Obama's March Of Dimes...Into Oblivion

In his recent state of the union message, President Obama proposed that over two dozen new Federal government programs be implemented. In doing so, he spoke one of his more comical lines in his whole Presidency, stating that implementing these programs would not cost the American taxpayer a single dime. Which raises two conflicting questions:

A) If these programs do not cost a dime, how will they actually work and be implemented and how effective could they possibly be?

B) If they are going to be effective, shouldn’t they cost more than a dime?

More political nonsensical talk from an ineffective political leader. Especially this political leader, who has the annoying habit of throwing out these grandiose rhetoric ideas without any solid back up plans at all, never mind even pie-in-the-sky ineffective plans to back up his empty promises.

And why would we even believe that 29 new programs will not cost anything, given the Federal government’s mismanagement of trillions of taxpayer payers dimes historically:

• Every year, Medicare and Medicaid waste or lose to criminal fraud over $100 billion (One trillion dimes).
• Every year, Social Security wastes or loses to criminal fraud over $100 billion (One trillion dimes).
• Every year, the IRS readily admits that it fails to collect over $380 billion from American tax evaders (3.8 trillion dimes).

We could cite hundreds of other examples of Washington political class financial mismanagement that cost Americans a lot of dimes and would cost Americans a lot more dimes of these new programs ever happened.

Consider four recent examples of wasted dimes that extend Washington’s tradition of wasting dimes:

1) A January 25, 2013 article on the CNN/Money website reported actual criminals, locked up in prisons across the country annually bilk the IRS out of millions and millions of dollars by filing fraudulent tax returns with the IRS from within their prison walls. Thus, not only are would-be convicts pillaging the American taxpayer from outside of prisons, actual convicts are also doing some pillaging inside prisons.

Details of this fraud include the following:

• This tax fraud usually involves prisoners filing fraudulent tax refunds from their respective prisons using stolen or fake identities.
• The prisoners often are in partnership with non-prisoners outside of prison, with all parties sharing in the cut of fraud that they execute.
• In one variation of the scams, prisons access company annual reports in the prison library that list Federal tax ID numbers, and then claim they worked for these companies on phony 1040 forms that they file.
• Other scams involve prisoners claiming wages from companies that are in bank bankruptcy proceedings since those wages can be harder for the IRS to track and verify.
• Some prisoners scan obituaries, looking for people’s identities to steal to be used in filing the false tax returns.
• Others use prison computers to file tax returns electronically online and have their fraudulent refunds easily and electronically deposited into the bank accounts of friends on the outside.

How embarrassing, the Federal government is so inept financially that even those already convicted can continue their crime sprees behind bars where their room and board is already being paid for by the taxpayers across this country. The article estimates that in 2010, prisoners attempted to fraudulently bilk the IRS for over $750 million and were successful in obtaining $35 million of taxpayer wealth.

Now, in the big Federal budget picture, this does not sound like a lot. But consider two things:

1. This is the IRS estimates of what is going on. Who knows how accurate these estimates are. The IRS could be lowballing the estimates to minimize their embarrassment in not being capable or they really do not have a handle on the extent of the fraud and it is much worse than what they can identify.
2. Second, theoretically this $35 million could have been used to put armed police professionals in over 600 U.S. schools in order to prevent future Newtown-like school shootings, a much better use of the resources than allowing criminals to continue their crime sprees in prison.

In any case, this losing $35 million, or 350,000,000 dimes every year is a testimony to ineptness of the Federal government.

2) The Bankrupting America website carried an interesting but depressing article on January 30, 2013 about how another Federal government program wastes billions and billions of dollars every year via incompetence

• An important, comprehensive report from the Government Office of Accountability (GAO) reported that $108 billion of unemployment benefits and other government appropriations went towards “improper payments” over the past several years.
• These improper payments often went to the wrong person or were issued in the incorrect amount.
• Citing a Roll Call article: “No business would allow this much of its budget to be wasted. Sadly, this is business as usual in Washington, and solutions are tough to come by.”

The website goes on to give examples of what this wasted $108 billion in taxpayer wealth could have been used for in order to illustrate the extent of the waste:

• On an average American household basis, this error rate would have reduced that average household’s monthly income by about $200 a month. This is $200 that they could not have used for food, gas, and other expenses, a significant drag on a household’s financials, an economic drag repeated over 110 million times across every U.S. household
• The $108 billion could also be used to buy 366,000 Ferraris.
• It also could have been used to make 101 million mortgage payments at $1061 per month.

To this list we would add the calculation that the $108 billion that was wastefully distributed could have put one armed police professional in every U.S. school for about 15 years, a much better use of the 1,080,000,000,000 dimes.

3) An Associated Press report from February 8, 2013 reported that the U.S. Post Office lost $1.3 billion in the fourth quarter of 2012 or about 13,000,000,000 dimes. This loss came despite the fact that billions and billions of dollars were spent on the November elections, a lot of which ended up funding mailings from the various candidates and other political entities. Thus, the better measure of the slumping Post Office financials iis not the loss of $1.3 billion in the fourth quarter of 2012 but the loss of $3.3 billion in the comparable timeframe of 2011 where there was no major election spending.

But this should come as no surprise. We reported on the mess that was the Post Office over a year ago in September, 2011:

http://loathemygovernment.blogspot.com/2011/09/political-class-when-it-comes-to-post.html

In that post we quoted Senator Joe Lieberman’s warning that “we must act quickly” to fix the red ink problems of the Post Office. Apparently, that warning did not get the right attention since seventeen months, later the dimes keep getting wasted due to Post Office inefficiencies.

Quick note: this is not meant as a knock against the management of the Post Office. Back in September, 2011 and now, management seems to have a good handle on what is happening to their industry and what could be done to adjust the Post Office operations to address those changes, e.g. their recent announcement to stop Saturday mail deliveries. It is the political class that is dithering while our dimes slide away, not those employees and executives that recognize the need to change.

4) And finally, a case where the number of dimes being lost is actually incalculable. That, at least is the conclusion of a GAO report on their audit of the Federal government financials. In a massive audit of the entire Federal government, the GAO report concluded the following:

• Our report on the U.S. government’s consolidated financial statements illustrates that much work remains to improve federal financial management. Further improvements are urgently needed.
• Certain material weaknesses in internal control over financial reporting and other limitations on the scope of our work resulted in conditions that prevented us from expressing an opinion on the fiscal years 2012 and 2011 accrual-based consolidated financial statements.
• About 34 percent of the federal government’s reported total assets as of September 30, 2012, and approximately 21 percent of the federal government’s reported net cost for fiscal year 2012 relate to the Department of Defense (DOD), which received a disclaimer of opinion on its consolidated financial statements.
• Because of significant uncertainties, primarily related to the achievement of projected reductions in Medicare cost growth reflected in the 2012, 2011, and 2010 Statements of Social Insurance, we are unable to, and we do not, express opinions on the 2012, 2011, and 2010 Statements of Social Insurance, as well as on the 2012 and 2011 Statement of Changes in Social Insurance Amounts.
• Material weaknesses resulted in ineffective internal control over financial reporting for fiscal year 2012.
• Our tests of compliance with selected provisions of laws and regulations for fiscal year 2012 were limited by the material weaknesses and other scope limitations discussed in our report.

In other words, the Federal government’s accounting processes are so screwed up that we have no idea what is going on or how many trillions of dimes are wasted every year. How scary is this report, the Federal government is so messed up that trained auditors cannot unravel the mess.

All of these examples get us back to the original discussion on Obama’s two dozen plus new programs. If he and the rest of the Washington political class were actually doing their jobs and watching over our dimes, they could fund their additional programs and it truly would not cost the American taxpayer a dime in additional taxes. They could put armed police professionals in every U.S. school to protect our kids. They could do a lot if they just started watching and caring for our dimes.

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