News of the Day

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 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.

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.

Yesterday, the Public Service Commission of Wisconsin (PSC) announced the creation of a new, additional area code to overlay the area in which the 608 area code is now in service.

The 608 area code is expected to run out of assignable prefixes (the three numbers in a phone number following the area code) in the first quarter of 2024. The new 353 area code will be used to provide telephone numbers to new customers. All current customers will retain their existing telephone numbers and will continue to dial and receive calls without change.

The Commission approved the petition by the North American Numbering Plan Administrator (NANPA), the neutral third-party area code relief planner, to overlay a new area code. This decision will provide additional numbering resources to meet the demand for telephone numbers. The new 353 area code will be in service by late 2023.

An area code overlay adds a second area code to the geographic region served by the existing area code. Therefore, multiple area codes co-exist within the same geographic region. Once the 608 area code runs out of assignable prefixes, new customers in southcentral and southwestern Wisconsin may be assigned telephone numbers in the new 353 area code. Customers will continue to dial the three-digit area code for all calls to and from telephone numbers with the 608 and 353 area codes. The price of a call will not change due to the overlay. Customers can still dial just three digits to reach 911, as well as 211, 311, 411, 511, 611, 711, 811, and 988, the new Suicide & Crisis Lifeline.

The plan filed by the North American Numbering Plan Administrator can be found here: PSC REF#: 440694

Dr. Fred Prehn, the former head of the Wisconsin Natural Resources Board, can continue to serve on the policy-making board now that the Wisconsin Supreme Court has ruled it’s legal for him to remain.

Wisconsin Attorney General Josh Kaul sued to remove Prehn from the NRB in August. The board’s former chair has refused to step down from the policy-making body after his six-year term expired in May last year. Former Republican Gov. Scott Walker appointed Prehn in 2015.

“(T)he expiration of Prehn’s term on the DNR Board does not create a vacancy. Prehn lawfully retains his position on the DNR Board as a holdover,” wrote Chief Justice Annette Ziegler for the majority. “Therefore, the Governor cannot make a provisional appointment to replace Prehn.”

The court found a vacancy is only created when a person dies, resigns, or is removed for cause.

Prehn’s decision to stay on the board has blocked Democratic Gov. Tony Evers’ appointee Sandy Nass from taking a seat. Evers appointed Nass and Sharon Adams to the board in April of last year to fill vacancies left by members whose terms expired, including Prehn.

Prehn could remain on the board for years if Republican lawmakers refuse to confirm Evers’ appointee. The state Senate adjourned its latest session earlier this year without confirming Nass.

Self-insured employers have been fighting the good fight against runaway health costs for their companies and for their workers for decades, without much help from state and national politicians. But a ray of sunshine has emerged: the courts.

A cause-driven law firm, Fairmark Law, has filed a federal class-action law suit in Wisconsin on behalf of self-insured employers and their employees against one of the state’s biggest hospital conglomerates, Advocate Aurora Health. The firm is charging monopolization and price gouging. The David versus Goliath suit was filed in the name of a small company, Uriel Pharmacy based in East Troy, Wisconsin.

The Medical Industrial Complex (MIC) of big hospital corporations and giant health care insurers has increased its rates close to 8% per year over the last two decades. That gouging has had the cumulative effect of raising the cost of care for a family of four to $22,000 to $30,000, depending on which consultant is keeping score.

In contrast, the most astutely managed company health plans have limited inflation to 2% to 3% per year. Total costs for a family can run $12,000 to $14,000 per year. That’s still expensive, but not outrageously so. (Note: The pure medical side of American health can be exemplary.)

That massive cost discrepancy is at the heart of the Fairmark case against Advocate Aurora.

Fairmark looks at the courts as one way to overcome anti-competitive contracting and imbalance of power between smaller payers and the Medical Industrial Complex.

Its Wisconsin case will be buttressed by a recent Rand Corp. analysis that ranks the state 4^th highest in the country in comparison to Medicare payments. Our hospitals charge private companies three times what they pay Medicare.

Advocate Aurora Health has a monster merger in the works with Atrium Health of North Carolina. It’s hard to see any operating synergies between those two distant operations. But the combination would gain leverage for higher prices with the nation’s largest health insurers.

The groundswell of organized retail crime is a national issue that risks spreading local law enforcement thin. While the American public sees headlines of smash-and-grab robberies or watches shock-inducing footage of their favorite retailers left ransacked and wrecked, it’s our local police forces that are left to pick up the pieces.

Almost 70 percent of storefronts have reported an increase in theft this past year, and the Coalition of Law Enforcement and Retail estimates that organized retail crime accounts for $45 billion in annual retail losses. In one instance alone in February 2021, a group brazenly grabbed handbags worth $165,000 from the shelves of a Chanel store in New York in a daytime robbery.

Why the sudden spike in crime sprees over the past couple of years? Historically, organized retail crime tends to increase in challenging times. According to U.S. court statistics, retail theft skyrocketed by 16 percent after 9/11 and by 30 percent during the 2008 recession. It’s no surprise that we are seeing a similar, albeit accelerated, trend amid the protracted pandemic and crippling inflation.

But what makes this current organized retail crime wave more pervasive and problematic than ever is where these stolen goods may end up once they are swiped from store shelves. Gone are the days of pawning stolen merchandise on street corners and flea markets; criminals are turning to the anonymity of the internet to peddle their loot. Stolen items are showing up on the virtual marketplaces that consumers traffic on a daily basis, seamlessly fitting in with honest online storefronts and businesses.

That’s why federal legislation such as the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers, or INFORM Consumers Act, could be a valuable and essential tool. It’s the least Congress can do to support law enforcement online as they continue to work to combat organized retail crime. The bill requires online marketplaces to clearly disclose contact information of certain high-volume, third-party sellers to consumers and provide consumers with ways to report suspicious marketplace activity. The Federal Trade Commission and state attorneys general would have authority to enforce the requirements.

The Wisconsin Supreme Court on Friday adopted Republican-drawn maps for the state Legislature, handing the GOP a victory just weeks after initially approving maps drawn by Democratic Gov. Tony Evers.

The court reversed itself after the U.S. Supreme Court in March said Evers’ maps were incorrectly adopted, and came just as candidates were about to begin circulating nominating papers to appear on this year’s ballot without being sure of district boundaries.

The Wisconsin Supreme Court had adopted Evers’ map on March 3, but the U.S. Supreme Court overturned it on March 23. The high court ruled that Evers’ map failed to consider whether a “race-neutral alternative that did not add a seventh majority-black district would deny black voters equal political opportunity.”

Evers told the state Supreme Court it could still adopt his map with some additional analysis, or an alternative with six majority-Black districts. The Republican-controlled Legislature argued that its map should be implemented.

The Wisconsin court, controlled 4-3 by conservatives, sided with the Legislature.

“The maps proposed by the Governor … are racially motivated and, under the Equal Protection Clause, they fail strict scrutiny,” Chief Justice Annette Ziegler wrote for the majority, joined by Justices Patience Roggensack, Rebecca Grassl Bradley and Brian Hagedorn.

The Legislature’s maps, they wrote, “are race neutral” and “comply with the Equal Protection Clause, along with all other application federal and state legal requirements.”

Hagedorn, a conservative swing justice, initially backed Evers’ map but reversed himself once the matter came back before the court. In a separate concurrence, he wrote that the U.S. Supreme Court decision required the state court to adopt a race-neutral map, and the Legislature’s maps “are the only legally compliant maps we received.”

The court’s three liberal justices — Jill Karofsky, Ann Walsh Bradley and Rebecca Dallet — dissented. Karofsky, writing for the minority, said the Legislature’s maps “fare no better than the Governor’s under the U.S. Supreme Court’s rationale.”

Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) Secretary Randy Romanski and Wisconsin Economic Development Corporation Secretary and CEO Missy Hughes announced yesterday the creation of the new Wisconsin Agricultural Export Advisory Council (WAXC). This council will help guide the initiatives created through the Wisconsin Initiative for Agricultural Exports (WIAE), a collaborative project between DATCP and WEDC to promote the export of Wisconsin’s agricultural and agribusiness products.

The council includes international trade experts from WEDC and DATCP, state legislators, and agriculture organizations and agribusinesses representing crop, dairy, and meat products. The council will meet at least twice per year, and the first council meeting will take place at 9 a.m. on May 4, 2022 at the WEDC headquarters, 201 West Washington Avenue, Madison, WI 53703. These meetings are open to the public, and are
expected to have virtual attendance options.

Wisconsin agricultural exports reached an all-time high of $3.96 billion in 2021. Through the WIAE, DATCP is working collaboratively with WEDC to build on that momentum by promoting Wisconsin agricultural products in the international marketplace.

A federal judge in Louisiana on Friday shot down President Biden’s interim estimates on the social costs of greenhouse gas emissions, dealing another judicial blow to the administration’s climate agenda.

A 2021 executive order directed agencies to use an interim metric that estimated costs to society that would come from burning carbon in environmental permitting and regulatory decisions. But Louisiana, Alabama, and eight other states “sufficiently identified the kinds of harms” needed to block the metric’s use, the U.S. District Court for the Western District of Louisiana ruled.

“The Court agrees that the public interest and balance of equities weigh heavily in favor” of ordering the administration to disregard the calculations Judge James D. Cain Jr. wrote in the opinion.

States challenged the temporary cost, claiming Biden didn’t have the authority to issue such a significant decision without notice-and-comment rulemaking. They also claimed that its use in decisions would hamper their economies through higher costs and more stringent standards.

The Justice Department unsuccessfully tried to argue that the states’ claims were premature until the metric was actually used in a decision. The DOJ said it’s “reviewing the decision” and declined to comment further.

The court did make it clear that it was ruling on whether Biden had flown against administrative procedures with his interim metric and not on “the scientific issues regarding greenhouse gas emissions, their effects on the environment, or whether they contribute to global warming.”