Why does virtually everything the government does cost more than we’re initially told?
In 2009, for instance, I warned that Obamacare would be much more costly than advertised, so I certainly wasn’t surprised several years later when the numbers began to climb.
Heck, I narrated an entire video warning that this would happen.
There are probably an infinite number of reasons why government programs wind up being needlessly expensive, but I think most of them fall into these four broad categories.
1. Government is inherently inefficient and wasteful (obvious to anyone who’s ever been stuck in a motor vehicles department).
2. Government doesn’t solve problems, and its failures are used as an excuse to increase budgets (a version of Mitchell’s Law).
3. Bureaucrats who produce cost estimates fail to incorporate behavioral effects (people acting in ways to take advantage of government largesse).
4. Politicians deliberately understate costs in hopes of tricking taxpayers into supporting their schemes (yes, we’re shocked that they lie).
These are some of the thoughts that went through my mind when I looked at this chart on estimated disability expenditures over time. As you can see, the government routinely underestimates the cost of the programs.
It goes without saying, of course, that the 2010 projection will be wildly inaccurate. The disability rolls have exploded during the Obama years.
But at least we’re not Greece, where you can actually get disability handouts for being a pedophile. In the United States, you have to do something far less offensive (like being a 30-year old who likes wearing diapers) to scam the program.
That is nothing compared to the myriad glowingly optimistic assumptions and flawed methodologies in their long range projections.An entrepreneur critiqued the long range projections as if they were a business plan, questioning assumptions, here:
http://www.politicsdebunked.com/article-list/ssaestimates
and found them sadly wanting. BLS projects labor force participation rates going down when they project them going up, and many other oddities. IN addition to merely an overoptimistic GDP forecast, In doing their variation of low, high and medium costs they give the implication they can project GDP out to 2090 more accurately than it is measured (given statistical GDI/GDP discrepancy as an indicator of potential measurement error), and more accurately than any government agency has for even 2 years in the future. The page critiques last year’s forecast, it hasn’t been updated for this years which still shows the same flawed methodologies.
Unfortunately it was done by a busy entrepreneur concerned about the country who didn’t find time to spread the word well enough, not a policy analyst with media connections.
I will add one more item to that list of reasons: FRAUD. For some reason, nobody thinks its a crime to steal from the government. I guess that may be because we all feel we are ripped off by the government to start with. So, when they get the chance many take what they can. And others don’t really think that badly of them- at least not like they stole from a private citizen.
\Having worked in Fraud management for a period of time, I can tell you that most 3rd-party payer systems have in the ballpark of 30% fraud, so add that amount to any government program to begin with. After all, in a billion dollar program- who is going to miss a measly million dollars? It’s only a tenth of a percent.
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