On top of everything else, it turns out the stimulus was an invitation to tax fraud: J. Russell George, the Treasury's inspector general for tax administration, just reported that he'd identified more than 125,000 individuals who got $111.4 million in undeserved tax-credit refunds, thanks to the 2009 Recovery Act.
We already knew that the stimulus failed to produce the miracles that President Obama, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid had promised -- the unemployment numbers alone are proof of that. Much of the cash went to the states, to roll back welfare reform and to allow states to avoid cutting their spending. Now George's audit of the IRS's handling of the 16 new or increased "refundable" tax credits has exposed yet another mess:
* 10,581 people got $65.6 million in Homebuyer Credits they didn't qualify for.
* 109,665 individuals got $29.7 million in Making Work Pay and Government Retiree credits they didn't qualify for.
* 5,345 people wrongly received $15.6 million in Plug-in Vehicle credits.
* 171 got $453,220 in erroneous Nonbusiness Energy Property credits.
* 2,933 received more than $95.8 million in excessive Qualified Motor Vehicle Tax deductions.
Democrats rushed the massive "stimulus" package through Congress within a month of Obama's taking office. More than one in every three dollars of "stimulus" -- $252 billion worth -- took the form of "refundable tax credits" (many to "taxpayers" who paid no taxes).
And now George has shown that the burden of processing these vast giveaways overwhelmed even the IRS's 100,000 employees and contractors, operating on a budget exceeding $12 billion this year.
We now know the Homebuyer's Tax Credit didn't stop housing's slide. Instead, we simply paid a couple million people $7,000 to $8,000 apiece to buy homes they would have bought anyway.
Worse, over 10,000 people got an $8,000 Homebuyer's Credit fraudulently. Many were under 18 years old -- the youngest was just 4. Thousands were incarcerated prisoners. Thousands more never bought homes or bought them before the law took effect.
Even IRS employees got in on the action -- George has (so far) found 53 of them who fraudulently claimed the credit.
The inspector general also identified nearly 40,000 people who got $15.2 million in Making Work Pay Credits (a credit designed to reduce payroll withholding taxes), despite not having a valid Social Security number.
Most of these people were likely illegal aliens working with fake documents. Almost none of them even tried to claim the tax credit -- IRS software automatically computed and paid the credit. The computers weren't told to check for valid Social Security numbers. (Continues here)