Friday, February 3, 2017

Februrary, 2017, Part 3, Political Class Insanity: The Wall Is (Relatively) Cheap, Bait and Switch In Illinois, and The Economic Plight of Millennials

It has been several weeks since Donald Trump has been sworn in which means at some point in the future we may run out of material to talk about. With the demise of the Obama administration, eight years worth of wasteful and excessive spending for nothing in return, foreign affairs blunders, Obama Care disasters, and assorted other administration and government blunders and screwups might end with the onset of a new administration. Trump may usher in a new paradigm of government actions that are limited, effective, cost efficient, and protective of the Constitution. If so, then this blog would run out of material to discuss and would have to be shut down.

But I doubt it. Even if Trump is truly a different type of President, he is still fighting over 500 embedded and entrenched politicians in Congress and thousands and thousands of government bureaucrats who will not go peacefully into the night for the good of the country. I wish him well and hopefully he can fix at least some of the myriad of problems the American political class creates everyday but until then, enjoy the latest political class insanity from Washington and beyond:

1) There has been a lot of discussion recently on Trump’s plan to build a wall along the Mexican border to staunch the flow illegal immigrants, illegal drugs, human trafficking, and possible terrorist infiltration. Many people, mostly liberals, are going nuts over this concept, often using the excuse that it is a waste of money. And “the wall” will not be cheap, with Senate Majority Leader Mitch McConnell estimating a cost of between $12-15 billion House Speaker Paul Ryan putting the price tag at between $8-14 billion.

They certainly have a right to their opinions but if they find the cost of the wall excessive without having at least the same outrage with the following Federal government projects, then please do not bother to argue your cost viewpoint with me without any outrage to the following insanity, as outlined by Jeff Poor on January 27, 2017 for the Breitbart website:

- The American taxpayer has paid $22 TRILLION, according to an analysis done by Robert Rector of the Heritage Foundation, since the War On Poverty began in the 1960s under the Johnson administration. Fifty years ago the U.S. poverty rate was about 14%. Twenty two trillion dollars later, the U.S.Census Bureau puts the most recent poverty rate calculation at….14.3%.

That $22 trillion could have built over 1,400 border walls and at least we would have something to show for it. Right now, we have nothing to show for the $22 trillion, 50 year effort called the War On Poverty.

- The F-35 Stealth Fighter Jet Project has been going on for decades. Total research, development, and construction costs, as we have reported before, are likely over a trillion dollars already. Reuters reports that the cost now to build out the fighter jet program will possibly another $379 billion. The plane has been a colossal failure since day one, plagued with massive cost overruns, schedule delays, and malfunctioning operations. Just that $379 billion could have build about 125 border walls.

- The Federal government has a mind numbing budget annual budget of about $3.8 trillion. At that rate, it is spending about $7.2 million a MINUTE, another mind boggling, obscene number. This comes out to about $10.4 billion a DAY. Thus, building a wall at say $15 billion consists of about one and a half days of Federal government spending, less than .3% of the annual Federal budget.

- A 2015 Government Accountability Office (GAO) report found that in 2014 the Federal government made $59.9 billion in improper/criminal Medicare payments and $17.5 billion in improper/criminal Medicaid payments, a grand total of $76.4 billion in one year in just these two government programs. This is equivalent to about five border walls. And the assumption is that the border wall would be basically a one time cost with smaller annual maintenance requirements while the Medicare and Medicaid almost $80 billion is an annual, recurring waste of money.

And by the way, if you include all 122 Federal programs like the GAO analysis did, you will find that in 2014 the Federal government made $124.7 billion in improper and criminal payouts, up from $105.8 billion the year before. In other words, under Obama, the inefficiencies and ineffectiveness of the Federal government and the money it wastes was growing steadily year over year.

- The Federal government now spends about $1.7 billion a year to maintain vacant and unused Federal buildings around the country. Not only is there an annual recurring cost just to keep these unused buildings from falling apart from neglect and decay, tens of billions of dollars have probably been already spent on them to obtain the land and buildings that now lay unused, more than enough money to build multiple walls.

- The Littoral Combat Ship program was costly to research and incurred higher than expected costs to build, with total costs estimates now around $29 billion, about twice the cost of the wall. And there is serious concern in the military and in Congress if these ships are even worth building and having with one Senator, John McCain saying that we may need to stop building and paying for thee ships that are not combat worthy or needed...after $29 billion has been spent.

- And last but not least is the Earned Income Tax Credit Program, an IRS program that paid out $69 billion to 28 million taxpayers in 2015. But according to the Treasury Inspector General for Tax Administration, “The IRS estimates that 23.8 percent ($15.6 billion) of EITC payments were issued improperly in Fiscal Year 2015.” In other words, cleaning up just one year’s screw ups in the Earned Income Tax Credit program could pay for the one time costs of the wall.

Look, I am not saying the wall is a good idea or not. But if you are trying to condemn the wall because it costs too much, please consider focusing your anger at far worst wastes of Federal government money vs. an effort that does not show up in the rounding error of the Federal government over the years.

2) While the Federal government seems to have no problem spending and wasting incredible amounts of taxpayer money, the state of Illinois has the opposite problem: they are so financially strapped that while they continue to sell state lottery tickets to Illinois residents, they no longer pay off on winning lottery tickets that involve more than trivial amounts. 

Phil Velasquez, recently writing for the Chicago Tribune, reported that two Illinois lottery winners have had to file a Federal lawsuit against the state in order to collect their winnings. Rhonda Rasche, who's awaiting a $50,000 payout, and Danny Chasteen, who won $250,000, are the litigants who are seeking class-action status and the halt of lottery ticket sales. Since the state government never passed a budget, the state comptroller claims there is no legal authority to pay off winnings of over $25,000 until maybe some time in the future.

Ms. Rasche raises a very good point on the idiocy and unfairness of this bait and switch effort: "How the heck can they do this, and they're still selling tickets? If I was the one selling raffle tickets and I didn't pay, I would be sued or in jail or both." Her lawyer, Thomas Zimmerman, Jr. also makes some common sense points: "The lottery represents that you can win instantly. They fail to tell you as of July 1 they're not going to pay. But yet they continue to sell the tickets under those false pretenses."

According to the article, “The lawsuit names lottery Director B.R. Lane, the Illinois Lottery Control Board and Northstar Lottery Group as defendants. It seeks to force the lottery to pay winners of more than $25,000 with 5 percent interest and asks that the lottery be barred from paying its administrative or operational costs until the winners receive their prizes. The lawsuit alleges that dozens await more than $288 million in prizes.”

Reminds of the old saying: Government is just like the Mafia except the Mafia is profitable. Here we have the government shaking down lottery players with no ability to pay off the winners, classic bait and switch, classic political class insanity.

3) We have often reported on how Obama and the Washington political class have done a horrible job at supporting and creating robust economic growth. Despite spending over $800 billion on a (failed) economic stimulus program, enjoying record low energy costs, and enjoying trillions of fake dollars the Federal Reserve pumped into the economy, Obama could not leverage these tailwinds into anything better than these anemic economic results:

  • Annual economic growth never got close to the long term trend of about 3% a year.
  • Wages were more or less stagnant until the past six months or so during the entire length of the “Obama recovery.”
  • Job creation could not even keep up with adult population growth.
  • As a result, the labor participation rate is at 40 year lows, it has not been this low since the horrible stagflation days of the Carter administration.
  • Over 94 million adult Americans are out of the workforce.
  • More Americans over 65 years old are still in the workforce and the highest proportion of young American adults are still living at home since the Great Depression.
  • Jobs that were created during the Obama recovery tended to be part time, contract work, and in low paying economic sectors such as food services.
And now we can add the death of the American dream for today’s millennials to the above list of failures:

  • According to a Federal Reserve analysis, the median income of today’s millennials, $40,581, a full 20% lower than what Baby Boomers were earning at the same time in their lives, taking inflation into account.
  • Millennials have half the net worth, a lower home ownership rate, and drastically higher student debt vs. Baby Boomers at the same age.
  • College educated millennials have it a little better than the overall millennials average but they are barely doing better than high school educated Baby Boomers, indicating that a college education is less valuable than it was for Baby Boomers.
  • A recent study out of Stanford University found that Baby Boomers born in 1950 had a 79% chance of making more money than their parents while those born in 1980 had only a 50% chance of making more money than their parents.
Thus, Obama and the rest of the Washington political class have been able to create economic conditions where younger Americans, despite being much more educated, have higher student debt, have less of a chance of making more than their parents, and are earning far less than the Baby Boomer generation. Nice job Washington.

That will do it for today’s insanity: economic mismanagement, government bait and switch in Illinois, and wasteful government spending that dwarf the cost of a border wall. More insanity tomorrow.

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