May, 2014 Poltiical Class Insanity, Part 4: Spending More But Getting Less, The Obscene Cost Of Regulation, And Destroying Good Ammunition

This is our fourth and probably not last post this month in our monthly series on political class insanity. At the beginning of every month, we review the insanity, lunacy, idiocy, and wasteful spending and programs of the American political class. Having done this for the past five years, we are continually amazed at how inept and incompetent our politicians are today with our wealth, our freedom, and quality of life.

1) The first several instances of insanity today comes to us from the wonderful website, Bankrupting America. In a previous insanity post several months ago, we discussed how in 2013 the Obama administration had issued over 3,000 new Federal regulations, almost 10 a day for every day of the year.

The obvious problems with such a performance is threefold:

1. Forcing businesses to comply with ten new regulations everyday takes away from business owners’ ability to grow their business and thus, grow the economy and economic opportunities for Americans.
2. At some point, the ever growing mountain of regulations becomes self defeating since they are too numerous to know or too numerous to comply with.
3. And if these thousands of new regulations are so important, why were they not identified in previous Presidential administrations? Could it be that we have gotten to a point that government bureaucrats are making up regulations just to justify their government existence and large compensation packages?

And now Bankrupting America has identified a fourth reason why so many regulations are so stupid and dangerous. A new study conducted by the Competitive Enterprise Institute (CEI) found that the average US household pays nearly $15,000 a year in regulatory costs as a result of the thousands and thousands of government regulations. 

If this estimate is accurate, this means that in 2013, the average consumer spent 23% of their household income to pay for just the Federal government’s regulatory burden. Obviously, state government and local government regulations place an additional burden on U.S. household incomes and wealth. 

The CEI study was entitled, titled “Ten Thousand Commandments 2014,” and it found that:

• In 2013, Federal regulation costs reached $1.863 trillion. 
• This is more than the GDPs of Canada or Australia. 
• In 2013, Congress passed only 51 laws but that resulted in 3,659 new rules and regulations, a ratio of 72 new regulations for each law that was enacted.
• Federal regulations burden each household with almost $15,000 in costs each year which is more than what an average household spends on every other household budget item except housing - more than health care, food, transportation, entertainment, apparel, services, and savings. 
• Even worse, according to the CEI, 63 Federal departments, agencies and commissions have more regulations in development.
• The study also showed that small businesses pay more in per-employee regulatory costs than larger firms. According to CEI, “Firms with fewer than 20 employees pay an average of $10,585 per employee, compared to $7,755 for those with 500 or more employees.” These costs are costs that cannot be used to expand business opportunities, which in turn expand the economy and economic opportunities for Americans.

Look, some regulations are necessary to protect the safety and welfare of citizens, that is one of the few legitimate fucntions of government, But adding 10 new Federal regulations every day proves that the political class and the government it oversees has no clue as to what are critical safety needs and what is bureaucratic idiocy and redundancy. And it is quite possible that this idiocy and redundancy are what has stifled economy growth for the entire length of the Obama Presidency.

2) Also from Bankrupting America, in late April, 2014, USAToday reported that the Pentagon plans on destroying more than $1 billion worth of ammunition that otherwise could still be used. According to a Government Accountability Office (GAO) report, the GAO found that the different armed services for the Defense Department have ammunition inventory systems that cannot share data directly. 

Only the Army uses the standard Pentagon format to report their ammunition stockpile, while the Air Force, Navy and Marine Corps operate under different and obsolete formats. The GAO suggests this leads to waste from buying new ammunition, while usable stockpiles exist.

Sen. Tom Carper, chairman of the Homeland Security and Governmental Affairs Committee stated, “We simply cannot afford this type of waste and ineffectiveness. The (Pentagon) has a responsibility to efficiently manage its ammunition stocks, not only because it is important to be fiscally responsible, but also because our antiquated ammunition inventory systems can shortchange our war fighters and compromise their ability to complete their mission.” Could not agree with you more, Senator, what are you going to do about it? 

Our armed forces have been around for over two centuries. Computers have been around for over sixty years. We pay the Pentagon hundreds of billions of dollars every year. Given these factors, is it asking too much of the Federal government and the Washington political class to have a few databases that can count and not waste billions of dollars in perfectly good ammunition?

3) Another Bankrupting America update comes from an editorial piece that recently ran in The Hill publication. The editorial discussed a recent study from the Mercatus Center that examined the true root causes of poverty in America and how to attack this chronic problem. 

The study found that there are two simple truths about poverty: poverty arises from joblessness, and government spending doesn’t reduce poverty, two pretty simple ideas that seem lost on the Washington political class. The study identified laws such as the Affordable Care Act and minimum wage legislation that are government programs with good intentions in an ideal world (everyone gets health care, low-wage earners receive higher wages), but in reality lead to greater rates of joblessness and poverty. 

Additionally, consider a quote directly form the study itself, a quote that examines the insanity of how politicians waste our wealth on failing programs:

Throwing more government dollars at this problem won’t solve it. Despite record spending on programs to help the needy, there were a record 46 million Americans in poverty in 2012. Federal spending alone on these programs was $750 billion in the 2011 fiscal year, up more than 30% from 2008.

Let’s do some simple math to put these numbers in perspective: at $750 billion a year, with 46 million Americans in poverty, if we could somehow divide up the $750 billion and just send a check to every American living in poverty, each one of those people would get a check for over $16,000. A family of four would get a check for over $64,000, more than the median household income of every U.S. household. That is how insanely inefficient and ineffective our politicians are when it comes to helping Americans in poverty. 

The money to help them is there, the delivery of that support is pathetically poor. And that $16,000 per person does not include poverty support from state and local governments.

The study concludes that the root of problem lies in the labor market. The majority of Americans living in poverty between the ages of 18 to 64 were unemployed, and only 11% had full-time employment in 2012. According to the editorial, as long as the government continues to pursue policies that discourage people from working or businesses from hiring (see the regulations insanity discussed above), we’ll continue to see high rates of unemployment and consequently, high rates of poverty.

The real problem is that there does not appear to be anyone in Washington who is bold enough and bright enough to break this cycle of wasting taxpayer wealth on poverty programs that do not reduce poverty. As a result, more Americans fall into poverty while anti-poverty programs spend more and more money. Only in Washington could this idiotic combination continue to exist for decades, spending more to get less.

That will do it for today but more insanity will come forth tomorrow. If interested in actually ending the insanity, please consider joining our effort to impose term limits on all politicians at:

www.howmuchworsecoulditget.com

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:

Term Limits Now: http://www.howmuchworsecoulditget.com
http://www.reason.com
http://www.cato.org
http://www.robertringer.com/
http://www.youtube.com/watch?v=08j0sYUOb5w

The Political Class: When It Comes To The Post Office, A Day Late and $5.5 Billion Short

If you had not heard, the U.S. Postal Service is in very dire shape as laid out in the September 6, 2011 Associated Press article:

• Postmaster General Patrick Donahue recently warned Congress that the Postal Service is on the brink of financial default.
• If Congress does not act by September 30, the Postal Service will default on a Congressionally mandated $5.5 billion payment to the U.S. Treasury.
• If no Congressional action is taken, about a year from now the Post Office could run out of money to pay its operating expenses.
• The Postal Service lost more than $8 billion last year despite having cut 110,000 jobs and closed smaller Post Office locations.

Other reports have reported that email and other electronic communications options have steadily reduced the amount of first class mail over the past several years. This has placed financial burdens on the Postal Service which is faced with a declining revenue stream but high fixed costs of physical post office locations, vehicles that go out everyday regardless of how much mail needs to be delivered, and employee unions that severely limit layoffs.

Although there are long term structural and market head winds for the Postal Service, the current short term crisis is really a Congressionally instigated problem. In 2006, Congress mandated that the Postal Service create a fund to start prefunding the medical benefits of employees for the many decades out.

In other words, Congress wanted large upfront payments from the Postal Service's annual operations budgets to fund the future medical benefits of employees that have not even been hired yet, or possibly not even born yet. This fund would start funding employee medical benefits starting in 2017 and be the sole source of money for those benefits.

However, Congress severely missed the forecast of how much money could be put away by the Postal Service in light of its declining revenue and declining market size. Also, according to the article, this is the only Federal government agency that is required to prefund its medical costs decades into the future.

Two observations on this whole mess, one complimentary and one critical. From a complimentary perspective, it appears that some people in the Post Service actually understand the root causes of the agency's problems. Postmaster General Patrick Donahoe understands that he has a huge fixed cost problem with a permanently declining revenue stream.

He and others in the Postal Service want to shut down 3,700 more Post Office locations, further cut the workforce by 220,000 employees, eliminate Saturday mail delivery, withdraw from the Federal retirement system and set up and manage its own retirement systems, get back $6.9 billion from the Federal government that it claims it overpaid into the current government retirement systems, and adjust union contracts for future flexibility in staffing. All good, solid, and appropriate actions in light of the current situation. Best of luck to Mr. Donahoe.

Of course, the critical comments, as always, are reserved for our politicians. Consider some quotes and opinions from members of Congress that were quoted in the article:

• Senator Joe Lieberman - "We must act quickly. The U.S. Postal Service is not an 18th century relic, it is a 21st century national asset, but times are changing rapidly now and so, too, must the Post Office."
• Senator Susan Collins: She is quoted as stating that "the Postal Service supports a $1.1 trillion mailing industry employing more than 8 million people in direct mail, periodicals, catalogs, financial services, and other businesses."
• Senator Tom Carper: he stated that Congress needs to work on areas where agreement can be found.

Carper and Collins have introduced Postal Service reform legislation in the Senate and several other reform plans have been introduced in the House of Representatives. However, how fast can a Senate reform bill be approved, how fast can a House bill be approved, how fast can these two bill be reconciled, how fast can the President sign the reform bill, and how fast can the changes in a final bill be implemented? Given the speed, or lack of speed, track record of the political class, it does not appear like any reform legislation will be forthcoming any time in the next few weeks, not in time to avoid default on the required payment.

Let's review. According to our politicians, the Postal Service is a national asset, it supports a major part of the nation's advertising industry, and Congress needs to do something but is only at the start of the reform legislative process. So, why are we only a few weeks away from a Postal service default?

The political class should have known about this looming crisis long ago. It should not have been a surprise to them that Postal Service mail volumes were in a permanent state of decline. It should not have been a surprise to them that Postal Service revenues were in a permanent state of decline. It should not have been a surprise to them that legislation they passed in 2006 was going to overwhelm Postal Service operating revenues. They should have known but we are still only weeks away from a default.

Given that the Postal Service is a "national asset," it never should have come to this point of crisis and panic. But it did, as does just about any problem that confronts the political class. Failing public schools, lost war on drugs, subprime financial crisis, escalating health care costs, terrorist attacks, etc., problems are never anticipated in time, problems' root causes are never understood, and problems are never solved, or are solved in a panicky last moment in a suboptimal way, usually wasting taxpayer money in the process.

Step 34 from "Love My Country, Loath My Government" would address this type of institutional incompetence. Given the mess of an impending Postal Service default, Congressional members in both the House and Senate would be removed from any committee or subcommittee post they sit on that had Postal Service oversight and responsibility, according to Step 34. That is the only way to get their attention and force them to actually be accountable for their Congressional behavior.

One final thought. If our politicians are so concerned about saving this national asset, why did they spend five summer weeks and the entire month of August on vacation? I guess it is not such a national asset to our politicians if their vacation time is more important than this national asset.

Lesson learned: if you have anything to mail, do it soon before this national asset is a day late and $5.5 billion short.

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