Turning Wealth Into Waste

Yesterday we discussed a new government report that highlighted the tremendous amount of waste in the Medicare area. Today we will cover waste on a broader base as outlined by a new government report that was summarized in a November 18, 2009 news article that appeared on Earthlink's news page.

According to the government report, the Federal government wastes $98 billion a year due to improper payments. This comes down to about $750 for every family in America every year. The report detailed the improper waste department by department:

• Agriculture wasted $4.3 billion or about 5.9 percent of its total department budget.
• Defense wasted $849 million or .5% of its total department budget (more on this below).
• Education wasted $599 million, 2.1 % of its budget.
• Health and Human Services wasted $55.1 billion or 9.4% of its budget.
• Homeland Security wasted $644.5 million or 3.7% of its budget.
• Housing and Urban Development wasted $1 billion or 3.5% of its budget.
• Labor wasted $12.3 billion or 9.9% of its budget.
• Transportation wasted $1.5 billion or 3% of its budget.
• Veterans Affairs wasted $1.2 billion or 2.7% of its budget.
• Social Security wasted $8.0 billion or 1.2% of its budget.
• And the big winner: Treasury wasted $12.3 billion or a whopping 25.5% of its budget.

A couple of observations:

• If someone or some department in private industry had lost/wasted 25.5% of its total budget on improper payments, like the Treasury Department did, there would sure to be firings, investigations and possible criminal liabilities.
• I am sorry but I simply do not believe the defense number of only .5% of its budget. With troops and facilities all over the world requiring probably thousands upon thousands of contracts with outside vendors (combined with the old stories about $700 hammers, $400 toilet seats, etc.), it is highly probable this number is bogus.
• The report identified the Homeland Security grant program and the Disaster Relief Fund Vendor Payments program in the Homeland Security organization as the main culprits in that department's waste. Has anyone in any position of responsibility been fired for this waste of taxpayer dollars?
• Similarly, in the Transportation department, much of the improper payments were attributed to the Federal Highway Administration planning and construction program. Has anyone been fired in this program?

But lets not stop here, this is probably just one leg of a three legged stool. These numbers appear to be due to improper payments, leg number one of the stool. It does not appear to include waste for programs that have little or no use for the American taxpayer. As mentioned in Appendix A of the book, "Love My Country, Loathe My Government," the following are just a small handful of useless government programs that while they may not include improper payments, they are a complete waste of Federal tax dollars, the second leg of waste in our stool:

• $250,000 of Federal money to research asparagus industry labor costs.
• $70,000 of Federal money for a Paper Industry Hall Of Fame.
• $300,000 of Federal money for a feasibility study for the world's first fully enclosed motor speedway in Ohio.
• $2,500,000 of Federal money for fish waste research in Alaska.

This list could go on forever but you get the idea. The $98 billion waste in improper payments is just the beginning, wasted tax dollars on useless Federal programs adds on to this number. This second set of waste includes not only the smallish programs listed above but the massive Federal programs like TARP that wastes untold billions of dollars. See some of our previous posts on how TARP and the Stimulus Program turned wealth into waste.

And finally, the third leg of the stool, outright fraud from a tax perspective. As outlined in "Love My Country, Loathe My Government," an article in Money magazine in 2006 quoted an IRS source that said the difference in what private citizens owed under the current tax code and what was actually collected differed by almost $200 billion a year to the short side. The article did not estimate how much businesses were also shortchanging the IRS.

If we just take a wild stab and say that the IRS is short $100 billion on business taxes, combine that with the $200 billion they are short on private citizen taxes and add in the $98 billion in waste of improper payments, you get almost $400 billion wasted every year or over $3,000 per U.S. household. This does not include the second leg of the stool, the money spent and wasted on Federal programs that get nothing done for the vast majority of Americans. It is mind boggling. And that does not end the bad news. Tomorrow we will discuss some of the reactions to this waste report as stated by government bureaucrats and members of the political class, now their comments are mind boggling. Also tomorrow, we will show how many of the steps in "Love My Country, Loathe My Government" would effectively address and minimize or eliminate many sources of wasted taxpayer dollars as compared to the lame plans the political class has in mind for fixing the problem.

Visit our website at www.loathemygovernment.com to order an autographed copy of the book, "Love My Country, Loathe My Government -Fifty First Steps To Restoring Our Freedom and Destroying The American Political Class" and to sign up for the cause. The book is also available online at Amazon and Barnes And Noble.