Wednesday, June 3, 2015

June, 2015, Part 3, Political Class Insanity: $12 Billion For ONE Navy Ship, States Going Bankrupt, Studnet Loans Paying For ISIS Recruitment And More

It is the start of another month which means it is time to review the latest political class insanity that the American political class has dropped on our heads in the past month or so. We do this review every month in order to continually prove our view that we are currently being served by the worst set of politicians in the history of our country. Their inane quotes, their failed programs and laws, their wasteful spending, their ineptness, and continued focus on their own careers and self enrichment at the expense of taxpayers is constant and disgraceful.

This month could be one of the worst ever, given the backlog that needs to be discussed. The insanity will cover a full range of areas where today’s politicians continue to disappoint and fail us. As always, the new ways they find to screw up is never ending and always creative.

1) Yesterday we discussed the incident where hackers broke into the IRS computers and stole the personal and vital information of over 100,000 Americans. This obviously makes identity theft of these 100,000 Americans much more likely, all as a result of bureaucratic incompetence at the IRS.

Thus, it should come as no surprise that an amazingly low 6% of those polled in a recent Pew research study said they are "‘very confident’ that government agencies can keep their records private and secure.” Obviously, 94% are not very confident that the government can keep their personal records secure. 

Just another nail in the coffin of Americans’ trust in the American political class and the ineptness in which they operate all levels of government in this country. We have previously discussed other studies in this blog where pollsters showed that confidence in Washington and Congress is at all time low and that the majority of American view the government itself as the largest danger to the country. The safekeeping of personal citizen records just reinforces this disgust with Washington.

2) Speaking of disgust, this story is surely one to disgust anyone who pays taxes. Two Minnesota men have been arrested and charged with financial fraud for using their Federal college loan money to purchase airline tickets to travel to the Middle East to join ISIS.

The indictment of the two alleges that Hamza Ahmed, 20 years old, and Hanad Mustafe Musse, 19 years old, have been charged with financial aid fraud for purchasing airline tickets on Nov. 8, 2014, from New York’s John F. Kennedy Airport to Europe, using more than $1,000 in federal college financial aid.

According to the Minneapolis Star Tribune:

Ahmed used his aid money to purchase a flight to Istanbul, Turkey, authorities say. Musse used similar funds to buy a ticket to travel to Greece. From those two destinations, authorities say the pair then planned on heading to Syria. Ahmed had actually boarded his flight when he was ordered off the plane by officers from the U.S. Customs and Border Protection.

I am pretty sure that using taxpayer money to join a terrorist organization is not allowed under the Federal student loan guidelines. What is really scary is that these two guys got caught. How many other “students” have used taxpayer money to join ISIS and have not been caught? Another example of Federal spending out of control and being wasted in yet another original and disgraceful manner.

3) The most popular blog post we have ever done highlighted the wasteful spending by the U.S.Navy. The Navy spent about $300 million to build two Navy ships almost to completion and then decided to spend another $10 million to scrap them without every getting a single day of us out of them. That post can be accessed at:

Well, the Navy is back at it again, wasting taxpayer money with seemingly no government or Congressional oversight to control it. According to a recent report by Bloomberg, the second Navy aircraft carrier being built in the Ford class is now about to exceed the spending cap that was established by Congress. Specifically:
  • The new carrier will go at least $370 million over the cap according to a Pentagon audit.
  • The current overall estimate for the new carrier is a whopping $11.9 billion, one carrier, vs. the original cap estimate of $11.5 billion.
  • And this is not a hard, final estimate since the audit personnel are still waiting for final Navy estimates, implying it could change and go down (unlikely) or go up further.
  • To complete the build out, the Navy now has to either go back to Congress to get the cap increased and more money released or reduce the fighting capabilities of the ship.
  • If there is any good news is the fact that the first Ford carrier cost over $12 billion to build, a number that was 22% above the original estimate. At least this second carrier is less than that if that is any consolation.
Two issues here. First, has any government cost estimate ever been hit correctly or are we constantly being low balled in government projects just to get approval and then the bait and switch happens after the work and investment has begun? Getting tired of being played for a fool on most, if not all, government projects and programs.

Second, do we really need to be building expensive $12 billion Navy ships when the major issue facing us from a national security perspective is sitting in the deserts of the Middle East, far away from and sea or ocean? What is really needed is a long term strategic plan to identify our long term security risks and then tailor our defense budgets to those risks, which may or may not include a lot of $12 billion Navy ships.

Unfortunately, long term strategic planning has never been a political class asset or capability.

4) Obviously, Washington politicians have not done a good job when it comes to competent financial management. Medicare, Medicaid, Social Security, food assistance, and thousands of other Federal government programs manage to waste hundreds of billions of taxpayer dollars every year. The reality that we have a sky high national debt of over $18 TRILLION also proves that financial management skills are definitely lacking in Washington.

But those skills are also lacking at the state political class level also. Despite being over five years out of a recession, more than half of the state governments are still in some level of financial crisis:
  • According to a recently released report from Standard & Poor’s (S&P) Global Credit Portal, many states are still in financial stress or crisis mode: “Six years after the recession ended, many U.S. states are hard pressed to balance budgets because of a sluggish recovery and their own policy decisions. The fiscal fragility raises questions about how they will weather the next economic downturn.” 
  • Thirty two states are currently facing budget shortfalls in either fiscal year 2015 or 2016. 
  • The S&P report states that many of these shortfalls are manageable but raises the issue if there are shortfalls while the economy is in recovery mode, what happens when the next downturn hits, especially considering that the national economy shrunk in the first quarter of 2015.
  • And some states are truly in crisis with Kansas, New Jersey, and Pennsylvania having all been hit with credit downgrades in the past year or so.
  • A main component of the states’ budget woes is the heavy pension obligations they have put themselves in for retired and future retired state workers. According to the S&P report, the size of those obligations will be a defining factor in the future credit rating of state governments.
So not only will taxpayers see growing pressure and revenue shortfalls from the Federal government, which cannot get its fiscal house in order, that pressure could be intensified at the state government levels as those state politicians also show they have very limited skills when it comes to managing a budget in a growing economy, never mind an economy that will eventually turn negative at some point in the future. And you all know that their ineptness means higher taxes for the rest of us to cover their mistakes.

Note: thanks to the wonderful website, Bankrupting America, for the previous two stories of political class insanity and details.

That will do it for today’s insanity. College students using taxpayer money to fund their terrorist trips, a complete loss of faith in government’s ability to protect our interests and personal information, a Navy that still cannot manage a budget requirement, and state politicians that are not much better than their Federal counterparts when it comes to budget management. As always, more insanity tomorrow.

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