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Posts Tagged ‘Government waste’

The Bureaucrat Hall of Fame, created to highlight government workers who go above and beyond the call of duty, is apparently such a prestigious honor that there’s been a strong competition between Americans and foreigners to engage in behavior that merits this great award.

Consider the U.S. bureaucrats who have earned membership so far in 2015.

The civil servant at the Patent and Trademark Office who was paid to shoot pool and drink beer.

The bureaucrat at the National Weather Service who pulled an impressive get-reclassified-as-a-consultant-for-a-lot-more-money scam.

A drone from the Commerce Department managed to combine porn downloading, obstruction of justice, overseas shopping trips, and not showing up to work.

Bureaucrats from overseas also have earned membership this year.

The French official who had a taxpayer provided car and chauffeur, yet still billed taxpayers for $44,000 worth of taxis.

Or the Indian bureaucrat who kept his job for more than 20 years even though he stopped going to work.

As I look at these 2015 honorees, I feel like the system is a bit unfair. Maybe it’s just me, but it appears that the foreign bureaucrats are more deserving than their American counterparts.

And I’m guessing that a senior-level bureaucrat at the Department of Veterans Affairs felt the same way. So he decided to take matters into his own hands.

Literally.

Here are some excerpts from a report in the Daily Caller.

…the Department of Veterans Affairs’ former top watchdog, resigned after being caught masturbating in the agency’s all-glass conference room in full view of people across the street, including school teachers at an education conference. …investigators confronted him with detailed instances of public masturbation in multiple states, according to a previously undisclosed report by the Department of the Interior inspector general and obtained by The Daily Caller News Foundation.

Obviously a very deserving member of the of the Bureaucrat Hall of Fame. And he’s definitely upped the ante on what it take to become a member.

For all intents and purposes, he’s thrown down the gauntlet to foreign bureaucrats: What can they do to…um…beat this?

But let’s set aside the U.S. vs. foreigners aspect of this issue and look more closely at our new honoree.

He apparently had lots of time on his hands (so to speak) because his office decided that it was okay for the Department to operate de facto death panels.

Sort of a trial run for Obamacare!

It was during Wooditch’s tenure as deputy inspector general that the VA IG first uncovered — then all but ignored — dozens of clues of the widespread patient wait-list manipulation that contributed to the deaths of dozens of veterans.

It’s also impressive that he got a promotion shortly after getting caught with porn on his computer.

He was caught with porn on his work computer in 2003, but VA officials only “counseled” him. Not long afterward, he was promoted to the top job.

Not surprisingly, he won’t face any penalties. Indeed, the net result is that he’ll go from being an overpaid bureaucrat to being an over-compensated retiree.

Wooditch retired with a federal pension without ever facing administrative discipline or criminal charges.

Though I don’t want to think what he’ll be doing with all this extra time on his hands.

And here’s a final excerpt.

IG agents also learned during their investigation of a separate incident…they were told, he made an “inappropriate advance” on his next-door neighbor as she was grieving her husband’s death. …“…she said Wooditch began to pose nude and masturbate in front of a window that was only viewable from her house” repeatedly, the report said. The woman…did have police warn him to stop. Wooditch lectured the police that he was a “high-level government employee.”

I think you’ll agree that it nicely captures the arrogance of the federal bureaucracy.

It’s the mindset that leads to these kinds of outrages.

P.S. Shifting to a different topic, I can’t resist an I-told-you-so moment.

There was a disagreement last year among advocates of smaller government about whether Doug Elmendorf, the then-Director of the Congressional Budget Office, should be replaced since Republicans were in full control of Capitol Hill.

I was one of those who argued a new Director was needed. Here’s some of what I wrote.

Elmendorf’s predecessor was a doctrinaire leftist named Peter Orszag. If Orszag’s policy views were a country, they would be France or Greece. By contrast, I’m guessing that Elmendorf would be like Sweden or Germany. In other words, he wants more government than I do, but at least Elmendorf basically understands that there’s no such thing as a free lunch. …That being said, while it’s much better to be Sweden rather than Greece, I obviously would prefer to be Hong Kong (or, even better, pre-1913 America).

The GOP leadership ultimately decided to replace Elmendorf.

It’s too soon to make any sweeping assessment of his successor, though early indications are somewhat positive.

But that’s not the point of this postscript.

Instead, I want to pat myself on the back for being right about Elmendorf. Now that he’s no longer at CBO, he’s come out of the closet and is openly pushing statist policies.

Here’s some of what he wrote earlier this year about “a fairer approach to fiscal reform.”

…the incomes of people across most of the income distribution have risen quite slowly, while incomes at the high end have risen rapidly. …There are a variety of ways to increase tax revenue for Social Security by imposing a payroll tax on income above the current-law taxable maximum. …this approach…does not offer a free lunch. …would reduce people’s incentives to work and save.

So the bottom line is that he recognizes his preferred policy (which is what Obama has endorsed) will hurt the economy, but his ideological support for redistribution and his myopic fixation on income distribution leads him to the wrong conclusion.

And here’s something else. The Hill reports he’s urging class-warfare tax policy.

Former Congressional Budget Office Director Doug Elmendorf on Thursday said the tax code should be changed so that the wealthy pay higher taxes…in a video released Thursday by the left-leaning Bookings Institution, where he is a visiting fellow.

Another example of his support for Obama’s preferred policies.

And another reason why those of us who favored a new person at CBO can take a victory lap.

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Here’s a simple rule. When a politicians says a new program will cost X, hide your wallet because it actually will cost three or four times as much. Or even more.

Obamacare is a particularly painful example from recent history.

Simply stated, politicians and bureaucrats routinely under-estimate costs because they figure once a project or program is underway, voters can be tricked into throwing good money after bad.

It happens all the time in Washington. And it happens in other nations as well.

And even though I’m a fan of decentralization, that doesn’t mean I’m oblivious to the fact that state and local governments are very capable of similar behavior.

Consider, for example, the streetcar project in our Washington, DC. The main problem is that taxpayers are getting reamed. The current price tag, according to a report in the Washington Times, is about $3 billion.

And what are taxpayers getting for that “investment”?

So far, based on a story in one of the city’s other newspapers, the Washington Post, they’re getting long delays.

In the early 2000s, an ambitious band of city officials set out to cut through the bureaucratic mire and launch a vast streetcar network that would be a model for the nation, eventually running 20 to 40 miles or more. The first leg was supposed to open in 2006. But as 2015 comes to a close, officials are scrambling toward their latest goal of opening a diminished, 2.2-mile streetcar line.

But major delays are just the tip of the iceberg.

The Post‘s report highlights how one small part of the project – a maintenance facility for the streetcars – has become symbolic of grotesque cost overruns and waste.

The District is spending three or four times what other cities have to build a maintenance facility for its fledging streetcar system… The “Car Barn” project was originally designed as a simple garage and rail yard for light repairs and storage, with some offices for staff. But it has ballooned in ambition and nearly tripled in cost — to $48.8 million. It will now include a number of pricey and unusual features, including grass tracks for parking the fleet of six streetcars and a cistern for washing them with rainwater. …The District says it…is projected to open in 2017 after long delays. Tucson spent $13 million. Cincinnati’s was $11.5 million. Seattle’s came in at $11.1 million.

I’m sure local taxpayers (plus taxpayers around the nation that also subsidized this farce) will be happy to know they paid for a solar roof and other useless quirks.

Here are some of the details on why costs exploded.

…the building has…become a teaching tool for how public projects can be saddled with immense new costs. The historic designation “prompted an immediate six-month stop-work order,” DDOT said, and required, along with the green building rules, numerous upgrades. Those included using stone and brick materials; adding a saw-toothed roof with skylights; and hiding a streetcar power supply under photovoltaic cells and behind “green screen walls.” …Among the other major additions was an intricate system of turf tracks and paving stones that allow rainwater to drip into an underground vault for storage and filtering before flowing toward the city’s storm-water pipes.

Though taxpayers may think the “drip” is the sound of their money being flushed down a toilet.

In 2011, under Mayor Vincent C. Gray (D), the District estimated it would spend $6.2 million on a maintenance yard and a temporary shelter — basically, a big tent. Then, with the temporary tuneup location in place, the permanent building, additional track and other work in the yard would be finished for an additional $10.7 million. …The yard-and-tent total grew to $10.4 million, DDOT said, including environmental work and hundreds of thousands of dollars to keep some Dean-Facchina workers on the job 12 hours a day, six days a week to speed things up. By last year, estimates for the second phase, including the permanent Car Barn, had risen to $24 million. In July, the city agreed to spend $38.4 million on this phase, bringing the total to $48.8 million. Among the unforeseen costs listed by DDOT are $1 million in storm drainage and $824,000 in “indirects.”

So what’s the bottom line?

Well, the late former Mayor of DC, Marion Barry, is not normally a credible source. And I’m not sure I trust any numbers that came out of his mouth.

But I suspect he ventured very close to the truth when he was quoted in a Washington Times story from 2014.

…the late former Mayor Marion Barry said D.C. taxpayers would be spending $2,000 to subsidize each ride, calling it “a streetcar to nowhere.”

In other words, it would have been cheaper to hire chauffeured limousines for the handful of people who will use the streetcar. Assuming, of course, it ever gets opened.

By the way, there must be something in the local water, because there’s a similar example of grotesque waste on the other side of the Potomac River.

But let’s not just pick on profligate local governments.

Never forget that the federal government is the real expert at waste.

National Review has a very depressing list of ways that Uncle Sam has been squandering our tax dollars.

Federal spending gets more ridiculous every year, and a new congressional report details 100 of the most egregious examples. Following in the footsteps of chronic-waste chronicler Tom Coburn, Oklahoma senator James Lankford published “Federal Fumbles” late on Monday afternoon. …Here are NR’s top-ten favorite — which is to say, most scoff-worthy and absurd — examples of how the government wastes your time, energy, and hard-earned cash.

Here are some of the highlights, though lowlights might be a better term.

…the Department of Defense…approved a $283,500 grant to monitor the day-to-day life of baby gnatchatchers. …the U.S. National Institutes of Health…announced it would grant some hapless grad student $48,500 to pen the definitive history of smoking in Russia over the past 130 years. …the National Science Foundation…gave Massachusetts Institute of Technology more than $400k to ponder the burning question: “Does media choice cause polarization, or does polarization cause media choice?” …five federal agencies alone spent $3.1 billion on workers placed on administrative leave in a two-year timespan. A lot of that cash — $775 million, to be exact — went to public employees banned from their desks for more than a month. …The National Park Service forked over $5,000 to Mars Hill University so it could make a documentary film about a local musician. …$65,473 to figure out what bugs do near a lightbulb…$35,000 for solar-powered beer.

To be sure, these items are just a drop in the bucket compared to entitlement spending.

And these examples of pork-barrel waste also are minor compared to all the supposedly non-controversial outlays that are part of the discretionary budget that funds various agencies and departments.

That being said, keep the above list in mind the next time some politicians says that we need more taxes to finance ever-bigger government.

And never forget that the real waste is when governments spend money on things that should in the private sector or civil society.

In other words, the real waste is about 80 percent-90 percent of what happens in Washington.

P.S. If you have a strong stomach, you can watch some short videos on government waste here, here, here, and here.

P.P.S. And some egregious additional example of waste can be perused here, here, and here.

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Advocates of limited government favor a small public sector because more resources in the productive sector of the economy translates into faster growth, more job creation, and higher living standards.

Statists, by contrast, favor big government for two main reasons. First, many of them belong to well-connected interest groups that have their snouts in the federal trough. Second, some of them sincerely think government spending “stimulates” an economy and/or “helps” people.

I want to address the latter group of statists, most of whom are well meaning.

I’ve learned over time that such voters generally don’t pay that much attention to economic arguments.

To the extent they sometimes favor small government, it’s because they think Washington wastes money. Indeed, I suspect a majority of voters would agree with P.J. O’Rourke that “giving money and power to government is like giving whiskey and car keys to teenage boys.”

Yet many of those voters (perhaps even including some of the ones that recognize that DC is riddled with waste, fraud, and abuse) can be persuaded to support bigger government. Having engaged in thousands of conversations with such people over several decades, I think they’re motivated by a desire to be part of a society that “cares.” So, regardless of Washington’s track record of exacerbating problems rather than solving them, these folks sometimes think more government is the right approach. Like second weddings, this is a triumph of hope over experience.

Today, at the risk of jumbling my analogies, let’s try to convince such people that you don’t want a second wedding if it means you’re getting hitched to an institution that is unavoidably wasteful and incompetent.

And we have some fresh eye-popping evidence. Here are some excerpts from an exposé published by the Washington Post.

…the government has spent more than $1 billion trying to replace its antiquated approach to managing immigration with a system of digitized records, online applications and a full suite of nearly 100 electronic forms. A decade in, all that officials have to show for the effort is a single form that’s now available for online applications and a single type of fee that immigrants pay electronically. The 94 other forms can be filed only with paper.

Amazing. After 10 years and $1 billion, the net result is a total cluster-you-know-what.

…officials at the Department of Homeland Security, which includes USCIS, were aware that the project was riddled with hundreds of critical software and other defects. …Only three of the agency’s scores of immigration forms have been digitized — and two of these were taken offline after they debuted because nearly all of the software and hardware from the original system had to be junked. ..A report last year from the DHS inspector general’s office said it sometimes took up to 150 clicks for employees to navigate the system’s various complex features and open documents.

So is the incompetent contractor (IBM) getting punished? Are any of the bureaucrats in charge of the project getting fired?

Of course not. This is government! So why you waste some money, that’s merely a prelude to wasting even more money.

This project, run by U.S. Citizenship and Immigration Services, was originally supposed to cost a half-billion dollars and be finished in 2013. Instead, it’s now projected to reach up to $3.1 billion and be done nearly four years from now.

By the way, the incompetence revealed in this story this is not an argument for immigration or against immigration.

My point is simply that governments have long track records of squandering other people’s money, with this story simply being another straw on the camel’s back.

Or maybe it would be better to describe it as another bit of dead weight financed by over-burdened taxpayers.

I don’t know if this will make anyone feel better, but other governments are similarly incompetent and foolish.

Here’s an example of government blundering from overseas. As reported by the UK-based Guardian, the European Commission just admitted that it has successfully process 0.00015 percent of refugees.

EU members states agreed in September to relocate 160,000 people in “clear need of international protection” through a scheme set up to relocate Syrian, Eritrean, and Iraqi refugees from the most affected EU states – such as Italy and Greece – to other EU member states. So far 116 people have been relocated, and only 1,418 places have been made available by 14 member states, according to data released on Tuesday by the European Commission.

Wow. It’s been a while since I was a student, but I remember that you need 70.0 percent for a C and 60.0 percent to avoid failing.

With that in mind, I wonder what sort of grade you get for 0.00015 percent? Is there such as thing as F-, though I guess Z- would be more appropriate.

Here’s a graphic from the article.

By the way, the EU’s incompetence at processing refugees is one issue. Another issue is whether European nations should be granting refugee status to hundreds of thousands (and eventually millions) of people from cultures that don’t assimilate very well.

And I imagine that refugee status in Europe means access to welfare, so the system presumably creates the same perverse incentives we find on the American refugee program.

But for today, I’m simply focused on the fact that government bureaucracies are spectacularly incompetent.

Yet there are still many people who want to give more power and money to politicians.

Let’s close with a serious point.

Unless you’re an anarcho-capitalist, there are some things you want government to do, and you want those things to be done well.

So how, given the natural incompetence of the public sector, can you get good (or at least acceptable) results?

The only feasible answer is to have small government, as Mark Steyn has explained with his usual dose of sarcasm. A bloated public sector guarantees slipshod performance everywhere. But if the federal government concentrates on just a few tasks, oversight and monitoring will be easier and it will be easier to weed out incompetence.

And this isn’t just theory. The European Central Bank has produced a measure of public sector efficiency and their research shows that smaller governments are much more competent at producing desired results.

P.S. Bizarrely, some folks acknowledge government incompetence but think the right solution is more power for government.

P.P.S. Some of this is common sense. What government do you think is more competent and effective, France with its big government or Switzerland with its medium-sized government? Where do you think government is more effective, Singapore with its small government or the United States with its medium-sized government?

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Since the Bureaucrat Hall of Fame is getting crowded, I’ve decided we need a system to limit new entrants.

So today we’re doing an experiment. We’ll look at two separate stories about lazy and overpaid bureaucrats, and the comments section will determine which one actually is most deserving of joining the Hall of Fame.

Let’s start in Italy, where Alberto Muraglia stakes his claim to membership. Here are some excerpts from a story in the UK-based Times.

Video footage of a policeman clocking in for work in his underpants before allegedly heading back to his bed has become the symbol of an embarrassing absenteeism scandal among council employees in San Remo, on the Italian Riviera. Alberto Muraglia, a pot-bellied, 53-year-old officer, was secretly filmed as he clocked on at council offices. He lives in the same building, a converted hotel, where he occupies a caretaker flat — allowing him to register his presence at work, and then go back to bed, it is alleged.

To be fair, our Italian contestant has an excuse for his truancy.

Though it’s about as plausible as the Groucho Marx quote, “Who are you going to believe, me or your own eyes?”

Mr Muraglia’s wife, Adriana, said the family had an alibi for every instance in which her husband was suspected of clocking in at 5.30am, opening the gates to the council building, and then returning to bed. “Some mornings, if he was a few minutes late pulling on his trousers, he would clock in in that manner and then get fully dressed immediately after and go off to work,” Mrs Muraglia told La Stampanewspaper. “Some mornings he may have forgotten, and he telephoned me to clock in on his behalf.”

In any event, Signor Muraglia is not the only bureaucrat scamming the system.

More than a hundred employees — 75 per cent of the council workforce — are under investigation for allegedly skiving off in the resort town…investigators…filmed employees swiping their time cards, and sometimes those of multiple colleagues, before turning tail and heading off to pursue other interests. One employee, filmed paddling a kayak on the Mediterranean, is alleged to have spent at least 400 hours away from his desk in the planning office, a dereliction of duty estimated to have cost San Remo council more than €5,600.

Though I have to say 400 hours away from his desk is chicken feed compared to the Italian doctor who worked only 15 days in a nine-year period.

And I like how the bureaucrats awarded themselves bonuses for their…um…hard work.

Eight of the suspected skivers shared a €10,000 productivity bonus last year.

Just like the IRS bureaucrats and VA bureaucrats who got bonuses for improper behavior.

I guess there must be an unwritten rule in government: The worse your performance, the higher your compensation.

Now let’s see how Alberto compares to our American contestant. As reported by the Contra Costa Times, former City Manager Joe Tanner is scamming taxpayers for a lavish pension, yet he’s asking for more on the basis of a shady deal he made with the City Council.

By working just two and a half more years, retired Vallejo City Manager Joseph Tanner boosted his starting annual pension from $131,500 to $216,000. He wants more, claiming he’s entitled to yearly retirement pay of $307,000. …he is now taking his six-year dispute to the state Court of Appeal. At issue is whether CalPERS must pay benefits on a contract Tanner and the Vallejo City Council concocted to boost his pension.

An extra $85,000 of pension for the rest of his life just for working 2-1/2 years?

Geesh, and I though the Philadelphia bureaucrat who is getting $50,000 of yearly loot for the rest of her life, after just three years of “work,” had a good deal. She must be feeling very envious of Mr. Tanner.

Yet Mr. Tanner isn’t satisfied.

Here’s the part that seems like it should be amusing, but it’s not actually funny when you realize that government employee pensions are driving states into fiscal chaos.

Ironically, Tanner was a critic of pension excesses. …Yet his personal spiking gambit was breathtaking. The case exemplifies how some top public officials try to manipulate their compensation to grossly inflate their retirement pay. …Tanner’s quest for another $90,000 a year, plus inflation adjustments, for the rest of his life is unreasonable.

Here’s how he schemed to pillage taxpayers.

His first contract with Vallejo called for $216,000 in base salary, plus a list of add-on items that would soon be converted to salary, bringing his compensation to $306,000. But when CalPERS advised that the amount of those add-ons would not count toward his pension, he insisted the contract be fixed. The result: His contract was amended. The add-ons were eliminated and his base salary was simply increased to $306,000, plus management incentive pay and other items that brought the total to about $349,000. If CalPERS used that number, his pension would have started at $307,000 a year. CalPERS says it was an obvious subterfuge. The amended contract was never put before the City Council at any public meeting. And there was never a truthful public explanation for it.

Of course there wasn’t a truthful explanation.

Whether bureaucrats are negotiating with other bureaucrats or whether they’re negotiating with politicians, a main goal is to hide details in order to maximize the amount of money being extracted from taxpayers.

By the way, the example of Mr. Tanner is odious, but it’s not nearly as disgusting as what happened in another California community.

Before inviting readers to vote, I want to make a serious point. Government employee pensions are a fiscal black hole because they are “defined benefits” (DB plans), which means annual payments to retirees are driven by formulas. And those formulas often include clauses that create precisely the perverse incentives exploited by Mr. Tanner.

The right approach is to reform the system so that bureaucrats instead are in a “defined contribution” system (DC plans), which basically operates like IRAs and 401(k)s. A bureaucrat’s retirement income is solely a function of how much is contributed to his or her account and how much it earns over time. By definition, there is no unfunded liability. There’s no fiscal nightmare for future taxpayers.

Now that I have that cry for fiscal prudence out of my system, I invite readers to vote. Does the shirking underwear-clad Italian bureaucrat deserve to join the Hall of Fame, or should that honor be bestowed on the scheming and hypocritical American bureaucrat?

P.S. While I think DC plans are inherently superior (and safer for taxpayers) than DB plans, I will acknowledge that some nations manage to run DB plans honestly.

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My first instinct, when arguing against higher taxes, is to pontificate about the negative impact of high marginal tax rates and punitive effect of double taxation on saving and investment.

Those are very legitimate concerns, and they’re the obvious things for an economist to highlight.

But I’m going to confess that my main motive for fighting tax increases is that I don’t think we should reward incompetent and feckless politicians by giving them more of our money.

I routinely cite horrifying cases of government waste and bureaucratic stupidity and it galls me to think that American families might have to sacrifice more of their income to the gaping maw of Washington.

And now I have more reasons to despise the political class. Check out these three additional examples of foolish waste.

The Washington Examiner reports that agents from the Drug Enforcement Administration got illegal bonuses after “partying” with prostitutes.

Drug Enforcement Agency officials linked to sex parties and prostitutes paid by drug cartels weren’t fired but rewarded with $95,000 in performance bonuses, according to a shocking new report from the Justice Department’s inspector general. What’s more, the bonuses weren’t allowed. …The report outraged House Oversight and Government Reform Committee Chairman Jason Chaffetz…”It is a disgrace that taxpayer dollars are being wasted on those who violate our trust and abuse their positions.”

I’m particularly impressed that they didn’t just hang out with normal prostitutes. These hookers were provided by the drug cartels!

I’m surprised they didn’t get free cocaine as well.

Our second story is from the Los Angeles Times, and it reveals that the Federal Air Marshall program is an ineffectual waste of money.

I realize “ineffectual waste of money” applies to most everything the government does, but this program must be uniquely wasteful.

…the federal air marshal program is mired in…allegations of misconduct and management turmoil, prompting some in Congress to question whether the multi-billion dollar experiment has outlived its usefulness. …At a price tag of $9 billion over the past 10 years, Duncan called the program “ineffective” and “irrelevant.”

I had no idea the government was squandering almost $1 billion per year on this empty gesture of security theater.

But I guess the costs add up with the Marshalls get to fly in first class while the taxpayers are stuck in coach.

Some air marshals have complained they feel they are merely “riding the bus” as they hopscotch around on domestic and international planes. …In addition, the agency, part of the Department of Homeland Security, has been hit recently with several scandals. In 2012 some agents were accused of setting up sexual liaisons to coincide with their work flights. …some Chicago-based marshals allegedly disguised themselves as pornography producers to hire prostitutes after some trips. …the program “has come to be a symbol of everything that’s wrong with the DHS, when 4,000 bored cops fly around the country First Class, committing more crimes than they stop.”

But not every Air Marshall was satisfied by first class travel and hookers.

“I hated every day of it,” said former air marshal Jay Lacson, who said he is suing after being fired for inappropriately releasing confidential job information. “I couldn’t stay awake. I got colds. You get complacent.” He added, “They don’t need the agency anymore.”

To complete a trifecta of brainless government waste, now let’s turn to the Equal Employment Opportunity Commission.

As recounted by my colleague Walter Olson, this bureaucracy sued a trucking company for failing to provide “reasonable accommodation” to Muslim truck drivers who didn’t want to deliver alcoholic beverages.

In 2013 the commission sued the Star Transport Co. in Illinois for failing to provide a reasonable accommodation to two Muslim truck drivers when it dismissed them for refusing to haul booze

Since the EEOC bureaucrats already have gone after a trucking company that wanted to weed out alcoholics (seemingly a prudent step), I briefly wondered whether these pinheads are trying to tilt the playing field in favor of air cargo and/or railroads.

But that assumes they know enough about investing to manipulate the market. But if they were that clever, they probably wouldn’t be languishing in the federal bureaucracy.

Instead, I think the EEOC simply wants to make sure it’s still recognized as America’s most clueless and malicious bureaucracy.

P.S. Since today’s topic is wasteful spending, I suppose it’s appropriate to share these excerpts from a report by the Daily Caller.

Entitlement spending accounts for most erroneous federal payments, and it’s only going to get worse, Comptroller General Gene Dodaro told Congress Thursday. “Improper” Medicaid, Medicare, and Earned Income Tax Credit disbursements made up 75 percent of all erroneous federal payments in fiscal year 2014, and were the main driver behind a nearly $19 billion increase in improper payments — from $105.8 billion in fiscal year 2013 to $124.7 billion in fiscal year 2014… Medicare incorrectly paid out one of every $10 the program spent last year, or $59.9 billion of its $603 billion budget.

Something to keep in mind next time someone argues that we can stick our heads in the sand and not enact genuine entitlement reform.

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I created the Bureaucrat Hall of Fame as a way of giving special attention to government employees who go above and beyond the call of duty in their efforts to get paid way too much in exchange for doing far too little.

While my standard practice is to bestow this honor on individual bureaucrats, sometimes I bend the rules and give the award to an entire group, such as the paralegals at the Patent and Trademark Office who were paid – and even given bonuses – even though they were never assigned any work.

Well, not doing work must be part of the culture at that bureaucracy. The Washington Post reports on an employee who apparently was supposed to do some actual work but instead gamed the system.

A federal patent examiner racked up more than 18 weeks of pay last year for work he didn’t do, but his manager didn’t notice until he received an anonymous letter claiming the employee only showed up for his job sporadically and turned in work that was “garbage.” …The examiner, a poor performer for years who was never disciplined, came and went as he pleased… He frequently told colleagues he was leaving work to go to the local golf driving range, play pool or grab a beer — then claimed a full day on the job on his time sheet. On most of the days when the examiner was gaming the system, “there was no evidence” he even went to the office or did any work on his government-issued laptop, investigators found.

My initial reaction to this story is that American bureaucrats need to learn some lessons from their foreign counterparts.

Doing zero work for 18 weeks and still getting paid may sound impressive, but it’s trivial compared to the Indian bureaucrat who managed to get paid up until last year even though he stopped showing up for work back in 1990. Or the lavishly compensated Italian government employee who only worked 15 days over a nine-year period.

But I’m not an Indian or Italian taxpayer. I get irked by when my tax dollars are being squandered.

So why didn’t his supervisor notice that something was amiss?

Well, perhaps that person didn’t notice because he or she was never around.

The examiner’s supervisor works from home more than 30 hours a week.

And even if the supervisor was paying attention, it might not have mattered.

…union rules allowed supervisors limited oversight over their employees.

Though there were plenty of warning signs that should have been noticed.

“Despite numerous red flags and the [patent office’s] internal controls, the agency did not review [the examiner’s] time and attendance records to determine if he was claiming time for work he did not perform,” the 27-page investigation by Acting Inspector General said. The patent office had received numerous complaints from inventors and their attorneys that the examiner was not responsive to their e-mails and phone calls.

If you’re a taxpayer, you’ll be delighted to know that the bureaucrat was making a very comfortable salary.

And even though the scam has been ended, you’ll also be happy to learn that he or she will leave with a clean personnel record.

The employee, a GS-11 making more than $70,000, quit two hours before he was scheduled to meet with the inspector general’s office, the report said. The union representing patent examiners told him that if he resigned, his personnel record would stay clean, not showing that he was under investigation for falsifying hours.

Gee, isn’t that wonderful. Anybody want to guess whether this person winds up working for another government agency?

The final part of the story nicely captures much of what’s wrong with Washington.

An independent review last month by the National Academy of Public Administration…praised the agency’s telework program as a model in the federal government that’s good for morale

Yeah, I bet it’s good for morale. If I got (over)paid and didn’t have to do much work, I might feel happy as well.

Actually, that’s not true. For better or worse, I passionately care about the future of the country and the cause of human liberty. So I’d be doing exactly what I’m doing even if I had to do it as a hobby. I’m just lucky that I get to ply my trade at America’s most effective think tank.

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Since I primarily work on fiscal policy, I normally look at the budgetary impact of entitlement programs. And the numbers are very grim.

But I’m also an economist, so I periodically comment on how government intervention undermines the efficient functioning of markets in the healthcare field.

Last but not least, I’m also a taxpayer, so I can’t resist occasionally expressing my frustration at how the government is a giant pinata of waste fraud and abuse. And government-run healthcare seems especially vulnerable.

Huge amounts of money bilked from taxpayers for supposed counseling sessions financed by Medicare and Medicaid.

Medicare getting scammed to pay for plastic surgery.

Russian diplomats scheming to get their healthcare costs covered by Medicaid.

We now have another example to add to the list.

The Washington Post has an excellent expose on how government incompetence has made Medicare a prime target for fraudsters and other crooks.

…in a Los Angeles courtroom, Bonilla described the workings of a peculiar fraud scheme that — starting in the mid-1990s — became one of the great success stories in American crime. The sucker in this scheme was the U.S. government.The tool of the crime was the motorized wheelchair. The wheelchair scam was designed to exploit blind spots in Medicare, which often pays insurance claims without checking them first. Criminals disguised themselves as medical-supply companies. They ginned up bogus bills, saying they’d provided expensive wheelchairs to Medicare patients — who, in reality, didn’t need wheelchairs at all. Then the scammers asked Medicare to pay them back, so they could pocket the huge markup that the government paid on each chair. …The government paid. Since 1999, Medicare has spent $8.2 billion to procure power wheelchairs and “scooters” for 2.7 million people. Today, the government cannot even guess at how much of that money was paid out to scammers.

Wow. Billions of dollars of fraud and the government to this day still can’t figure out the level of theft.

And wheelchair fraud is just a small slice of the problem.

…while it lasted, the scam illuminated a critical failure point in the federal bureaucracy: Medicare’s weak defenses against fraud. The government knew how the wheelchair scheme worked in 1998. But it wasn’t until 15 years later that officials finally did enough to significantly curb the practice. …Fraud in Medicare has been a top concern in Washington for decades, in part because the program’s mistakes are so expensive. In fiscal 2013, for instance, Medicare paid out almost $50 billion in “improper payments.”

You won’t be surprised to learn that fraud is so lucrative because the government routinely over-pays for items.

…The original equipment scam had sprung up in the 1970s, at a time when Medicare was young and criminals were still learning how to steal its money. Doctors, for example, could bill Medicare for exams they didn’t do. Hospitals could bill for tests that patients didn’t need. The equipment scam was the poor man’s way in, an entry-level fraud that didn’t require a medical degree or a hospital. …“Let me put it to you this way: An $840 power wheelchair, Medicare pays close to $5,000 for. So there’s a huge profit margin there. Huge,” said one California man who participated in a recent fraud scheme involving wheelchairs.

So this isn’t just a story about government incompetence and taxpayer ripoffs, it’s also a story which shows why third-party payer is a recipe for excessive healthcare spending.

The good news is that the wheelchair scam is slowly fading away.

The bad news is that the overall problem of a poorly designed entitlement system ensures that scammers and other crooks will simply come up with other ways to pillage taxpayers.

Today, even while the wheelchair scam is in decline, that same “pay and chase” system is allowing other variants of the Medicare equipment scam to thrive. They aren’t perfect. But they work.  In Brooklyn, for instance, the next big thing is shoe inserts. Scammers bill Medicare for a $500 custom-made orthotic, according to investigators. They give the patient a $30 Dr. Scholl’s.

Geesh.

When examining entitlements, I’ve  argued that Medicaid reform is the biggest priority.

But perhaps the rampant fraud means Medicare should be addressed first.

Though the right answer is to reform both programs, which is why I’m so pleased that the House of Representatives has approved the Ryan budget for four consecutive years, even if each new proposal allows more spending than the previous one. What matters most if that Ryan’s plan block grants Medicaid and creates a premium support system for Medicare.

Those reforms won’t eliminate waste, fraud, and abuse, but the structural reforms will make it harder for crooks to take advantage of the programs.

P.S. If you want more background information on Medicare, here’s a post that explains why the program is so costly even though seniors don’t enjoy first-class benefits.

P.P.S. And here’s my video explaining why Medicare desperately needs reform.

But keep in mind we also need reform of Medicaid and Social Security.

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