GOP Should Be Leader In Fight Against Fraud

If the months since President Obama's reelection have proved anything, it is simply that there is no shortage of opinions about the preferred direction of the Republican Party One particularly insightful thought though came from Louisiana Governor Bobby Jindal immediately afterwards.  

He said that the GOP's perceived coziness with corrupt Big Business and Wall Street is part of its image problem. It is true that Republicans need to change perceptions about what and for whom the Party stands.


And one way to facilitate that is by taking a more proactive posture towards combating commercial fraud — particularly though free market means — and touting other Republicans' accomplishments in that respect.

Historically, Republicans have spearheaded fraud-fighting efforts, including creating incentives for private whistle-blowers to report fraud against the government and to benefit monetarily as a result.

The False Claims Act, which was passed during the Civil War to protect the Union Army from unscrupulous defense contractors, allows private citizens to sue on the government's behalf and keep a significant portion of the funds recovered.

Also known as "Lincoln's Law," the Act — which recently celebrated its 150th anniversary — is named after the Republican President who signed it.

In 1986, the False Claims Act was strengthened and revived after lying virtually dormant for decades.

Republicans have not done enough recently, however, to foster the narrative that the Party will stand up to corruption in business and protect taxpayers from commercial abuse.

It doesn't help that some Republicans in Congress and Washington lobbyist groups often associated with the political right want to water down laws that punish corruption and protect those who risk their careers to expose it.

Nobody can honestly deny, however, that commercial fraud is an enormous business and that private citizens are increasingly responsible for bringing these misdeeds to light.

Indeed, it was because of the work of a whistle-blower — Bradley Birkenfeld, who one of these authors represented — that the IRS uncovered the largest tax fraud in history, which ultimately led to billions of dollars in fines from UBS.

In other industries, particularly health care and defense, the increase in government spending has led to record amounts of fraud and waste.

The Government Accountability Office estimated that well over $100 billion was lost last year due to improper federal government payments. That is significant money even by Washington's standard.

Only about $5 billion of those improper payments were recovered through the False Claims Act — a record, but one that leaves plenty of room for further taxpayer savings, however.

Fighting fraud, particularly through the work of whistle-blowers, preserves confidence in the free market and can meaningfully contribute to alleviating our budget and deficit woes.

Not only is this critically important, but it is consistent with conservative views in other respects. After all, government resources at places like the DOJ, IRS, and SEC are limited.

Whistle-blower statutes deputize the citizenry and harness private sector profit incentives to provide a public good and reduce the institutional waste that conservatives rail against.

This promotes smaller, smarter and more efficient government by delegating a role to the marketplace and focusing government officials on the biggest and worst cheats, rather than well-intentioned people and honest business owners.

Moreover, pushing other Republican agenda items, like lower tax rates, becomes more viable if the Party appears genuine in championing a level playing field.

Particularly after an election in which many saw Republicans as protecting "fat cats" and Democrats as fighting for the common folk, it is an especially opportune time for the Party to work on rebranding its image.

 Republicans cannot afford to be seen as defending business interests at all costs. Combating economic malfeasance by utilizing private sector resources is a fresh and timely issue for the right to champion. That can improve our nation's bottom line and the GOP's future.

 Zerbe was previously Senior Counsel on the Senate Finance Committee for Senator Grassley and his firm, Zerbe, Finkeret, Frank & Jadav, P.C. now represents whistle-blowers. • Joshpe is an author and attorney in New York City. His firm, Joshpe Law Group LLP, also represents whistle-blowers.


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