse at some point.
Aquapura
Posts: 128
Incept: 2012-04-19

Land of 10,000 taxes
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My cousin went on SSDI. Can't recall what his monthly check is but it's better than min wage. He's got a felony on his record which makes finding work more difficult but as of not too long ago worked in construction and made a decent income. Somehow the housing bust and loss of that job caused him to be disabled.

Saw him over the Holidays and was surprised to see how much weight he's gained while on disability. Maybe he's trying to make himself legitimately disabled as a safeguard.
Aztrader
Posts: 6648
Incept: 2007-09-10
Green
Scottsdale, AZ
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The issue of what is a disability has become the scam. Being depressed is the easiest one to fake. Once a person has been approved for disability, then they qualify for medicare after 1 year. Add in minor children and the payments increase substatially. Each kid under the age of 18 gets between 50% and 80% of mom or dads payment. They basically copied the same benefits from the death of a parent and this can really kick up the money recieved for the family.

This part of the benefit needs to go away completely unless the parent is truly physcially disabled and can't work. It should be reserved for military personel or true public servants that are truly disabled due to their service.

I personally know someone that gets over $3200 a month on this program and he finds it easier to collect then go back to work. He has had knee surgery due to his incompetence on a motorcycle. I carries the cane when people are watching, but drives a 92 camaro that sits very low to the road. He is 6'6" and can get in and out of the car just fine. He is now sporting a full beard and wears flannel so he looks like some poor veteran. He loves pulling into the handicapped spots while the geezers have to make the long walk into store.
This BS needs to stop immediately. All these benefit programs are ripping off the American taxpayer daily and the weak willed politicians refuse to make the cuts because they are afraid of how the media will brand them. These programs kill the will to work and produce Obama soldiers for the next war on the rest of us.
These will be the people that will rat out the gun owners for Obama. The govt now has a ton of leverage on all the leeches they have hooked on the free money and will want payback.
How much of this "free money" has supported the phony economy in the past 3 years? When a lot of people on the Ticker and other sites have been waiting for the implosion, the government was simply pumping money to the leeches in more ways than we can count, but didn't realize the size. The banks weren't loaning it, so they found a way to hand it out. Add in the student loans and we know why the economy continued to chug along.
More and more disgusted every day............
Ckaminski
Posts: 1569
Incept: 2011-04-08
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If you haven't lost a limb or had bomb shrapnel rip through you, you shouldn't be able to qualify as disabled...
Oldpool
Posts: 873
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Silver
LI NY
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Some of that market based work is now performed in other countries, and I would imagine there are some who are on disability who would prefer to work albeit not what is available currently.

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Liberty, Comrade!
Mortgageguymn
Posts: 1562
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North Coast
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When talking about ending SSDI abuse (which is most of it) libs will find 1-2 seemingly worthy recipients and try to pull on people's heart strings. I recall that in the bible, after The Lord said he was going to smite Nineveh, He relented a little and said He'd go easy on the town if ten righteous men could be found. Jonah tried to bargain God down lower, but ten righteous men was the lowest God would go. He wasn't willing to spare the town if only 9 good men could be found. The point being that sometimes you gotta say "enough's enough". Also, no word on whether good women would have counted. Maybe Jonah couldn't find any.
Trades50
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Land of Tax and Spend
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There are so many qualified people collecting disability. Many were replaced by H1Bs and foreign workers. Those that collect think if the country is so messed up the overseas worker takes precedence over them then they take advantage of the system.

The government is fully aware of this. Corporations are supposed to hire an American first. They know the checks on this are a joke, so they go around or ignore the laws and hire the cheaper worker.

As we know many of the laws are never enforced. Look at the last robo signing fraud forgiveness. We no longer have the rule of law.

We are now a country of lawlessness. Those that cheat the most win.

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When the people fear the government, there is tyranny. When the government fears the people, there is liberty. - Thomas Jefferson
Bagbalm
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Just North of Detroit
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I'm past the 65 mark now to collect regular Social Security. But I needed and collected Disability for several years.
Imagine how you'd feel if you actually NEED it and these moochers destroy it for you.
There are problems with both regulations and employer attitudes too. I could drive a truck. But Federal regulations keep me from doing so because I have hearing loss. I could sit and do bench work such as deburring and polishing or assembly. Nobody wants to hire somebody they must give written instruction. Which is really silly when most of the work is so simple it really requires little instruction.
I went three years without work and saw many jobs I could do but for which I could not get hired. One fellow refused to hire me because his drivers must call in after deliveries. Don't you do text on your phone? I asked him. Yes, but not the office land line. I don't do business on my cell. I keep it separate. So basically not willing to make the slightest accommodation when he already has the needed equipment and is paying for it already.But he complains he can't find 'good' people.
Nomullet
Posts: 6819
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Green
SW
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Minimum wage? Take some computer classes at community college and get a desk job with a decent wage.

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Don't confuse clear thinking with simplistic thinking.
--Nomullet
Johnny
Posts: 1585
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Silver
Kentucky
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Is $3K a month really worth putting your name on a list as useless with Eugentics making a full throttle thrust into the mainstream?
Poodlelover
Posts: 143
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I agree in great part to the post here.

However, I see a future in which unemployment is ever-increasing because the poorly educated and poorly motivated simply are not worth anything to the economy to work, so the huge excesses of society (and they grow constantly) are simply given to these people as scraps, kept as indefinite wards of the state more or less.

Think 200 years ago. If you couldn't work you barely lived at all unless family took care of you. Far more people had to do SOMETHING and people worked more. But technology has just taken that necessity away.

What can a high school drop out who's barely ambulatory really add to society? Even if something, it's not much.

http://www.wired.com/gadgetlab/2012/12/f....
Marcustullius
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Johnny, the odds are poor that among the masses doing that, you will find more than a handful who haven't gotten into "the masses doing that" (scam) by/because of a prior history of making poor choices.

Tully

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"It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people's minds." (Samuel Adams)
Duc888
Posts: 7368
Incept: 2008-11-06
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CT, the UNconstitution State
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TPTB don't care. They are paying people not to riot on your dime. They are paying for their votes.

Quote:
"100% of what is collected [in income taxes] is absorbed solely by interest on the Federal Debt and by Federal Government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services taxpayers expect from government."


This is from the Grace Commission Report done for Ronald Reagan in 1984

http://www.uhuh.com/taxstuff/gracecom.ht....

This is from #6 from this ZeroHedge article.

http://www.zerohedge.com/contributed/201....

I have always said income tax was a slave tax. we need a consumption tax combined with tariffs on some imports.

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...burp

Jstanley01
Posts: 8176
Incept: 2008-07-30
Silver A True American Patriot!
San Antonio, Texas
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Government handouts kill the human spirit, and thereby undermine the foundations of a healthy social order.

In a lot of ways, life sucks. It's hard. Things go wrong. Accidents happen. Health deteriorates. The greatness of the human spirit is not realized in the pathetic notion that if the body that houses it has its necessaries provided, then all is well. Bullcrap. The greatness of the human spirit is realized in the mustering the optimism necessary to improvise, adapt, overcome by way of contributing to the good of others in some productive fashion that pays, whatever the obstacles to doing so might be.

Ever seem the movie "Places in the Heart"? Remember the blind guy, who rented a private room and wove brooms to pay for his keep? Remember the courage he displayed in that story?

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You can't cheat an honest man. ~P.T. Barnum

Lodgerhead
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From various points around my property, I am able to see 4 other homes.
Income stream for each residence as follows:

Home #1: Both Husband and Wife on disability, no children at home

Home #2: Father retired on government pension, daughter employed, actually has a good white collar job at a manufacturing company.

Home #3: Father on disability, mother is a teacher employed by the state, 1 minor child at home

Home #4: Husband downsized/retired from private company, pretty sure he has a decent pension, wife works in a support role in the healthcare field.

So, out of 8 potential wage earners, we have 3 on disability, 1 on government pension, 1 employed by the state, 1 retired with corp pension, and 2 working adults.

Sustainable?

Bagbalm
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Just North of Detroit
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There is a different mentality also. It used to be people were raised not to waste anything - including labor. If grandma was old she still might peel potatoes sitting at the kitchen table or pick out nut meats. Granny felt better to do something and it helped. Now she is off in a nursing home being taken care of by paid help.
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