Talking back to the inspector, rewards for bad behavior, new poker possibilities, and other matters. THE SSI FOLLIES

(FORTUNE Magazine) – ''Can you top this?'' was the note attached by a Bay State correspondent to the article clipped from the Boston Globe, and the answer has to be -- it's tough. The article concerned certain weirdities that keep cropping up in the Supplemental Security Income (SSI) program, and having now ransacked Nexis for related articles and congressional testimony, one gloomily gathers that reporter Charles M. Sennott was not making it up. Although administered by the Social Security Administration, SSI is really a vast welfare bureaucracy and citadel of perverse incentivization. It was set up in 1972 to help aged, blind, and disabled poor people, and pursuant to this goal now pays out around $26 billion a year. The problem is that more and more folks eyeing this pot have begun casting themselves as disabled -- and, once the monthly checks begin, fiercely resisting all efforts to get well. Especially perverse are the incentives for the ''DA&A'' population, i.e., drug abusers and alcoholics. When SSI was being debated in Congress, there actually was some controversy over the question of covering DA&As, with various hard-liners insisting that the American people would not stand for payments helping this population to support its bad habits. So the legislation requires that (a) the checks go to responsible third parties, who (b) ensure that the DA&As are getting treatment, which should (c) help them to become productive workers. Mid-May testimony in the Senate makes it all too clear that what is actually happening is that (a) the responsible third parties are typically relatives who simply turn over the payments, (b) only a minority of the drug abusers and alcoholics are receiving treatment, and (c) virtually none of those treated return to the labor force. The ''virtually'' in that sentence is required by the testimony of June Gibbs Brown, an inspector general in the Department of Health and Human Services, who told the Senators that once the payments start, there is ''a very strong disincentive for recipients to succeed at rehabilitation,'' and that a random survey of 197 DA&A beneficiaries turned up exactly one (1) who had gone back into the labor force. Thus far, at least, the American people appear to be standing for it. The Globe article centered on another SSI population: troubled children. The 1972 act always provided for payments to the parents of severely disabled, retarded, or autistic children, but a 1990 Supreme Court decision enormously expanded the eligibility pool. Justice Blackmun's opinion required the SSI bureaucracy to pay also for a large class of children deemed to be lacking the ''functional capacity to perform age-appropriate activities.'' Not quite knowing what the new standard meant, HHS began offering payments to children who, say, were disruptive or inattentive in classrooms. Between 1989 and 1993, the number of kids covered rose from 296,000 to 761,000. The worst of it is that some parents have caught on to the fact that bad behavior in school can mean an extra $500 or so per month at home. Some kids are obviously being coached on how to be bad, and the Globe reports that kids across the land refer to the new entitlements as ''crazy checks.'' Can it really be that we now have public policies creating incentives for kids to misbehave in school? Hey, this is America.