Thousands of stimulus checks sent in error, report says

By Ed O'Keefe
Washington Post Staff Writer
Thursday, October 7, 2010; 8:43 PM

The federal government last year sent about 89,000 checks of $250 each to dead or incarcerated people through the Obama administration's economic stimulus program, according to a watchdog report.

The Social Security Administration distributed about $13 billion to 52 million eligible beneficiaries in the form of $250 checks as part of the economic recovery program. The program cost $814 billion. Most of the payments were issued properly, but SSA failed to check all available payment records or was unaware that beneficiaries had died, according to a report by the Social Security Office of Inspector General.

Although SSA lacks the authority to recoup most of the money, the report estimates that slightly more than half of the payments have been returned.

About 71,600 recipients were dead before SSA certified their payments, receiving a total of $18 million, according to the report. Another 17,300 inmates received a total of $4.3 million.

Most of the inmates were eligible to receive checks because the American Recovery and Reinvestment Act only prohibited payments to people incarcerated in the three months before it passed, which was November 2008 to January 2009. SSA maintains conviction records and is normally required to suspend payments to incarcerated beneficiaries, the report said.

The agency already had records for more than 63,000 of the deceased beneficiaries who received payments, according to the report. Another 8,200 payments to dead people were sent to Prouty beneficiaries, or people too old to have worked long enough after passage of the Social Security Act. Their deaths were generally not reported to SSA, the report said. Those individuals, if alive, would be between 112 and 136 years old and had not received payments in 30 years, the report said.

The Recovery Act did not give SSA or the Treasury Department the authority to reclaim erroneous payments made through electronic funds transfers to deceased beneficiaries, but it could recoup checks, the report said.

"These findings are yet another example of congressional stupidity and a lack of accountability," said Sen. Tom Coburn (R-Okla.), a frequent critic of federal spending. He blasted Congress for failing to grant SSA the authority to recover erroneous payments.

The watchdog report was published Sept. 30, a day before the White House released a report asserting that the stimulus program is coming in on time, underbudget and with few claims of fraud or abuse. Aides to Vice President Biden, who is charged with overseeing the recovery program, did not respond to requests for comment.

The controversial stimulus package has been criticized for being too big and not helping to hold the line on unemployment, and alternately for not being large enough to offer greater assistance in an ailing economy. Many economists, however, have credited it and other initiatives with having eased the recession.

In general, the federal government misspent almost $110 billion in fiscal year 2009 by sending benefits checks to dead people, responding to fraudulent Medicare and Medicaid claims and overpaying government contractors. In the past three years, agencies have issued 20,000 separate benefits payments totaling $182 million to dead people, according to the Office of Management and Budget.

In June, President Obama ordered the establishment of a government-wide "do not pay" database to ensure that agencies no longer send money to dead or incarcerated people and debarred or suspended contracting firms. He also signed a law in July that penalizes agencies for failing to detect and stop such payments.

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