This post will set up tomorrow's detailed post on budget reduction. It is a good precursor since many Democrats in Congress are going out of their mind at the mere mention of cutting down the size of the Federal government. They act as if everything the Federal government does and everything they do is critical to the national well being, that there is absolutely no waste or unneeded parts of government, and how could any American even think about trimming or slashing government's size.
Please review the following political class insanity from just the past month or so and afterwards I think you will agree with me - cutting out the following waste and insanity would save taxpayers billions of dollars without any significant damage to any American voter's well being.
- Consider a recent newspaper article from the May 15, 2011 issue of the Washington Post regarding the Federal government's actions in the housing market:
"The Federal government's largest housing construction program for the poor has squandered hundreds of millions (of dollars) on stalled or abandoned projects and routinely failed to crack down on derelict developers or the local housing agencies that funded them...The result is a trail of failed developments in every corner of the country. Fields where apartment complexes were promised are empty and neglected. Houses that were supposed to be renovated are boarded up and crumbling eyesores in decaying neighborhoods ... The Post found breakdowns at every level."
This paragraph is courtesy of the July/August, 2011 Cato Policy Report. According to Cato, the article goes on for three more pages as it details the corruption and waste. The scary adjective from the Post report is "routinely," as if this goes on and on, year after year, billions and billions of dollars later.
Shouldn't someone be held accountable for such waste, either within the Federal housing entities or on the Congressional committees that are supposed to make sure this type of waste does not happen? Thus, this becomes the first of many examples of wasteful spending that needs to be plugged and the overall Federal budget reduced.
- A General Accounting Office report from April 12, 2011 addressed the financial literacy of Americans through a publication, "Financial Literacy: The Federal Government's Role In Empowering Americans To Make Sound Financial Choices." Given the recent debt ceiling fiasco and the $14.3 TRILLION national debt situation that led up to the fiasco, I would certainly not look to the Federal government as a beacon of financial literacy and an entity that makes sound financial choices.
This is like saying that Jabba The Hutt from Star Wars infamy is now your dietary advisor and physical fitness instructor, makes no sense. Kill ridiculous government projects like this along with the government resources that support them and bank the savings.
- According to a Washington Post article from May 15, 2011, Congressional sources have questioned Amtrak's management, inquiring, for example, how an Amtrak employee with an annual salary of $21,000 actually earned $149,000 in overtime pay in 2010's fiscal year. Huh? An employee earned more than seven times their base salary in overtime wages? While I understand how the math works, conceptually I cannot figure out how that computation is possible. I have to think there is some financial hanky panky going on in not only this case but in probably many other cases, hanky panky that usually means the taxpayer is footing the bill for some type of major inefficiency at Amtrak (and likely at other government organizations also.)
- According to an article in the May 5, 2011 issue of the Daily Caller, National Public radio (NPR) is paying a major lobbying firm big bucks to lobby and defend NPR's funding stream from Congress. Thus, taxpayer money is being spent on an outside lobbying firm to get more taxpayer money for the lobbyist's client, taxpayer supported NPR.
While this seems like an incredible conflict of interest and waste of taxpayer money, who is to say it could not happen elsewhere within the government, or maybe it does already, where a strictly government agency uses part of its taxpayer funding to hire lobbyists to get more taxpayer funding. An incredible, wasteful disgrace in so many ways.
- According to a short article from Time magazine that was summarized in the July 22, 2011 issue of The Week magazine, farm income in the U.S. was up 27% last year and is expected to rise another 20% this year despite the bad overall economic conditions. Another article in the July 29, 2011 issue of The Week magazine discussed how the traditional family farm was disappearing, being replaced by big business, corporate operations.
Federal farm aid does not usually go to the family farm, it is mostly another form of corporate welfare and a source of re-election campaign donors for incumbent politicians. The majority of government farm subsidies now go to farming operations with annual revenue over $200,000 and net worth of around $2 million.
Thus, given the corporate welfare aspect of farm subsidies today and the fact that farming is one of the few growth industries in America today, why would the American taxpayer still pay farmers subsidies? Kill the subsidies and bank the savings, the corporate farming organizations can live without this taxpayer windfall.
- An article in the August 5, 2011 issue of The Week magazine quoted a CNNMoney.com article on how the Federal government had sold its stake in Chrysler for a net loss of $1.3 billion. The Federal government still owns a 32% share of General Motors and is likely to lose more than another $10 billion on that deal unless the stock can miraculously rise to the low $50s per share, about a 60-70% increase from where it is right now.
This loss does not include a little known Federal government action that occurred during the GM bailout where the Federal government gave GM a tax break "gift" of about $14 billion. Thus, the taxpayer will end up losing anywhere from $25 to $30 billion as a result of the Federal government's clumsy and unneeded intrusion into the auto industry. How many other government screw ups are out there, given that the political class gave out hundreds of billions in bailouts to many different companies? The waste could be in the hundreds of billions of dollars.
- According to a New York Times article that was summarized in the August 5, 2011 issue of The Week, despite cutting $12 billion in costs over the past four years and eliminating more than 200,000 job positions in the past decade, the U.S. Post Office is still on track to lose $8 billion this year, the same amount it lost last year.
While someone in the Post Office should be commended for trying to fix a sinking ship, the effort was not enough to stem the red ink. This is just one example where the lack of problem solving skills by the political class is again likely to result in incremental billions of taxpayer waste to hold up a dying business model with no improved business model being developed.
- A recent article from the The Daily Beast was summarized in the August 5, 2011 issue of The Week magazine and pertained to the pirates from Somalia. Two years ago, President Obama, in conjunction with our European allies, promised to reduce the danger from piracy in the Indian Ocean and Arabian Sea.
They have not quite lived up to that promise since in the first six months of this year, attacks by Somali pirates hit a record high, with average ransom per ship rising from $150,000 in 2005 to over $5 million per ship today.
Why the failure to live up to the promise? First, the navies of ourselves and our European allies are tied up fighting the stalemated and ill-fated Libyan military action. Second, according to the article, 20% of the U.S. Navy's ships are not combat ready and half of the Navy's air fleet is in disrepair. This is a disgrace. The American taxpayer pays over $600 billion a year, year in and year out, and one out of five Navy ships are not ready and 50% of its planes cannot operate? What have we been paying for all these years? Talk about wasting taxpayer money, for $600 billion a year, the political class has to ensure that we have a top notch, fully functional defense corps. Anything less is a waste, dereliction of duty, and a shame.
- Recent news reports have described how Congress, specifically the Democratic-controlled Senate, has not been able to come up with an agreeable funding plan for the Federal Aviation Agency even though the Republican-controlled House of Representatives has already passed a bill that the President says he will sign. This has resulted in 4,000 government employees being furloughed and more importantly, the Federal government not being able to collect millions of dollars a week in airline government fees.
Thus, rather than solve a problem, the Senate would rather squander more than a $200 million dollars a week in lost fees. Adding insult to injury, the flying public does not see the benefit of the fees not being collected, many of the airlines are still collecting the fees but keeping the fees for themselves. Another blatant example of not being able to manage a rationale, problem solving process in the Senate, resulting in the American taxpayer again getting the short end of the stick.
- Finally, let's go back to the housing collapse from a few years ago that was a main driver of the Great Recession. Despite spending TRILLIONS of dollars over the years to operate, support, and staff the SEC, HUD, FDIC, the Federal Reserve Board, the Treasury Department, Fannie Mae, Freddie Mac, Senate committees and subcommittees on housing, House of Representative committees on housing, and probably other government agencies on housing, not one of them foresaw the disaster that was the housing market and subprime lending bubble that devastated the economy.
That does not mean it was not foreseeable. A Business Week article from June 13, 2011 described how the co-founder of Pimco, a trillion dollars plus investment fund, was not only able to predict what was going to happen but also minimize its impact on the fund.
Bill Gross of Pimco wrote the article and described how there were inklings of a housing problem as early as 2006. What did he do? He took ten of his forty credit analysts, each of whom covered major companies throughout the country, and sent them around the country, pretending they were would-be home buyers moving into the area. Each got a specific area and were told to visit their own area two to three times a month for two years.
What did these ten recon people find out? Namely, that the real estate industry was dealing with bogus mortgage loans and dangerous lending practices such as no down payment mortgages and no income check mortgages. Gross says the findings of these ten people were shocking. As a result of ten people and the market intelligence and reality intelligence they provided, Pimco was able to minimize its exposure and losses.
Ten people, with just some travel money and time, were able to do what thousands of Federal employees with billions in resources could not do, namely identify a problem and its root causes, take action, and avoid a disaster. Unfortunately, the political class does not have these skills and it cost Americans dearly from an economic perspective, a cost still being incurred today.
These are the latest examples of our political class insanity. Lost tax opportunities, disasters not averted, government organizations that are so broken that they lose billions of dollars year in and year out, unnecessary bailouts that cost billions, favorable tax and subsidy deals that are not needed, fraud and waste in housing and other government entities, and useless brochures and reports.
Lets face it: the Federal government is not a finely tuned computer, it is a broken abacus. There are so many opportunities to fix what is broken that no rational person should be able to rant that cutting Federal spending will cut to the basic bone of government functions. There is way too much fraud and waste sitting on top of that bone, waste and fraud that needs to be trimmed aggressively so that government can focus on far fewer things but be far more effective on the vital basics of its responsibilities.
We just need to fix our political processes so that we replace the current set of politicians with a new set of people that know how to dissect a problem, identify root causes, and have the courage to implement the solutions, traits sorely lacking in Washington today. Given this context of waste, tomorrow we will review the numbers that show how to cut waste without cutting bone.
Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at http://www.loathemygovernment.com/. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.
Please visit the following sites for freedom:
http://www.loathemygovernment.com/
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment.com/
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