The Scandal of American Welfare Goes Beyond Fraud - WSJ
California spends billions on programs that enrich insiders and don’t help the needy—and it’s all legal.
Economist
John Maynard Keynes suggested that the government pay people to dig
holes in the ground and then fill them up. This is an apt metaphor for
progressive government these days: It creates social dysfunction, then
shovels out money to correct it. Dredge, fill and repeat.
Healthcare
and social assistance added more than 1.6 million private-sector jobs
between June 2023 and June 2025, according to comprehensive data from
employer payrolls published by the Labor Department in December. Yet the
U.S. gained only 1.3 million private jobs during that period, meaning
there was a net loss of jobs in other industries.
These
two industries accounted for more than half of the new establishments
(businesses and nonprofits) created over those two years. Minnesota’s
welfare-fraud scandal make you wonder: How many of these new entities
and their employees are actually helping people, and how many are merely
looting the government?
More
than 90 people have been charged with setting up sham businesses and
nonprofits in Minnesota that feasted on Medicaid, food, housing and
other welfare programs. Defendants employed family members and others to
provide autism “treatment” to kids who didn’t have autism, to drive the
kids to fake appointments, and to feed them while they were there. The
fraudulent enterprises didn’t provide legitimate public services, though
they did employ people—in the service of bilking the government.
“Honest
graft” may be a bigger scandal than outright fraud. America’s
all-you-can-eat buffet of health and social benefits—16 different
federal food programs, Medicaid, housing support, child care and
more—provides abundant opportunities for milking the government. Look no
further than California, where a vast welfare-industrial complex has
developed around homelessness, drug addiction and left-wing identity
politics.
The
Golden State added roughly 188,000 jobs in social assistance between
June 2023 and June 2025, yet only 4,900 private-sector jobs in total.
During this period some 153,000 new establishments were created in
social assistance. Every vagrant, drug addict and confused young person
needs a social worker and “community support.”
Gov.
Gavin Newsom’s Elevate Youth California initiative claims to address
substance use disorder “by investing in the leadership development and
civic engagement for youth of color and 2S/LGBTQIA+* youth ages 12 to 26
living in communities disproportionately impacted by the war on drugs.”
Grants are funded by taxes on marijuana.
Maybe
young people wouldn’t struggle with substance abuse if the state hadn’t
legalized marijuana and effectively decriminalized other drugs. Or if
union-run public schools educated them and molded good character, rather
than manufacture left-wing culture warriors. Or if high minimum wages
hadn’t killed entry-level jobs for teens.
What
do these youth-oriented outfits do with the state money they receive?
The nonprofit Brotherhood of Elders Network instructs “system-impacted
Black youth” in what it calls “the Art Of Being A Black Man.” Its
curriculum explores “African culture through rhythm, song, and dance.”
Another nonprofit, Asian Refugees United, sponsors “weekly Queer Youth
Art Storytellers programming, which combines youth mentorship,
leadership development, and creative skill-building” to reduce substance
abuse.
The
Mixteco Indigena Community Organizing Project fosters “community with
60 to 100 Indigenous youth from the Mixteco, Zapotec, and many other
Diasporic communities throughout the Central Coast.” The California
Youth Empowerment Network sponsored a “youth-led bus stop campaign
featuring vibrant, stigma-free posters that connected youth experiencing
housing insecurity to essential resources, including food and
shelters.” In other words, the state gave money to sign young people up
for government benefits.
We’ll
spare readers a long recitation of other examples of Mr. Newsom’s
splashing around money to left-wing groups, which can be found on the
state’s website. It’s possible that work by some grant recipients is
reducing recidivism, homelessness and substance abuse, but it’s
impossible to know because the state doesn’t measure such outcomes.
The
goal of the welfare-industrial complex isn’t to ameliorate social
problems but to extract more money from the government. Social workers
employed by a nonprofit—funded by hospitals and health insurers—spent
recent weeks searching for undocumented immigrants to sign up for
Medicaid before a deadline that would make them ineligible.
A
story in the Atlantic this fall described how drug addicts and the
mentally ill have been cycling in and out of California hospitals. Every
emergency-room visit, typically covered by Medicaid, means more money
for hospitals. It’s no coincidence that hospitals are the loudest
opponents of Medicaid reforms.
California’s
Medicaid spending—which pays for Native American exorcisms, music
lessons, cooking classes and many other nonmedical services—has
ballooned by nearly 50% over the last two years. “Healthy living starts
with a chef in your kitchen. Paid by Medi-Cal,” one company advertises. A
state audit last month flagged it as high risk for fraud, waste and
abuse. You don’t say.
Say
this for a union-backed ballot measure that aims to tax the wealth of
billionaires to boost spending on Medicaid: It might awaken wealthy
liberals to the welfare racket that masquerades as a public service.
Left wingers want unlimited social spending - because that gives them unlimited opportunities to loot the government
