May, 2013 Political Class Insanity, Part 1: Food Aid Explosion, Expensive Empty Bank Accounts, Another Failed Stimulus Program

It is the start of another month which always mean we kick off the month with a review of the latest insanity, lunacy, waste, and stupidity form the American political class. When we started this tradition a few years ago, we used to be able to contain each month’s insanity to a single post. Unfortunately, as time has marched on, a single post could not contain a month’s worth of lunacy.

This culminated in last month’s political class insanity which required five full days to cover. And this month is no different, with a strong possibility that we equal or possibly exceed five days worth of political class misadventures.

Thus, we will start going down the list of the latest insanity and stop when we are done. The following examples are in no particular order or structure, much like the thinking and actions from today’s politicians.

1) According to a report in the April 24, 2013 issue of the Washington Post, the Federal government will spend at least $890,000 on service fees this year for bank accounts that are empty. At last count, there were 13,712 such accounts with a balance of zero. They are supposed to be closed but apparently no one in the Federal bureaucracy has gotten around to doing the necessary paperwork yet.

$890,000 being paid for nothing could have funded the White House tours for almost a whole year. $890,000 could have kept a lot of air traffic controllers on the job for a while and not have the traveling public face the vindictive sequester cuts of the Obama administration.

The article points out that several years ago the Pentagon got caught paying over $400 for a single hammer. But at the end of the transaction, at least the Pentagon had a hammer. In this case, no one, the government or the taxpayers, has anything except nearly a million dollars wasted every year.

And even sadder, the government apparently knows what the accounts are but never gets around to shutting down thousands of accounts that cost about $65 a month to maintain. Disgraceful waste of money.

2) The Honolulu Civil Beat newspaper reported on April 5, 2013 that the U.S. Department of Energy, under the Obama economic stimulus program, had given the Honeywell corporation, a giant industrial business, $25 million of taxpayer money to operate a biofuels test plant operation in Hawaii. The objective of the funding was to create 85 construction jobs and an average of 40 long term, permanent jobs once the operation was up and running.


But several years later, Honeywell has only created about 10 permanent jobs, according to a company spokesman. In addition, only 60 construction jobs were created, not 85. If we divide the $25 million investment by the number of full time, permanent employees we come out to a ridiculous average cost per job of about $2.5 million spent per permanent job created.

Looks like another Obama administration alternative energy “bet” (Joe Biden’s words) has not panned out and has gone the way of Solyndra, Fisker, Ecotality, A123, and a myriad of other alternative energy companies that burned through taxpayer cash with no societal benefit in return.

3) Staying with the Department of Energy for a moment, a favorite waster of taxpayer wealth, consider the findings from a recent Department Inspector General report:

• The Office of Inspector General recently reviewed the use of $1.1 billion intended for use by 15 energy projects.
• The audit found that three of the project recipients received $90 million in funding.
• The project reviews of these proposals indicated that the score for each of the projects was not high enough to receive such substantial funding and that each project was suffering from financial and technical issues.
• But the Department still granted the money despite the identified issues.
• The Department awarded $48 million to one recipient whose financial stability was not close to being high enough to receive the funding but rather than addressing the underlying problems, the Department simply decided to lower the standards for the recipient in order to make them eligible for the funding.
• The report also found that the Department was not monitoring its funds properly and found an $18.3 million in questionable reimbursements claims from funding recipients which violates the Federal and Department policies.
• The DOE was found using $575 million to accelerate existing projects rather than using the money to fund other projects, as required by current policies

Little in the way of financial controls and when the limited controls were used, they were simply waived to get a project approved, basically rendering the controls as worthless. And when controls are not in place or being waived you can bet that millions and millions of taxpayer dollars are being wasted.

4) One of the big advocates for the Obama administration spending and wasting over $800 billion of taxpayer wealth in a vain attempt to stimulate the economy was Nobel Prize winner Paul Krugman. If I remember correctly, he wanted the Federal government to spend trillions of dollars, not hundred of billions of dollars to stimulate the economy.

Well, we all know what a bust that stimulus effort was even though Krugman was a big supporter of it and in fact, he has been a big advocate for the failed economic programs of the Obama administration. He continues to advocate for stronger Federal government spending for the sake of Federal government spending to fix the ailing economy.

However, before you think he might be right and that his Nobel Prize makes him, and the political class, a wizard of predicting the economic future, consider one of his earlier predictions from 1998:

The growth of the Internet will slow drastically, as the flaw in "Metcalfe's law"--which states that the number of potential connections in a network is proportional to the square of the number of participants--becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's.

As the rate of technological change in computing slows, the number of jobs for IT specialists will decelerate, then actually turn down; ten years from now, the phrase information economy will sound silly.

Seems he was a little off on that prediction, it is actually his prediction that sounds a little silly. Thus, judge for yourself, when he and his advocates in government want to spend more of your money and your kids’ money and your grandkids’ money, whether or not they truly have a handle on economic principles in light of his outrageous miss on the future of the Internet. Fax machine indeed.

5) Some interesting, and depressing numbers from the Federal government’s food aid program as recently reported by the Huffington Post and other news sources:

• The current food stamp program costs the American taxpayer about $75 billion a year.
• Government sources believe that $750 million of that budget number is lost every year to fraud.
• This wasted/lost food aid money could have funded White House tours for more than 750 years.
• This fraud number is more than double the amount dollars of fraud detected annually in a 2006-2008 study on food stamp benefit trafficking, a type of fraud that involves selling Supplemental Nutrition Assistance Program (SNAP) benefits to food retailers for cents on the dollar.
• This purported fraud is only about 1% of the annual total food stamp budget.
• However, food aid programs administered by 36 states as well as the District of Columbia, Guam and the U.S. Virgin Islands have no asset test for food stamp eligibility. In other words, wealthy people could get food stamps if their annual income is low enough even though they have many other assets already in their possession, making the $750 million/1% numbers probably substantially too low.
• Just such an example of underestimating the waste in the program came to light that a Michigan man who won a $2 million lottery jackpot was collecting food stamps under a state loophole that counted only income, not assets. The man took his winnings in a lump sum, which categorized them as assets.
• Enrollment in the food aid program that helps the poor, elderly and disabled is running at record high levels, with well over 46 million people now participating.
• Well over 14 million people have signed up for the benefits of the food aid program since U.S. President Barack Obama took office.

I am not advocating killing the food aid program which is a literal lifeline in these hard economic times for many Americans and their families. But at least $750 million a year, and probably a lot more, is being wasted on criminal elements and wealthy recipients who have healthy levels of assets but no healthy levels of current income.

Is it too much to ask for the Federal government to use some common sense when spending billions of taxpayer dollars?

6) Staying with the food aid program and some really depressing numbers, the Wall Street Journal recently reported that the Federal government is now spending $74.6 billion a year on the program, a level that is up from $30.4 billion in 2007. This program now supports a whopping 15% of Americans and its budget is now more than the COMBINED budgets of the Department of Homeland Security, the Justice Department, and the Department of the Interior.

The insanity here is the political class and others in Washington, such as Nobel Prize winners, have been totally inept at creating the right environment to grow the economy and create jobs, jobs that would hopefully lead to a diminishing of the food aid budget. Record level government stimulus spending levels, record low interest rates for a record length of time, and record levels of printing money have all failed to get the economy rolling.

The fact that this food aid government expenditure has grown so much so quickly is a disgrace, a disgrace that takes wealth away from other programs that would potentially better serve more Americans.

That is enough for now, we are just getting started with this month’s lunacy.

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.reason.com/
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com
http://www.youtube.com/watch?v=08j0sYUOb5w