Wasteful Government Spending Week (Extended) - Understanding Waste At The Household Level

Last week we spent the entire week talking about different types of government waste and wasteful spending, recommending several ways to cut down on the disgraceful misuse of taxpayer wealth. From Afghanistan to Iraq to U.S. Navy yards to Washington D.C., there does not seem to be any Federal action or program that is exempt from wasteful spending. The waste we identified came out to more than a TRILLION dollars, waste that will continue to diminish the country and its wealth and potential unless something is done soon.

However, we could not get through all of the wasteful spending in one week, requiring us to go two more blog posts to cover everything. Today we will give a simple, everyday example of how ridiculous our government and political class has become when it comes to destroying wealth in this country.

It becomes a little difficult to understand the magnitude of the waste when the zeros start to pile up (e.g. one TRILLION dollars is a one followed by 12 zeros). It is a little difficult getting one's arms around that since for many of us it is a foreign and unknown concept, TRILLIONS. Today's post will try to make a TRILLION dollars relevant via a household purchase example.

But first, let's set the stage by reviewing some statistics:

• Annual amount of waste, inefficiency, and criminal fraud in the Social Security program = $125 billion
• Annual amount of waste, inefficiency, and criminal fraud in the Medicare and Medicaid programs = $110 to $150 billion (let's use the middle of the range, $130 billion)
• Annual amount of waste, inefficiency, and criminal fraud in just one Federal government unemployment insurance program = $19 billion
• Annual amount of waste, inefficiency, and criminal fraud in the above four government programs = $274 billion
• Annual amount of uncollected taxes the IRS annually fails to collect from American tax evaders = $385 billion
• Estimated Federal government taxes and fees to be collected in 2012 = $2.47 TRILLION  (http://www.usgovernmentrevenue.com/federal_revenue)
• The ratio of uncollected taxes and fees to estimated amount of collected taxes and fees in 2012 = 15.6%
• The ratio of annual waste and fraud in the four social support government programs listed above to the estimated amount of collected taxes and fees in 2012 = 11.1%

Okay, let's make all of this waste relevant to a typical household purchase. Let's assume that your household needed/wanted to buy a new car. If you are like most consumers, you have done your research of prices, safety, style, resale value, etc. Let's assume that you have decided on a car model and you and the dealer have agreed to a price, say $20,000 to keep the math simple.

You sign the papers and agree to return in a few days with a check for $20,000, during which time the dealer preps the car for sale. However, when you arrive to pick up your new car, along with your check of $20,000 you are hit with some extra charges:

1. Since the dealer has had problems collecting car payments from other customers, according to the dealer, you have to make him whole. If the dealer is the Federal government who is so incompetent that it fails to collect 15.6% of the taxes and fees legally due under our tax code, you now have to pay the car dealer an additional $3,117 (15.6% of the $20,000) to cover up the dealer's inability to collect what he should have been paid by others.
2. But we are not done. Not only has this dealer not collected over 15% of what he should have been paid by other customers, he has somehow lost 11.1% of the money he had already collected due to waste, inefficiency, and criminal fraud, just like what happens with Social Security, Medical, et al. Thus, he wants you to pay another $2,219 (11.1% of $20,000) to cover his misuse of funds in his possession.

Thus, rather than pay the $20,000 for the new car that you agreed to with the dealer, if that dealer operates like the Federal government, you would have to pay an extra $5,336 (about 26.7%) more because of the incompetence of the dealer who loses wealth that the dealer already possessed or failed to collect payments that were due to him.

Obviously, we would never allow this to happen to us in a new car transaction. We agreed to a price, if the dealer tried to up that price by almost 27% we would walk away and never deal with that car dealer again.

And we should do the same thing with the Federal government and the political class that operates it. We should not have to pay a 26.7% premium in taxes to a government that is so incompetent that it loses, wastes, or fails to collect 26.7% of the taxes and fees we agreed to pay the government, just like we agreed to $20,000 with the hypothetical car dealers.

Federal bureaucrats need to be fired for wasting taxpayer dollars. Federal bureaucrats need to be fired for not doing their jobs, such as not collecting $385 billion in taxes every year. Politicians need to be removed from committee posts for allowing the waste and criminal fraud to continue unabated every year. New politicians assigned to those posts need to focus their efforts on plugging the leaks and collecting what is due rather than continuing to harp on nonsense and non-starters like the idiotic "Buffet Rule."

No American, rich or poor, should pay a cent more in taxes until there is a successful operational plan in place to bring that disgraceful 26.7% figure down to zero. We would not stand idly by if that car we wanted had a 26.7% surcharge, we should not stand idly by if our government also comes with a 26.7% surcharge. No car is worth that much of a surcharge, no government and political class deserves that much of a surcharge.

P.S. the 26.7% is probably a conservative estimate of the Federal government's waste. None of the figures we discussed above include waste and inefficiencies that are very likely present in the Defense Department budget, the food stamp program, etc. and excludes the random wasteful spending we discussed in detail last week like the $80 million Afghan consulate that was built and never used, the $184 million spent on unsued and unwanted TSA airport security equipment, etc.


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http://www.unitedstatesofpurple.com/

The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.

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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 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.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment/