News of the Day

GAO Pegs Unemployment Insurance Fraud Tally at more than $60 Billion

The Government Accountability Office said in two new reports issued Monday that getting reliable data on government fraud is extremely difficult, while hazarding that unemployment insurance fraud during the pandemic may be in excess of $60 billion.

The reports come as multiple committees of the new Republican-led Congress prepare to focus oversight efforts on government spending.

“Republicans are committed to investigating fraud and conducting rigorous oversight on behalf of working families,” Jason Smith (R-Mo.), the new chairman of chair of the House Ways and Means Committee, said in a statement about the new reports. “Congressional Democrats walked away from their oversight responsibilities of getting to the bottom of how this happened, what they could do to prevent it, and even how much has fully been lost.”

One report offers an overview of some of the data problems that prevent program overseers from producing reliable estimates of governmentwide fraud and a second report examines fraud in unemployment insurance programs. That report includes what GAO says is a conservative estimate for upwards of $60 billion in unemployment insurance fraud during an 18-month period starting April 2020.

GAO had to rely on extrapolations and projections made using data on probes into unemployment benefits fraud from across the states to come up with its estimate. GAO takes pains to explain all the variables and assumptions that go into producing these estimates, although it’s not clear that customers are paying close attention

Seto Bagdoyan, director in GAO’s Forensic Audits and Investigative Services Team, told FCW in an interview that usually when he talks about data reliability, “the eyes glaze over, or they’re just plain not interested.”

Rebecca Shea, a GAO director for forensic audits and investigative services, told FCW that “having a number, understanding the extent of a problem is important for your ability to bring attention to it and to address the problem.” Shea added: “And it is important to get that accountability that you’re looking for.

GAO also gave the Labor Department a new recommendation to design and implement an anti-fraud strategy for unemployment. It says that the department still hasn’t completed six other recommendations made in fall of 2021. In reply comments, acting Labor Department Assistant Secretary Brent Parton said the agency was following GAO’s recommendations but on its own schedule.

Governor Evers Calls for Nearly $1.3 Billion in New Spending, Shared Revenue Boost

Governor Tony Evers Tuesday night called for nearly $1.3 billion in new spending on mental health initiatives, addressing PFAS and bolstering the state’s workforce while calling for a big boost in state aid to local governments.

In his annual State of the State speech, Evers also knocked a GOP proposal to implement a flat income tax as a giveaway to the wealthy. And he used his fifth address to back a proposal to use up to 20 percent of sales tax revenues to boost shared revenue.

Evers had previously expressed skepticism of the suggestion to dedicate one penny of the state’s five-cent sales tax to increase the aid Wisconsin sends municipalities and counties. But he pitched his new openness to the idea as an effort to find common ground as the Dem guv once again faces a GOP-controlled Legislature that blocked many of his priorities during his first four years in the office.

Evers said the idea would mean an additional $500 million a year in new resources for local costs, including public safety, transportation and health.

“The state must fulfill its obligation to fund our communities, just like we must fully fund our public schools and invest in clean water,” Evers said. “Our state, our economy and our workforce depend on these investments.”

Beyond the $500 million boost in shared revenue, WisPolitics.com tallied nearly $1.3 billion in spending proposals Evers included in his speech. The biggest chunk was $500 million to address mental health, while he also proposed more than $360 million to make child care more affordable and another $100 million to help address PFAS.

 

Consumers are Piling on Credit Card Debt

Now, signs of a looming debt crisis among U.S. consumers are beginning to flash, and it is a triple whammy: credit card balances are at an all-time high, annual percentage rates (APRs) are up and more consumers are taking on debt than in 2021.

Discover Financial Services CFO John Greene issued an ominous warning last week, noting a sharp uptick in delinquencies. “In the card portfolio, the net charge-off rate of 2.37% was 87 basis points higher than the prior year and 45 basis points higher sequentially,” he said during the firm’s fourth-quarter earnings call.

The Federal Reserve Bank of New York recently reported a 15% year-over-year increase in total credit card balances for the third quarter of 2022, which amounts to the largest surge in more than 20 years.

A new report from CreditCards.com released Monday shows nearly 3 out of 4 (72%) credit card debtors added to their balances over the past year. Nearly half (48%) took on additional debt due to rising costs, while 34% saw their balances jump due to rising interest rates. Twenty-four percent reported having a disruption in household income.

According to the company’s sister site Bankrate.com, there are also more people carrying debt, too. Some 46% of credit card holders are carrying debt from month to month, up from 39% a year ago.

2023 Stamp Price Increases Kick In

Starting Sunday, January 22, the USPS plans to increase prices of some postage by 4.2%, which generally amounts to a few cents per stamp. The cost of a Forever stamp would go up 3 cents, from 60 cents to 63 cents – the third price hike in about a year.

Forever stamps, regardless of when they are purchased, will be accepted in perpetuity – hence the name. That means if you have some already, even if you bought them at a lower price, they will still be accepted to mail letters next year and the year after that. It also means you can buy stamps in bulk now to avoid paying more after January 22.

The USPS is also increasing the cost of sending Priority Mail by about 5.5%. Priority Mail Express will get 6.6% more expensive, and First-Class Package Service prices are set to increase by 7.8%. Priority Mail commercial rates will bump up about 3.6%.

At the same time, the cost of some Priority Mail shipping materials, including flat-rate envelopes and boxes, will go down. Using a flat-rate box or envelope lets you send a package of up to 70 pounds to any U.S. state for a flat fee.

Bail Reform Amendment Goes to Wisconsin Voters

A constitutional amendment proposal to reform Wisconsin’s cash bail system is now headed to voters in April’s election.

Following the Republican-controlled Senate’s approval of the measure earlier this week, the GOP-dominated Assembly on Thursday passed the resolution. The measure passed 73-22, with 10 Democrats joining Republicans in support.

Under the amendment, judges would be able to consider the “totality of the circumstances” in setting bail— including the seriousness of the crime, previous convictions of the accused and the need to protect the community from serious harm. Currently, they can use only one factor: the likelihood a defendant will show up to his court date.

“Violent criminals should not be given unspoken approval by the system to repeatedly victimize our communities,” said Rep. Cindi Duchow (R-Delafield), who authored the proposed amendment. “Judges and law enforcement officers see the revolving door of arrests, low bail, release, and re-arrest, and they are asking for change.”

It takes passage in two consecutive legislative sessions to send a constitutional amendment question on to voters. Thursday’s vote marked the final passage needed to send the question to the voters.

 

U.S. Retail Sales Slumped in December

U.S. retailers and restaurants made $677.1 billion in sales in December, down 1.1 percent from a revised November sales total of $685 billion, according to the Census Bureau. It was the second consecutive monthly decline in retail sales, which are adjusted for seasonal shifts but not inflation.

“The final retail sales report of 2022 was the weakest of the year,” Kayla Brunn, an economic analyst at Morning Consult, wrote in a Wednesday analysis.

When adjusted for inflation, “retail sales declined year-over-year – a development that is especially disappointing given that last December was being impacted by the spread of the omicron variant,” Brunn wrote.

The steady drop of gasoline prices in December drove part of the overall slump in retail sales last month. Sales at gasoline stations fell 4.6 percent last month even amid the rush of holiday travel, as lower global demand and easing energy supply constraints helped bring down prices at the pump.

Department stores also took a serious hit last month despite the promise of the holiday shopping season, with sales plunging 6.6 percent. Sales at furniture and home goods stores, auto dealers, clothing stores, electronics and appliance stores, and restaurants also fell in December.

Only sporting goods and hobby stores, building material and supply stores, and grocery stores saw sales increase in December.

Wholesale Prices Fell 0.5% in December

Prices for wholesale goods and services fell sharply in December, providing another sign that inflation, while still high, is beginning to ease.

The producer price index, which measures final demand prices across hundreds of categories, declined 0.5% for the month, the Labor Department reported Wednesday.  Excluding food and energy, the core PPI measure rose 0.1%, matching the estimate.

For the year, headline PPI rose 6.2%, the lowest annual level since March 2021 and down considerably from the 10% annual increase in 2021.

A sharp drop in energy prices helped bring the headline inflation reading down for the month. The PPI’s final demand energy index plunged 7.9% on the month. Within that category, wholesale gasoline prices fell 13.4%.

The final demand food index also fell, declining 1.2%.

Inflation readings ahead could be less certain, though, as the cost for a gallon of gas is up about 21 cents from this time last month, and crude oil prices have risen about 1.6% so far in January.

Still, the general trend in inflation has been slightly lower. The consumer price index decreased 0.1% in December, though it was still up 6.5% from a year ago – 5.7% excluding food and energy. CPI gauges the prices that consumers pay at the marketplace, while PPI measures what business pay for goods and services.

State GOP Leaders Seek Voter Input on Job Search Requirements for Government Benefits

Republican legislative leaders on Friday introduced a proposal to seek input from voters on whether to require able-bodied, childless adults to look for work in order to receive government assistance.

If approved, the question would be placed on the April ballot as an advisory referendum — a vote that is informative as a measure of public opinion but is not legally binding.

The proposal, a joint resolution that requires passage by both chambers of the Legislature, does not require the governor’s approval. That’s key as Democratic Gov. Tony Evers would be all but certain to reject it.

The resolution — introduced by Senate Majority Leader Devin LeMahieu, R-Oostburg, and Assembly Speaker Robin Vos, R-Rochester — would place this question on the ballot: “Shall able-bodied, childless adults be required to look for work in order to receive taxpayer-funded welfare benefits?”

U.S. Government will Hit its Debt Limit Thursday

Treasury Secretary Janet Yellen on Friday notified Congress that the U.S. government will reach its statutory debt limit next Thursday.

After that, the Treasury Department this month will begin “taking certain extraordinary measures to prevent the United States from defaulting on its obligations,” Yellen wrote in a letter to new House Speaker Kevin McCarthy, R-Calif.

The Treasury “is not currently able” to estimate how long those emergency actions will allow the U.S. to pay for government obligations, she wrote.

But, “It is unlikely that cash and extraordinary measures will be exhausted before early June,” Yellen added.

Congress in December 2021 increased the federal debt limit to about $31.4 trillion.

IRS Sets January 23 as Official Start to 2023 Tax Filing Season

Yesterday, the Internal Revenue Service today announced Monday, January 23, 2023, as the beginning of the nation’s 2023 tax season when the agency will begin accepting and processing 2022 tax year returns.

More than 168 million individual tax returns are expected to be filed, with the vast majority of those coming before the April 18 tax deadline. People have three extra days to file this year due to the calendar.

The filing deadline to submit 2022 tax returns or an extension to file and pay tax owed is Tuesday, April 18, 2023, for most taxpayers. By law, Washington, D.C., holidays impact tax deadlines for everyone in the same way as federal holidays. The due date is April 18, instead of April 15, because of the weekend and the District of Columbia’s Emancipation Day holiday, which falls on Monday, April 17.

Taxpayers requesting an extension will have until Monday, October 16, 2023, to file.