Stimulated scammers

When President Obama signed the trillion-dollar stimulus law in 2009, he said he was "keeping the American dream alive in our time." He failed to mention that billions would go to keeping tax scammers afloat on our dime.

According to a General Accounting Office audit conducted over the last year, nearly 4,000 stimulus recipients received $24 billion in Recovery Act funds -- while owing more than $750 million in unpaid corporate, payroll and other taxes. Among them:

* Two social-services groups with nearly $3 million in unpaid taxes each received more than $1 million in stimulus awards.

* One nonprofit owed more than $2 million from years of unpaid payroll taxes, even as its CEO made numerous trips to a casino. The group won more than $1 million in stimulus funds.

* One engineering-services firm had a $6 million delinquent tax debt and was called by the IRS an "extreme case of noncompliance," yet won a contract worth more than $100,000.

* A health-care company that owes more than $1 million in back taxes and has had federal IRS liens filed against it since the late 1990s received $100,000 in stimulus funds.

* One security firm owed $9 million and was repeatedly cited not only for being uncooperative with the IRS, but also for frequent labor violations. It also received a stimulus contract worth more than $100,000.

This is just the tip of the iceberg. The GAO noted that "the estimated amount of known unpaid federal taxes we identified is likely understated" because of rampant underreporting of income and because the analysis did "not include Recovery Act contract and grant recipients who are noncompliant with or not subject to Recovery Act reporting requirements."

The official response of the Obama administration's stimulus-oversight board? The Recovery Accountability and Transparency Board patted itself on the back for its transparency. Then it dodged responsibility by pointing out that "federal law does not prohibit tax delinquents from getting government contracts or grants." As if it couldn't have exercised its common sense to stop such plundering?

And you can't count on the IRS to perform due diligence on behalf of the taxpayer, either. Last week, the Treasury Department inspector general found that the tax police have failed to prevent fraud in the stimulus law's energy-tax-credit program.

Some $6 billion in energy credits for homeowners have been claimed -- but the IG's audit found that 30 percent of credit-claimers had no record of home ownership. "I am troubled by the IRS's continued failure to develop appropriate verification methods for distributing Recovery Act credits," the Treasury watchdog said.

When the IRS wasn't falling down on its job policing outside fraud, its own workers were committing their own stimulus fraud -- by cheating the system and claiming a first-time homebuyer tax credit included in the 2008 and 2009 stimulus packages. At least 128 IRS employees claimed the credit, according to a recent Treasury audit, yet weren't first-time buyers or violated other basic eligibility criteria.

Sen. Tom Coburn (R-Okla.), who has doggedly tracked stimulus waste, said, "That such a huge amount of the stimulus money went to known tax cheats should be a wake-up call for Congress."

It should be about the 20th wake-up call. Obama's slush fund has redistributed wealth to prison inmates, flaky researchers, social-justice boondoggles, infrastructure to nowhere, foreign companies, dead people and ghost congressional districts -- not to mention $20 million to pay for campaign-style stimulus-hyping road signs emblazoned with the shovel-ready logo.

For what?

Unemployment remains near double-digits. Highway jobs have not materialized. Investor's Business Daily notes that a study by economists Timothy Conley and Bill Dupor "found that despite the influx of all that federal money, highway-construction jobs actually plunged by nearly 70,000 between 2008 and 2010."

The researchers found that the stimulus "destroyed or forestalled" a million private-sector jobs by crowding them out with make-work public jobs and programs.

Recovery.gov? More like Wreckovery.gov.