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Posts Tagged ‘Waste’

The politicians, bureaucrats, lobbyists and interest groups in Washington are hyperventilating that the federal gravy train may get sidetracked for a day or two by a shutdown fight between Republicans and Democrats.

I’m not sure why they’re so agitated. After all, the shutdown is really just a slowdown since only non-essential bureaucrats are sent home. And everyone winds up getting paid for those unplanned vacations, which is why the bureaucrats I know are crossing their fingers for a lengthy confrontation.

But that describes what may happen when the new fiscal year begins tomorrow. What’s been happening in recent days, culminating today, is a feeding frenzy of end-of-the-fiscal-year wasteful spending.

Here are some details from a Washington Post expose.

This past week, the Department of Veterans Affairs bought $562,000 worth of artwork. In a single day, the Agriculture Department spent $144,000 on toner cartridges. And, in a single purchase, the Coast Guard spent $178,000 on “Cubicle Furniture Rehab.” …All week, while Congress fought over next year’s budget, federal workers were immersed in a separate frantic drama. They were trying to spend the rest of this year’s budget before it is too late. …If they don’t, the money becomes worthless to them on Oct. 1. And — even worse — if they fail to spend the money now, Congress could dock their funding in future years. The incentive, as always, is to spend. So they spent.

If you’re a taxpayer, you’ll be especially delighted to know that the “use it or lose it” spending orgy is so intense that federal contractors have to cater lunches for their sales staff. Can’t have them away from their desks, after all!

It was the return of one of Washington’s oldest bad habits: a blitz of expensive decisions, made by agencies with little incentive to save. Private contractors — worried that sequestration would result in a smaller spending rush this year — brought in food to keep salespeople at their desks. Federal workers quizzed harried colleagues in the hallways, asking if they had spent it all yet. …“Use it or lose it” season is not marked on any official government calendars. But in Washington, it is as real as Christmas. And as lucrative. …In 2012, for instance, the government spent $45 billion on contracts in the last week of September, according to calculations by the fiscal-conservative group Public Notice. That was more than any other week — 9 percent of the year’s contract spending money, spent in 2 percent of the year.

The IRS may win the prize for the most egregious example of last-minute waste.

In 2010, for instance, the Internal Revenue Service had millions left over in an account to hire new personnel. The money would expire at year’s end. Its solution was not a smart one. The IRS spent the money on a lavish conference. Which included a “Star Trek” parody video starring IRS managers. Which was filmed on a “Star Trek” set that the IRS paid to build. (Sample dialogue: “We’ve received a distress call from the planet NoTax.”)

But it’s not just tax collectors who flush our money down the toilet in creative ways.

One recent study, for instance, found that information technology contracts signed at year’s end often produced noticeably worse results than those signed in calmer times. …they listed dumb things they had seen bought: three years’ worth of staples. Portable generators that never got used. One said the National Guard bought so much ammunition that firing it all became a chore. “When you get BORED from shooting MACHINE GUNS, there is a problem,” an anonymous employee wrote.

Impressive examples of waste, though I confess I’m curious about the part about ammo and the National Guard. Does this mean bullets are like milk and have to be fired before an expiration date?

Beats me, but at least someone in the government acknowledged that (at least up to a point) it’s cool to fire a machine gun. Maybe that person should hook up with the Texas cop who likes tanks.

Oh, and you’ll be happy to know that spendaholic bureaucrats and crafty interest groups keep track of time zones so they can squander money until the very last second.

On Monday, Richer’s people will sell until midnight. Then they will keep selling. “Money rolls across the continent,” the feds say. Cash not spent in Washington might be spent by federal offices in California in the three hours before it is midnight there. When it is midnight in California — 3 a.m. in Washington — they will keep on. There are federal offices in Hawaii, after all. And it will still be three hours until midnight there.

Makes me think that we may need a slogan for the bureaucracy. Perhaps this modification of the Postal Service’s unofficial motto: “Neither snow nor rain nor heat nor gloom of night – nor even different time zones – stays these bureaucrats from spending every possible penny of other people’s money.”

But let’s close on an upbeat note. Whether you give credit to the Tea Party, to Republicans, to gridlock, or to Obama, the good news is that the federal government in the past two years has been wasting money at a slower rate.

So taxpayers can smile…or at least not frown as much. The bureaucracy and contractors may be throwing a party today, but not with the same reckless abandon they displayed between 2001 and 2010.

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What do you do if you’re part of a government bureaucracy that has been caught red-handed engaged in sleazy, corrupt, and (almost surely) illegal targeting of Americans for their political beliefs?

But before you answer, keep in mind that your bureaucracy also has been exposed for wasting huge amounts of money at lavish conferences. What’s the ideal way of dealing with the fallout from that scandal as well?

The answer is simple. Even though you and your pals already are paid more than the peasants in the private sector, give yourself and your cronies giant bonuses!

I’m not joking. Here are some excerpts from an AP report.

The Internal Revenue Service is about to pay $70 million in employee bonuses despite an Obama administration directive to cancel discretionary bonuses because of automatic spending cuts enacted this year, according to a GOP senator. …“The IRS always claims to be short on resources,” Grassley said. “But it appears to have $70 million for union bonuses…” Three congressional committees and the Justice Department are investigating the targeting of conservative groups. And key Republicans in Congress are promising more scrutiny of the agency’s budget, especially as it ramps up to play a major role in implementing the new health care law.

Sort of makes this cartoon self evident.

IRS Trust Cartoon

Indeed, this motivates me to announce “Mitchell’s First Theorem of Government.”

I’ve explicitly expressed this sentiment in the past, and hinted at it here, here, and here.

Now it’s time to make it official.

Mitchell's First Theorem of Government

I hope you’ll agree this is a nice addition to Mitchell’s Golden Rule, Mitchell’s Bleeding Heart Guide, and Mitchell’s Law.

And maybe one of these will catch on and I can be famous like Art Laffer.

P.S. Enjoy some cartoons about the IRS scandals here, here, and here.

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Taxpayers all across America send lots of money to Washington, DC, in part because we’re supposed to believe that redistribution is a legitimate and desirable function of the federal government.

But this is a very perverse form of redistribution. All that money going to Washington helps subsidize a network of overpaid bureaucrats, fat-cat lobbyists, corrupt politicians, and well-heeled interest groups.

Indeed, as shown in this map, 10 of the 15 richest counties in the country are in the Washington metropolitan area.

One of those wealthy areas is Arlington County, VA, just across the river from Washington. Home to thousands of federal bureaucrats and other DC insiders, Arlington is similar to Washington in that there is a lot of wasteful spending. Sort of makes you wonder if local bureaucrats and federal bureaucrats ever meet at bars after work and brag about who wasted the most money that day?

Anyhow, here are some sordid details from a Washington Post story.

A wall made of etched glass opens the rear vista to newly planted landscaping. Embedded in the floor are heating elements intended to ward off the cold weather and keep winter-weary feet cozy. …And the price tag: $1 million. “Is this made of gold?” asked commuter Yohannes Kaleab, examining the concrete-and-stainless-steel bench that is part of the new, seven-figure bus shelter. “What?” asked Robin Stewart as he learned of the cost of the structure while waiting for a bus there last week. “That’s ridiculous. From a citizen, from a voter, whoever put that budget through needs to get their butt canned. It’s an outrage.” The “super stop,” which opened March 11, is the first of 24 new bus stops that will also accommodate Arlington’s long-planned streetcars. …It will shelter 15 people at a time.

Boondoggle Bus Stop

$1 million for this bit of glass, metal, and concrete?!?

That sounds kind of expensive, but we can be comforted by the fact that thoughtful public servants predict future savings.

“When you do a prototype, you end up heavily front-loading on the costs,” said Dennis Leach, Arlington’s transportation director.

So how much will taxpayers save on the remaining 23 stops? Well, the good news is that they won’t cost $1 million each. The bad news is that the government doesn’t exactly save a lot of money when doing bulk purchases.

“Our goal if at all possible is to do it for less,” Leach said. The county has budgeted $20.8 million for the remaining 23 stops, or about $904,000 for each one.

Gee, knock me over with a feather. The additional bus stops will “only” be $904,000!

That’s not counting cost overruns, which are an inevitable reality with government budgeting, so I think it’s safe to assume that the final cost will be far higher.

So why do governments waste money like this?

Part of the answer, of course, is that politicians are inherently wasteful. But there’s another factor at play. Politicians are especially wasteful when they can spend money that isn’t collected from their own taxpayers.

And readers from other parts of America doubtlessly will be overjoyed to learn that their paying for a big chunk of this boondoggle.

Federal and state transportation money paid 80 percent of the costs.

With taxpayers outside of Arlington paying such a high share of the cost, we should think of ourselves as lucky that the bus stop didn’t cost $10 million!

But here’s the most amazing part of the story.

What’s the most important part of a bus stop? In theory, a bus stop can be nothing more than a sign indicating the spot where you should wait for a bus.

But if you’re going to build a structure, the most valuable feature – at least from the perspective of riders – is that you will be protected from the weather. So what sort of protection are riders getting as a result of this $1 million boondoggle? Meh, not so much.

…the bus shelter is “pretty, but I was struck by the fact that if it’s pouring rain, I’m going to get wet, and if it’s cold, the wind is going to be blowing on me. It doesn’t seem to be a shelter. It doesn’t really shelter you very much . . . you can get pretty soaked in two minutes.” Her opinion was shared by some on Columbia Pike trying it out.

Gee, isn’t this wonderful. Some contractors doubtlessly lined their pockets building this white elephant. Some consultants doubtlessly fattened their bank accounts with all the nonsense that is now part of the “planning” process.

But taxpayers, as usual, got the short end of the stick. They got taken for a ride, figuratively. And if they actually use the bus stop, they can get taken for a ride, literally, so long as they don’t mind getting wet.

P.S. And let’s not forget that Obama wants some more class-warfare tax hikes to finance more of this “investment.”

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I’ve been against the auto bailout from the very beginning because it was a corrupt payoff to lazy corporate fat-cats and an ossified union.

And when folks on the left say the bailout is a success, I explain that any industry can be propped up with a sufficiently large injection of other people’s money.

Now we have new data on how much “other people’s money” has been diverted. It’s a big number, and it seems to get bigger each time there’s a new estimate. Here’s part of a Reuters report.

The U.S. Treasury Department has said the auto industry bailout will cost taxpayers $3.4 billion more than previously thought. Treasury now estimates the 2009 bailout will eventually cost the government $25.1 billion, according to a report sent to Congress on Friday. That is up from the last quarterly estimate of $21.7 billion.

Sort of reminds me of the old joke about the lousy businessman who says he loses money on every sale, but he makes up for it with high volume.

Well, that incompetent businessman has a kindred spirit in the White House. Here’s some of what Politico reported.

President Obama, while villifying Mitt Romney for opposing the auto industry bailout, bragged about the success of his decision to provide government assistance… he said. “Now I want to do the same thing with manufacturing jobs, not just in the auto industry, but in every industry…”

Well, we can’t say we haven’t been warned. He wants to do the same thing in “every industry.” Well, according to the Bureau of Economic Analysis, there are 60 industries in America. At $25 billion each, that means $1.5 trillion.

Stimulus in action

By the way, Mickey Kaus explains that the government’s numbers are incomplete and that the actual damage is significantly higher. And this Reason TV video exposes some of the government’s chicanery.

P.S. If you’re in the mood for some satire, here’s a bailout form showing how you can become a deadbeat and mooch off the government.

P.P.S. Just in case you’re new to this blog and don’t know my history, rest assured that I’m also against Wall Street bailouts.

P.P.P.S. Ethical people should boycott GM and Chrysler, particularly since these companies are now handmaidens of big government.

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It gets my blood boiling that the crowd in Washington is talking about raising our taxes when the budget is so riddled with excess spending. Here are two stories that illustrate the waste, fraud, and abuse that is pervasive in the federal budget.

Our first example is about unemployment benefits fraud. I’ve noted on several occasions (including this very amusing cartoon) that the main problem with unemployment benefits is that they lure people into long-term joblessness and dependency. That gets me angry in my role as an economist. As a taxpayer, though, I get upset that 10 percent of the funds (that’s just what the government admits, so the real figure surely is higher) are squandered because of fraud. Here’s some info from an AP report.

A nationwide crackdown is coming for people fraudulently drawing unemployment payments — those who were never eligible and workers who keep getting checks after they return to work — a $17 billion benefits swindle last year alone, say federal officials. …As much as 30 percent of the wrong payments in 2010 went to people who had returned to the workforce but continued to claim benefits, according to Dale Ziegler, deputy administrator for the Office of Unemployment Insurance at the U.S. Department of Labor.

Our second example comes from a news report in West Virginia, and it deals with the weatherization program (one of the flagship components of Obama’s failed stimulus scheme). You won’t be surprised to learn the program has been a farce.

Federal audits are turning up misspent taxpayer dollars in a $5 billion stimulus program aimed at lowering the utility bills of disabled, poor and older Americans by making their homes more energy-efficient. In West Virginia, which received $38 million in weatherization funds, some of the money went for lobbying, to consultants who did little work and to recipients with connections to state officials who are doling out the funds, the Energy Department’s inspector general found. In one case, West Virginia paid $25,000 to a lawyer for writing two sentences stating that weatherization contracts had been reviewed, reportedly after four hours’ work at a state office, according to a report analyzing how the federal stimulus money was used. A $20,000 consulting fee was paid to the former director of the state’s weatherization program after he left the job in May 2009 even though there were no specific work requirements set for the consulting contract. …more than half of weatherized homes that were re-inspected needed to be redone because of faulty work, the report said. Meanwhile, $2,500 was spent on lobbying in Washington – even though such use is expressly forbidden – to “get the word out” that there wasn’t enough funding to administer stimulus programs, it said.

These stories aren’t even the tip of the iceberg. They are a few tiny crystals in one snowflake sitting on the top of the tip of the iceberg. The politicians want more revenue so they can maintain this corrupt scam.

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Since I’ve spent the past 25 years analyzing government, I’m used to spectacular levels of waste and incompetence. Examples of pork such as “$27 light bulbs” and the “turtle tunnel” barely cause me to raise an eyebrow.

It takes something really amazing to grab my attention, so I’m almost grateful to Ike Leggett, the head bureaucrat of Maryland’s Montgomery County. He has restored my faith in the extreme foolishness of the political class with a proposal that would require bums to get a panhandling license from the government.

Montgomery County Executive Ike Leggett is pushing for a state law that would allow the suburb to ban all roadside solicitation without a permit.

Just think of the new bureaucracy that could be created! Imagine all the new patronage jobs, the new forms that would be required, and the new leases to be signed!

Best of all, think of how much fun it will be to fleece taxpayers to pay for this nonsense. Other bureaucrats and politicians will be jealous of Ike for this new racket.

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Very few things that happen in Washington are legitimate functions of the federal government. I’ve already posted about the need to dismantle the Department of Transportation and send it back to the states, but some things  shouldn’t even be handled by state and local governments. Housing is a perfect example. There should be no role for government in building or subsidizing housing, period.

But I’ll be happy if we can simply get rid of the Department of Housing and Urban Development in Washington. This $53 billion turkey should be the top target for GOP reformers.

Fealty to the Constitution should be the only reason lawmakers need to abolish HUD, but if they’re looking for some tangible examples of how the Department squanders money, J.P. Freire of the Washington Examiner opines on the issue, citing some devastating findings in a report from the Center for Public Integrity.

In the more than 3,000 public housing agencies nationwide funded by the Department of Housing and Urban Development, and particularly inside the 172 that HUD considers the most troubled, ABC News and the Center for Public Integrity found a struggle to combat theft, corruption, and mismanagement. According to the report, one official embezzled $900,000 and bought a mansion. Other funds went to support sex workers. In other words, this is a perfect illustration of why recommending cuts to such assistance programs is not heartless but actually wise — waste is rampant:

The problems are widespread, from an executive in New Orleans convicted of embezzling more than $900,000 in housing money around the time he bought a lavish Florida mansion to federal funds wrongly being spent to provide housing for sex offenders or to pay vouchers to residents long since dead. Despite red flags from its own internal watchdog, HUD has continued to plow fresh federal dollars into these troubled agencies, including $218 million in stimulus funds since 2009, the joint investigation found.

These are horrific examples of government waste, and they are tailor-made for soundbites and blog posts, but waste, fraud, and corruption are not the real issues. HUD should be abolished even if every penny of the budget could be accounted for. If Republicans can’t get rid of HUD, voters should get rid of Republicans.

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Considering they could have sat on their hands and relied on unhappy voters to give them big gains in November, I’m not too unhappy about the House GOP’s “Pledge to America.” Yes, it’s mostly filled with inoffensive motherhood-and-apple-pie language, but at least there’s some rhetoric about reining in excessive government. After eight years of fiscal profligacy under Bush, maybe this is a small sign that Republicans won’t screw up again if they wind up back in power. That being said, I was a bit disappointed that the GOP couldn’t even muster the courage to shut down Fannie Mae and Freddie Mac, the two corrupt government-created entities that bear so much responsibility for the housing mess and subsequent financial crisis. The best the GOP could do was to say “Since taking over Fannie Mae and Freddie Mac, the mortgage companies that triggered the financial meltdown by giving too many high risk loans to people who couldn’t afford them, taxpayers were billed more than $145 billion to save the two companies. We will reform Fannie Mae and Freddie Mac by ending their government takeover, shrinking their portfolios, and establishing minimum capital standards.” Is it really asking too much for Republicans to simply say “The federal government has no role in housing and Fannie Mae, Freddie Mac, and the Department of Housing and Urban Development should be eliminated.” Heck, the GOP’s Pledge doesn’t even mention a penny’s worth of budget cuts for HUD. Here’s an excerpt from Peter Wallison’s Bloomberg column, which explains why Fannie and Freddie should be decapitated.

In a year when angry voters are demanding a reduced government role in the economy, it is remarkable that most of the ideas for supplanting Fannie Mae and Freddie Mac are just imaginative ways of keeping government in the business of housing finance. …This is pretty astonishing. One would think that something might have been learned from the recent past, when two New Deal ideas for government housing support–the savings and loan industry and the government sponsored enterprises, Fannie Mae and Freddie Mac–failed spectacularly. It cost taxpayers $150 billion to clean up the first and may cost more than $400 billion to resolve the second. …government policy that deliberately degrades loan quality or creates moral hazard will eventually cause devastation in the housing market. …Government involvement in housing finance is an invitation to disaster. As illustrated by the S&Ls and GSEs, no matter how such a system is structured, government support will hide the real risks.

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Apologies to Star Wars fans for the title, but it seemed very fitting considering the profound amoral mentality of the lobbyists who have launched a public relations campaign to defend earmarks. The key part of the story is excerpted below for your reading pleasure, but let’s focus on the “best” defense of earmarking. I’ve talked to some Republican politicians who argue the practice is legitimate because it means that elected officials rather than faceless bureaucrats are deciding how money is being allocated. That sounds semi-legitimate, but it overlooks three key problems.

1. Earmarking facilitates higher spending. The politicians on the Appropriations Committees allow other members to insert special requests (earmarks) – but only if they agree to vote for the underlying bill. This “log-rolling” practice makes it much more difficult for fiscally responsible members to convince their colleagues to support smaller budgets.

2. Earmarking is naked corruption. In the majority of cases, earmarks are inserted at the request of campaign contributors. In some cases, the contributors are lobbyists representing clients. In other cases, the contributors are the actual earmark beneficiaries. In either case, the process accurately could be described as bribery.

3. Earmarking supports programs and activities that should not exist. The “bridge to nowhere” became a symbol of the earmarking process, but the underlying problem is that members of the Alaska delegation focused on steering as many transportation dollars to their state as possible when they should have been fighting to get rid of the Department of Transportation.

Almost everybody in Washington loves earmarks. Politicians get to raise campaign cash. Lobbyists get rich charging clients. Special interests get money they haven’t earned. Congressional staff facilitate the process so they eventually can become rich lobbyists. The only losers are taxpayers and the Constitution. Anyhow, here’s the nauseating excerpt:

Lobbyists who pursue congressional earmarks are planning a public-relations campaign to defend the practice, as voters signal they no longer want lawmakers to direct millions of federal dollars to pet projects back home. The Ferguson Group, one of the largest earmark lobbying shops in Washington, is seeking donations from other appropriations lobbyists to establish a group that would promote the benefits of earmarks through a media campaign, according to documents obtained by The Hill. …“We have decided to form an informal coalition, tentatively called the Earmark Reform and Education Coalition, with the overall goal being to foster a rational conversation about earmarking among all interested parties, so that we can preserve what works and reform what does not.” …A third option is to partner with the American League of Lobbyists (ALL), according to Ferguson’s memo. Dave Wenhold, ALL’s president and a partner at Miller/Wenhold Capitol Strategies, said the organization has not decided on whether to join the campaign, but he defended earmarks as “the most transparent and accountable form of funding.”

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Since the United States is the biggest funder of that bevy of kleptocrats and moochers known as the United Nations, it is especially painful to read stories about the rampant corruption that characterizes that international bureaucracy and its various divisions. Here’s a typical story about waste and fraud from The American:

How pervasive are the problems at the World Food Program, the largest hunger relief agency in the world and the United Nations agency responsible for food aid? It’s a $2.9 billion question—the amount of direct aid disbursed by the WFP. A significant part of its budget comes from U.S. contributors, and USAID coordinates some of its work through the WFP. It’s been a month since the leaking of a scathing evaluation of WFP’s Somalian relief program written by the UN Monitoring Group on Somalia. The body, created by the UN Security Council, alleges that three Somali businessmen who held about $160 million in WFP transport contracts were involved in arms trading while diverting the agency’s food aid away from the hungry. A New York Times report also claimed food was being siphoned off by radical Islamic militants and local UN workers. …Somalia is not the WFP’s only controversy, only its most recent and most public. Its operation in Ethiopia, which is one of the largest recipients of food aid in the word, is reportedly in disarray, with the transport companies controlled by the country’s authoritarian government at the center of the controversy. According to the U.S. State Department, in 2008 only 12 percent of food aid (most of it overseen by the WFP) made it to its intended recipients in the poverty-stricken eastern region. The trucking situation is little better in Afghanistan, where reports suggest that WFP is paying two to three times more than commercial rates, taking large chunks out of the $1.2 billion, three-year relief effort. The WFP has admitted that it inflated its shipping costs in North Korea by funneling business through dictator Kim Jong Il’s government. In each case the WFP has denied the magnitude of the problem. But the responses miss the point. Why hasn’t the WFP, which portrays itself as a model of transparency, opened its books so the international community can exercise appropriate accountability and oversight? …U.S. citizens concerned about the use of their tax dollars abroad may find it equally hard to discover how NGOs awarded grants by USAID are spending their money. I filed a Freedom of Information Act request with USAID in May 2009, requesting copies of all NGO project budgets financed with American taxpayers’ money during the second half of 2008. Almost a year later, USAID has still not released these documents.

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This Associated Press story really bolsters my confidence in the public sector. I can’t wait for geniuses like this to be in charge of determining what health care procedures are acceptable:

Fifteen phony products – including a gasoline-powered alarm clock – won a label from the government certifying them as energy efficient in a test of the federal “Energy Star” program. Investigators concluded the program is “vulnerable to fraud and abuse.” A report released Friday said government investigators tried to pass off 20 fake products as energy efficient, and only two were rejected. Three others didn’t get a response. The program run by the Energy Department and Environmental Protection Agency is supposed to identify energy-efficient products to help consumers. Tax credits and rebates serve as incentives to buy Energy Star products. But the General Accountability Office, Congress’ investigative arm, said Energy Star doesn’t verify claims made by manufacturers – which might explain the gasoline-powered alarm clock, not to mention a product billed as an air room cleaner that was actually a space heater with a feather duster and fly strips attached, and a computer monitor that won approval within 30 minutes of submission.

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Here’s a story to warm the hearts of struggling taxpayers around the nation. Washington, DC, is one of the few spots in the nation where income is climbing. According to the Wall Street Journal, “Personal income in 42 states fell in 2009, the Commerce Department said Thursday. Nevada’s 4.8% plunge was the steepest, as construction and tourism industries took a beating. Also hit hard: Wyoming, where incomes fell 3.9%. Incomes stayed flat in two states and rose in six and the District of Columbia.” Serfs in flyover country will also be delighted to learn that a new survey finds that a majority of America’s 10-richest communities are now suburbs of Washington, DC. To be fair, not all of the wealth in places such as Loudoun County is because of a bloated and overpaid bureaucracy. Some of it is because of the fat-cat lobbyists who work with the bureaucrats to funnel your tax dollars to special interest groups. I’m not sure if that will make you feel better, but here are the details from the Forbes survey:

…most Americans still aren’t ready to brag about their paychecks. Except, perhaps, in Loudoun County, Va., where median household incomes are higher than anywhere else in the country. This affluent suburb of Washington, D.C., where families take home a median $110,643 annually, tops our list of America’s 25 richest counties. …It’s not surprising that workers in Loudoun do well. The federal government generates a wealth of jobs, keeping unemployment in the D.C. metro area at a low 6.2% (the national average is still near 10%). The best-paid workers from D.C. take their money home to Loudoun, where jobs have grown 4% between the second quarter of 2007 and the second quarter of 2009… Like Loudoun, a number of the country’s wealthiest households are tightly concentrated in counties around the nation’s capital. Six of the richest counties lie on the outskirts of Washington: Fairfax County, Va., Arlington County, Va., Stafford County, Va., Prince William County, Va., Charles County, Md., and Alexandria City, Va.

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The Union Leader newspaper in New Hampshire has a correct view of the absurd $130 million “census awareness budget,” inlcuding the reprehensible decision to squander $2.5 million on an ad during the Super Bowl. It’s bad enough that the Census has evolved into an exercise in nanny-state intrusion, rather than the simple head-counting exercise as our Founders envisioned. But it adds insult to injury (or should it be injury to insult?) that our tax dollars are being wasted to publicize the exercise. Anybody want to guess whether the public relations agency that got the contract for this boondoggle donated money to Obama?

Did you see that Super Bowl ad for the U.S. Census? If not, too bad, because you paid $2.5 million for it. Maybe you can catch it on YouTube. If you think that’s outrageous, it gets worse. The $2.5 million is just 1.9 percent of the government’s $130 million “census awareness budget.” Oh, yes. Just in case you didn’t know that Census Bureau workers will be coming to your home this year to do what they have done every 10 years for more than two centuries, Washington is spending $130 million of your money to tell you. …It’s also par for the course in a Washington so awash in money that $130 million isn’t considered serious spending, and yet the government still manages to outspend revenues by $1.6 trillion.

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I’m not sure if this is better or worse than the infamous Bridge to Nowhere, but the U.K. government has been spending millions of dollars in a futile effort to exterminate a duck. And because they are relying on government bureaucrats to kill the ducks, the cost-per-dead-duck is well over $750. I would suggest that they simply offer regular citizens a $50 bounty on each dead duck, but that might not work since the government has banned private gun ownership. Not surprisingly, this foolish program was instigated by the bureaucrats at the European Commission. Here’s a report from the Daily Telegraph:

For five years it has been subject to a ruthless European Union-inspired campaign of extermination. But now the ruddy duck could be about to have the last laugh. …The cull was supposed to have been completed this year, but despite the killing of 6,200 ruddy ducks, the population is starting to increase again. …And while the British government has been trying to kill off its population, ruddy ducks in Holland and France have grown in number, undermining the British effort. …Lee Evans, from the British Birding Association, said: “It is a pointless farce. They will never be able to kill every last bird. …“The cull has been a complete and utter waste of money because the government would have to kill every one and there is no possibility of that.” …The five year project to kill off the ruddy duck, co-ordinated by the Department for Environment, Food and Rural Affairs (Defra), is due to finish this summer. But 687 birds are still alive in the UK, up from an estimated 400 to 500 two years ago. …Andrew Tyler, director of Animal Aid, said: “This has been a completely hopeless slaughter. The whole premise is nonsense, as well as the logistics, and it has also been extraordinarily expensive. “The birds from Britain don’t seem to be going to Spain anyway, but even if ruddies are breeding with white headed ducks, that is a natural hybridisation that occurs in many birds.” …At one shoot earlier this month, an estimated 12 Defra officials, in eight boats, killed a total of 14 ducks on Ibsley Water, near the New Forest. …Half the cost of the UK’s £3.3 million ruddy duck cull has been met by the EU, with the other half provided by Defra. It follows earlier research by the department into eradicating ruddy ducks, said to have cost a further £1.3 million.

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Isn’t it nice to know that our tax dollars were used for a study showing that – gasp! – that people are not totally honest when using online dating sites. Maybe the next taxpayer-financed study can investigate whether it’s hotter at the equator. The Washington Post reports on this boondoggle (though only about the results, of course, not about the waste of taxpayer money):

It won’t surprise anyone who’s tried online dating to learn that eight out of 10 people lie somewhere in their profiles, according to a series of studies funded in part by the National Science Foundation. And it didn’t surprise Jeffrey T. Hancock, a communications professor at Cornell University who conducted the research over the last few years and explained the findings in a NSF webcast earlier this month. Fabrications “have been driving human behavior for millennia,” Hancock says in a phone interview. “It’s new bottles, in a way, but very old wine.”

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You would think after decades of figuring out new ways of stealing other people’s money, the politicians would have developed a certain expertise. But this story from the Washington Times shows that the incompetence in Washington is quite remarkable:

When he earmarked $100,000 in taxpayer spending to go to Jamestown’s library, Rep. James E. Clyburn meant for it to go to the library in Jamestown, S.C., which is in his district. But in the bustle to write and pass the $1.1 trillion catchall spending bill, Congress ended up designating the money for Jamestown, Calif. – 2,700 miles away and a town that doesn’t even have a library. “That figures for government, doesn’t it,” said Chris Pipkin, who runs the one-room library in Jamestown, S.C., and earlier this year requested $50,000, not the $100,000 that Congress designated, to buy new computers and build shelves to hold the books strewn across the room. The library is just one of more than 5,000 “earmarks,” or pork-barrel spending projects, totaling $3.9 billion, tucked inside the report accompanying the catchall spending bill Congress sent to President Obama this week. …The bill, which funds most domestic federal agencies for fiscal 2010, includes projects such as $200,000 to study elderly Irish immigrants in New York, $1 million to add plumbing to houses in Maryland and $487,000 to build office space so Winston-Salem, N.C.

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The clever folks at the Taxpayers Alliance in the United Kingdom have a new video documenting some of the wasteful European Union programs that are imposing a heavy burden on average people.

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While perusing Don Boudreaux’s superb blog, I read a letter-to-the-editor he noticed in the Washington Post. A Virginia woman was upset about the bloated salaries of the parasites who work for the federal government. She said:

If you drive through Northern Virginia, you will find nearly entire neighborhoods of $500,000 to $900,000 homes owned by government workers or contractors. Then you can drive five streets over and find $200,000 to $400,000 homes owned by those who pay the salaries for those government employees. It’s a fascinating distribution of wealth. Most government employees and contractors could not earn more than $60,000 on the free market. Their only chance to make that kind of money comes from having an employer that not only never has to make a profit but can forcibly take money through taxation.

Just in case you think this woman doesn’t know what she’s talking about, here is an increasingly famous chart put together by my Cato colleague, Chris Edwards:

Overpaid bureaucrats

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There’s really no much commentary needed for this story. President Obama’s so-called stimulus proposals was designed to shovel money out the door in hopes that consumers would somehow jumpstart the economy. The Boston Herald reports that the politicians in Washington were so anxious to buy votes…oops, I mean to “stimulate” consumer spending…that they even sent a couple of thousand checks to criminals:

One day after the Herald reported some surprised Bay State inmates – including murderers and rapists – were cashing in $250 stimulus checks, federal officials revealed the same behind-bars bonus was mailed to nearly 4,000 cons nationwide. …It’s all part of the massive American Recovery and Reinvestment Act of 2009 – and what is becoming an accounting nightmare for red-faced feds. …Nationally, about 2,200 inmates who were mailed checks are entitled to the payments because they were not in prison and lawfully collecting Social Security at some point between November 2008 and January, Richardson said. The federal goverment is examining whether the payment was due to the remaining 1,700 inmates because they were not identified as prisoners in the Social Security system, Richardson said.

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In a new mini-documentary released by the Center for Freedom and Prosperity, I explain several of the ways that government spending hinders economic growth.

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The Wall Street Journal opines about the Department of Housing and Urban Development extorting a local community into engaging in a perverse form of racial/social engineering. Apparently, the bureaucrats in Washington are upset that people self-segregate on the basis of income (which the pencil-pushers magically equate with racism even though well-to-do minorities have no problem living in nicer neighborhoods. The real lesson here, though, is that the Department of Housing and Urban Development should be dismantled. It is not the job of the federal government to subsidize housing. The nanny-state social engineering is just the insult added to injury:

The bad news is that Westchester County, the sprawling suburb just north of New York City, has been pressured to settle a federal lawsuit brought by liberal activists over “affordable” housing. The worse news is that the Obama Administration wants the settlement to be a template for the rest of the nation. The three-year-old lawsuit alleged that Westchester had accepted federal housing funds but failed to provide enough affordable housing and reduce segregation in some of its wealthier communities, such as Scarsdale and Chappaqua, home to Bill and Hillary Clinton. In February a U.S. District Court judge in Manhattan ruled that Westchester’s integration efforts were insufficient, and rather than risk losing out on more federal money, county officials struck a deal with the Department of Housing and Urban Development this week. Within seven years, the county will construct or acquire 750 homes or apartments, 630 of which must be located in communities that are less than 3% black and 7% Hispanic. “We’re clearly messaging other jurisdictions across the country that there has been a significant change in the Department of Housing and Urban Development, and we’re going to ask them to pursue similar goals as well,” said HUD Deputy Secretary Ron Sims. …Blacks have long populated Westchester towns such as White Plains, New Rochelle and Mount Vernon, and the Administration is assuming that low percentages of racial and ethnic minorities in places like Scarsdale are a result of discrimination. Yet there’s no pattern of fair housing complaints or other evidence showing that black families with incomes similar to whites in more upscale neighborhoods were barred from those jurisdictions. History also demonstrates that racial and ethnic minorities have incurred far less resistance when they move into neighborhoods where they can afford to live. The black and Latino suburban population is increasing steadily as the household incomes of those groups rise. But social engineers who want to force the issue risk creating more problems than they solve. Most people believe in integrated neighborhoods provided they’re a consequence of genuine choice, not the government deciding where it wants people to live.

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John Fund explains in the Wall Street Journal that many politicians not only take vacations at our expense, but also line their pockets with taxpayer-provided per-diem allowance. The problem apparently has gotten worse since the Democrats took over, but this is a bipartisan problem. The longer people stay in Washington, the more corrupted they become:

The total cost for congressional overseas travel is never made public because the price tag for State Department advance teams and military planes used by lawmakers are folded into much larger budgets. Members of Congress must only report the total per diem reimbursements they receive in cash for hotels, meals and local transport. They don’t have to itemize expenses—a convenient arrangement since most costs are covered by the government or local hosts. Some trips subtract some hotel and meal costs from the per diems, others do not. “The policy is completely inconsistent,” one House member told me. Total per diem allowances (per person, including staff) can top $3,000 for a single trip. Unused funds are supposed to be given back to the government, but congressional records show that rarely happens. …The House’s official handbook requires that lawmakers use regular U.S. airlines “whenever possible, unless such service is not reasonably available.” But congressional records show members routinely take military planes to London, Paris and other well-served locales. Members can fly for free with their spouses on military aircraft.

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Professor Dwight Lee has an excellent column in Investor’s Business Daily explaining how government subsidies increase the total cost of health care by reducing the out-of-pocket cost for consumers:

Government expansion of the medical system has increased health care costs because it has ignored the distinction between marginal and average costs of health care. …Government expansion in medical insurance, while claiming to reduce costs, has consistently increased the average cost of health care by reducing its marginal cost. The marginal cost has been lowered with a combination of government subsidies and low-deductible health insurance, leaving direct payment for additional insurance an ever smaller percentage of the total cost. As the marginal cost for medical insurance declined, individuals quite rationally gave less thought to cost and consumed more medical care. Of course, this drove up the average cost of medical insurance, most of which was being paid for with increasing taxes and premiums. But people recognized that their extra consumption had no noticeable effect on their taxes or insurance premiums. They also knew that any savings in taxes and premiums resulting from shopping more carefully would be captured almost entirely by others. So while people complained as average costs increased, they continued making their medical decisions in response to lower marginal costs. Politicians respond to public complaints about increasing medical costs, but they invariably do so by trying to disguise the costs with more subsidies and convince voters that any costs not covered by reductions in waste and fraud will be paid with higher taxes on the rich. The medical plan receiving the most attention in Congress is no exception.

Professor Lee specifically shows how the government’s tax preference for employer-provided care has distorted the health care market – especially for insurance. Unfortunately, he notes, the President’s plan makes a bad situation even worse:

The right reason for taxing the value of health insurance is that leaving it untaxed motivates people to pay for medical care with before-tax dollars by purchasing low-deductible policies through their employers. While this makes sense for each employee, it guarantees higher average medical cost for everyone by reducing the marginal cost paid by most Americans — those with employer-provided health insurance. Taxing health insurance would eliminate the tax advantage of low-deductible policies. The shift to high-deductible policies, with lower premiums, would confront people with higher marginal medical costs and motivate more cost-conscious medical decisions. This would reduce the average cost of health care and lead to further reductions in insurance premiums without government mandates and rationing. Unfortunately, Obama’s sudden interest in taxing employer-provided health insurance is motivated by the desire to finance the large increase in subsidies central to his medical plan. By lowering the marginal cost of medical insurance, these subsidies would offset the cost-reducing effect of taxing employer-provided health insurance. If Obama really wants to lower costs in ways consistent with consumer choice, and also stimulate economic activity, he should recommend taxing health insurance and using the revenues to reduce marginal tax rates. This would result in two marginal changes that would generate improvement in economic productivity. First, higher marginal costs for medical insurance would reduce the average cost. Second, higher marginal returns to creating wealth would increase prosperity.

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As my Cato colleague Chris Edwards has documented, government programs and contracts inevitably cost much more than first projected. This pattern of inaccuracy exists for several reasons, including the fact politicians have an incentive to lowball cost figures. But a big reason for the mistaken numbers is that government budget estimators do not understand the degree to which people will alter their behavior to get their hands on other people’s money. I explained recently on Fox Business network that this means any government-run health care scheme will be much more expensive than we are being told today.

Our friends at Reason TV address this issue in a very compelling three-minute video that looks at how government programs – especially for health care – have cost several times more than politicians claimed when the legislation was first adopted.

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I have no objection to extravagent consumption so long as people are spending their own money. But when elitists in Washington want to enjoy “lifestyles of the rich and famous” by using our money, that is an outrage. Politicians already get to vote themselves hefty salaries and gold-plated benefit packages. They already pass laws and exempt themselves. Is it too much to ask that they fly commercial aircraft when going on their junkets? Heck, maybe if they had to deal with the mindless bureaucrats at the TSA, we might get some common-sense reforms so that going to the airport was not like a visit to the motor vehicles department. Rollcall.com has the story:

Last year, lawmakers excoriated the CEOs of the Big Three automakers for traveling to Washington, D.C., by private jet to attend a hearing about a possible bailout of their companies. But apparently Congress is not philosophically averse to private air travel: At the end of July, the House approved nearly $200 million for the Air Force to buy three elite Gulfstream jets for ferrying top government officials and Members of Congress. …The Gulfstream G550 is a luxury business jet, which the company advertises as featuring long-range flight capacity that “easily links Washington, D.C., with Dubai, London with Singapore and Tokyo with Paris.” The company’s promotional materials say, “The cabin aboard the G550 combines productivity with exceptional comfort. It features up to four distinct living areas, three temperature zones, a choice of 12 floor plan configurations with seating for up to 18 passengers.”

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A fallacy (one of many) of Keynesian economics is that it incorrectly assumes that consumption is the cause of economic growth rather than the result of economic growth. This leads advocates of this misguided theory to adopt policies designed to get people to spend more – even though economic growth (by definition) is the result of people earning more income. This absurd logical mistake is evident in the cash-for-clunkers debacle, as I explain to Foxnews.com:

…critics have a different view. “This is not good for economic growth,” said Dan Mitchell, a senior fellow in economics at the Cato Institute. “You’re simply getting people to use existing income to spend on cars. Getting people to spend more of their money on cars mean they will have less money to spend on other things.” Economic growth, Mitchell argued, is not getting people to spend more money on products, it’s getting them to have more income. Mitchell also believes the program is counterproductive for the auto industry down the road because the acceleration in car purchases will precede a “big downturn in the future.” “Giving someone a shot of heroin is not good for their long term health,” he told FOXNews.com. The program, Mitchell added, shows that the government is “incompetent.”

The Wall Street Journal has the same perspective, noting that the policy is not a success – unless one defines success as getting people to buy things with other people’s money:

What the clunker policy really proves is that Americans aren’t stupid and will let some other taxpayer buy them a free lunch if given the chance. The buying spree is good for the car companies, if only for the short term and for certain car models. It’s good, too, for folks who’ve been sitting on an older car or truck but weren’t sure they had the cash to trade it in for something new. Now they get a taxpayer subsidy of up to $4,500, which on some models can be 25% of the purchase price. It’s hardly surprising that Peter is willing to use a donation from his neighbor Paul, midwifed by Uncle Sugar, to class up his driveway. On the other hand, this is crackpot economics. The subsidy won’t add to net national wealth, since it merely transfers money to one taxpayer’s pocket from someone else’s, and merely pays that taxpayer to destroy a perfectly serviceable asset in return for something he might have bought anyway. By this logic, everyone should burn the sofa and dining room set and refurnish the homestead every couple of years.

Last but not least, the CEO of Edmunds, the company that publishes leading car-buying guides, has a column in the Wall Street Journal explaining that even auto companies may come to regret this policy since the net effect seems to be that consumers either postponed or accelerated purchases that would have occurred anyway:

…it’s not clear that cash for clunkers actually increased sales. Edmunds.com noted recently that over 100,000 buyers put their purchases on hold waiting for the program to launch. Once consumers could start cashing in on July 24, showrooms were flooded and government servers were overwhelmed as the backlog of buyers finalized their purchases. Secondly, on July 27, Edmunds.com published an analysis showing that in any given month 60,000 to 70,000 “clunker-like” deals happen with no government program in place. The 200,000-plus deals the government was originally prepared to fund through the program’s Nov. 1 end date were about the “natural” clunker trade-in rate.

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Reprehensible (but Sadly Typical) Example of Government Sleaze

President Obama’s pork-filled spending bill certainly has not done much to help the economy (not a surprise since bigger government means a smaller private sector), but it has done a great job of lining the pockets of politicial insiders. The Denver Post has a story about Colorado’s governor using a no-bid contract to funnel a pile of money to his former law partners:

Gov. Bill Ritter turned down a $75-an-hour offer from the Colorado attorney general’s office to handle legal matters regarding the disbursement of federal stimulus funds, instead hiring his former law partners for up to six times that cost. …Ritter hired Hogan & Hartson through a no-bid contract. So far, the firm has been paid $40,000 from federal funds. Although Colorado has laws governing the circumstances under which the state can contract, the governor and other elected officials are exempt. In 1941, the state legislature buried a sentence in an unrelated section of the law that essentially permits elected officials to disregard procurement rules — including a requirement to seek multiple bids — when entering into contracts. …The March contract between the firm and the governor’s office is vague. A letter attached to the contract says Hogan & Hartson will represent the governor’s office in analyzing the recovery act and help ensure that the state “receive and distribute its full share” of the funds. Other documents that may shed more light on the work the firm is doing for taxpayers were withheld by the governor’s office on the grounds of “attorney-client privilege.”

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Timeless Wisdom from Walter Williams

Back in the 1980s, the irreplaceable Walter Williams produced a documentary based on one of his more controversial books, The State Against Blacks. Someone has done a great service and posted the documentary on Youtube.com. Everything Walter said back then is true today – and just as applicable. The only discordant note is that when Walter refers to “welfare reform,” it is important to understand that he is talking about the expansion of handouts and centralization in the 1960s and 1970s, not the pro-market welfare reform of the 1990s.


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Our Tax Dollars Are Being Used to Lobby for More Government Handouts

The First Amendment guarantees our freedom to petition the government, which is one of the reasons why the statists who wants to restrict or even ban lobbying hopefully will not succeed. But that does not mean all lobbying is created equal. If a bunch of small business owners get together to lobby against higher taxes, that is a noble endeavor. If the same group of people get together and lobby for special handouts, by contrast, they are being despicable. And if they get a bailout from the government and use that money to mooch for more handouts, they deserve a reserved seat in a very hot place. This is not just a hypothetical exercise. The Hill reports on the combined $20 million lobbying budget of some of the companies that stuck their snouts in the public trough:

Auto companies and eight of the country’s biggest banks that received tens of billions of dollars in federal bailout money spent more than $20 million on lobbying Washington lawmakers in the first half of this year. General Motors, Chrysler and GMAC, the finance arm of GM, cut back significantly on lobbying expenses in the period, spending about one-third less in total than they had in the first half of 2008. But the eight banks, the earliest recipients of billions of dollars from the federal government, continued to rely heavily on their Washington lobbying arms, spending more than $12.4 million in the first half of 2009. That is slightly more than they spent during the same period a year ago, according to a review of congressional records. …big banks traditionally are among the most active Washington lobbying interests in the financial industry, and the recession has done little to dent their spending. …Since last fall, companies receiving government funds have argued that none of the taxpayer money they were receiving was being spent on lobbying. …Six of the eight banks spent more to try to sway lawmakers in the first half of 2009 than over the same period in 2008, before the worst of the financial crisis took hold. The eight banks include: Citigroup, JPMorgan Chase & Co, Bank of America, Goldman Sachs, Morgan Stanley, Wells Fargo, State Street and Bank of New York Mellon. JPMorgan was the top spender, at $1.76 million in the second quarter and $3.07 million in first half of the year. That is roughly 20 percent more than the bank spent on lobbying in the first half of 2008. Citigroup, which has yet to repay any of the $50 billion in bailout money it has received, was the second highest, at $1.67 million in the quarter and $2.92 million in the first half. A spokesman for Citigroup declined to comment. …American International Group, the insurance firm crippled by trades in financial derivatives that received roughly $180 billion in bailout commitments, closed its Washington lobbying shop earlier this year. AIG continues to spend money on counsel to answer requests for information from the federal government, but the firm said it does not lobby on federal legislation.
The most absurd part of the story was the companies claiming that they did not use tax dollar for lobbying. I guess the corporate bureaucrats skipped the classes where their teachers explained that money is fungible. The best part of the story was learning that AIG closed its lobbying operation, thought that does not mean much since AIG basically now exists as a subsidiary of the federal government. The most important message (which is absent from the story, of course) is that the real problem is that government is too big and that it intervenes in private markets. Companies would not need to lobby if government left them alone and/or did not offer them special favors. Indeed, that was the key point of my video entitled, “Want Less Corruption: Shrink the Size of Government.”

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Taxpayers May Not Appreciate this Joke

After almost 25 years in Washington, I thought I had reached the point where I was incapable of being shocked by how government wastes our money, but promiscuous profligacy in Washington is causing even my jaw to drop. The latest example comes from the Department of Treasury, which wants to use taxpayer funds to conduct a “Humor in the Workplace” program. The seminar supposedly will help particpants “alleviate stress” and “improve work-place relationships.” Gee, isn’t that wonderful. Maybe some IRS folks will go through this program so they can share some good jokes next time their applying the thumbscrews. Just in case you think this is a much-delayed April Fool’s joke, here is a link to the official government notice and a brief description of how they want to waste our taxes:

The purpose of this announcement is to seek qualified contractors with the capability to provide presentations for The Department of Treasury, Bureau of the Public Debt (BPD), Management Meeting with experience in meeting the objectives as described herein. The Contractor shall conduct two, 3-hour, Humor in the Workplace programs that will discuss the power of humor in the workplace, the close relationship between humor and stress, and why humor is one of the most important ways that we communicate in business and office life. Participants shall experience demonstrations of cartoons being created on the spot. The contractor shall have the ability to create cartoons on the spot about BPD jobs. The presenter shall refrain from using any foul language during the presentation. This is a business environment and we need the presenter to address a business audience.

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