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Posts Tagged ‘Waste’

Having lived in the Washington area for more than three decades, I have many friends who work for the federal government. Most of them will privately admit that they are very lucky since federal salaries and benefits are considerably higher than what they could earn in the private sector. And they’ll also admit that there’s lots of featherbedding, inefficiency, and waste where they work.

While I like my buddies, I don’t think it’s fair that taxpayers around the nation (particularly those with modest incomes) are sending so much money to Washington to subsidize overly generous compensation packages for a bloated federal bureaucracy.

So I’m pleased that President Trump announced a hiring freeze yesterday.

President Trump on Monday ordered an across-the-board employment freeze for the federal government, halting hiring for all new and existing positions except those in national security, public safety and the military. In the two-page order, Mr. Trump said the directive was a stopgap way to control the growth of government until his budget director recommends a long-term plan to significantly reduce the federal work force through attrition.

But keep in mind this is just a tiny step in the right direction.

First, it only addresses part of the problem.

For instance, most bureaucrats are at the state and local level, often carrying out mandates, regulations, and spending of the federal government.

The Wall Street Journal put together a good summary of the situation back in 2014.

When you include state and local governments, it’s clear where the public civilian workforce has been growing in recent decades. Local governments, in particular, have boomed from 4 million employees in the 1950s to over 14 million today. In the mid-1950s, state governments employed half as many people as the federal government. Today, state governments employ nearly twice as many.

Here’s the accompanying chart.

Moreover, federal employment numbers don’t include the gigantic “shadow bureaucracy” of government contractors.

And exactly how many people are technically private employees but actually get their pay from federal taxpayers? Well, because the federal government is so big and bloated, we don’t have an exact number.

Indeed, as reported by Government Executive, there’s not even an official inexact number.

How many contractor employees does the federal government rely on, at what cost per person, and how does that compare with the cost of assigning the same task to a full-time hire? When asked by Rep. Chris Van Hollen, D-Md., ranking member of the House Budget Committee, the Congressional Budget Office took a shot but left the $64,000 question unresolved. “Regrettably, CBO is unaware of any comprehensive information about the size of the federal government’s contracted workforce,” the nonpartisan analysts wrote in response. “However, using a database of federal contracts, CBO determined that federal agencies spent over $500 billion for contracted products and services in 2012.”

But we do know that it’s a very big number. An outside expert crunched the data and concluded that there are 5-1/2 contractors for every federal bureaucrat.

Second, the real issue is that the federal government has accumulated far too much power and is involved in many areas that either belong in the private sector (Department of Agriculture, Department of Energy, Department of Housing and Urban Development, etc) or should be handled by state and local governments (Department of Transportation, Department of Education, etc).

In other words, as I explain at the end of this video, the correct pay for many federal bureaucrats is zero, for the simple reason that their jobs shouldn’t exist.

This is why I explained a few days ago that the real goal for the Trump Administration should be program terminations. The new hiring freeze is good, to be sure, but it’s largely a symbolic gesture.

And that’s not going to solve our very big problem.

P.S. Though the problem is even bigger in Europe.

P.P.S. A study from the European Central Bank found that excessive pay for bureaucrats undermines entire economies by breaking the link between compensation and productivity.

P.P.P.S. If you want to some bureaucrat-themed humor to make all this bad news more palatable, these posters and this video are the place to start. And if you want more, here’s a joke about an Indian training for a government job, a slide show on how bureaucracies operate, a cartoon strip on bureaucratic incentives, a story on what would happen if Noah tried today to build an Ark, and a top-10 list of ways to tell if you work for the government. I also found a good one-liner from Craig Ferguson, along with some political cartoons from Michael Ramirez, Henry Payne, and Sean Delonas.

P.P.P.P.S. I laughed when I read about this, but it’s more gross than funny.

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President-Elect Trump has picked Ben Carson as his Secretary for the Department of Housing and Urban Development (HUD), which immediately produced two thoughts.

First, since he had the best tax plan of all the 2016 candidates, too bad he wasn’t named Secretary of Treasury.

Second, I hope his job at HUD is to shut down the department, raze the building, and get the federal government out of the housing business.

Then I realized I was thinking too narrowly. Shouldn’t all Trump appointees start with the assumption that their department, agency, or program is an unconstitutional waste of money? I’ve already written columns explaining why some cabinet-level bureaucracies should be abolished.

Now let’s expand this list by taking  a look at the Department of Energy.

And our job will be easy since William O’Keefe has a very persuasive column for E21. Let’s look at some of the highlights, starting with the observation that the bureaucracy was created based on the assumption that the world was running out of energy and that somehow politicians and bureaucrats could fix that supposed problem.

The Department of Energy (DOE) traces its roots to the energy crisis of 1973, which was made worse by misguided government policy.  …there was, at the time, a firm belief that the world was going to run out of oil by the end of the century. Not only does the world have plenty of oil, but the United States is now a net exporter of natural gas–and would be exporting more if DOE was faster with its approvals. …Prior to DOE, the federal government played a very limited role in energy policy and development.  Presumed scarcity, excessive dependence on OPEC nations, distrust in markets, and the search for energy independence became the foundation for what is now a $32.5 billion bureaucracy in search for relevance.

In other words, the ostensible problem that led to the creation of the department was preposterously misdiagnosed.

The market produced lots of energy once the shackles of government intervention (including those from the Energy Department) were sufficiently loosened.

So what, then, does the department do?

What DOE has done is squander money on the search for alternative energy sources. In the process, it enabled Bootlegger and Baptist schemes that enriched crony capitalists who are all too willing to support the flawed notion that government can pick winners and losers.  For 2017, a large chunk of DOE spending–$12.6 billion, or 39 percent—is earmarked to “support the President’s strategy to combat climate change.” This is not a justifiable use of taxpayer dollars. Over 36 years, DOE’s mission has morphed from energy security to industrial policy, disguised as advanced energy research and innovation.  There is a long and failed history of industrial policy by the federal government.

Here’s the bottom line.

DOE has become the Department of Pork. …Energy firms do not need government subsidies to innovate and develop new technologies.  Horizontal drilling and fracking came from the private sector because the incentives to develop shale oil and gas were stronger than the illusions driving alternative energy sources. …Abolishing DOE would punish only the crony capitalists who have become addicted to its support.

Amen.

By the way, Mr. O’Keefe’s argument is primarily based on the fact that DOE doesn’t produce value.

Since I’m a fiscal wonk, I’ll add another arrow to the quiver. We also should abolish the department so that we can save a lot of money.

My colleague Chris Edwards has an entire website filled with information about the uselessness of the department. You can – and should – spend hours perusing all of the information he has accumulated.

But here’s the part that jumped out to me. Over the years, the federal government has squandered hundreds of billions of dollars on a department that is most famous for wasteful Solyndra-style scams.

By the way, there are a small handful of activities at DOE that should be shifted to other departments (such as transferring nuclear weapons responsibilities to the Department of Defense).

But the vast majority of DOE activities never should have been created and produce zero value, so the sooner the bureaucracy is eliminated, the better.

P.S. We can have tons of evidence about the desirability of shutting down the Department of Energy, but it doesn’t matter if there aren’t politicians who think it is more important to protect taxpayers rather than to funnel money to cronyists and interest groups. We’ll have to wait and see whether Trump chooses wisely, though I’m not holding my breath. We certainly didn’t get any pro-taxpayer shift of policy the last time GOPers were in charge of the White House. And Trump’s commitment to the notion of smaller government doesn’t seem overly robust, though I very much hope I’m wrong.

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As a public finance economist, I normally focus on big-picture issues such as the economically debilitating effect of excessive government spending and punitive taxation.

But as a human being, what irks me most about big government is the way that insiders use the system to enrich themselves. I don’t like it when politicians, bureaucrats, lobbyists, contractors, cronies, and other well-connected interest groups funnel money to themselves at the expense of ordinary people.

Especially when taxpayers pay twice. They have less take-home income because of higher tax burdens and over time their pre-tax income doesn’t grow as fast because a bloated public sector reduces growth.

In other words, a lose-lose situation for regular folks.

But it’s a win-win situation for insiders. Consider, for instance, this exposé in the Daily Caller about a bureaucrat who double-dipped by getting a big paycheck from Uncle Sam an interior designer while also getting outside contracts as – you guessed it – an interior designer.

A fashionista from Beverly Hills, Calif., collected millions in interior design contracts from federal agencies by claiming to be “disadvantaged,” while simultaneously working at the Department of Veterans Affairs (VA) sending work to design companies. Ronda C. Jackson was a no-show at her VA job, colleagues said. Records show she instead spent her time running a design company that got $7 million in contracts from the VA and other government agencies since 2008, reselling them marked-up goods like five-seat tables for $17,000.

Here are some of the sordid details.

Jackson worked as a full-time federal employee at the Los Angeles VA center in fiscal years 2010 and 2011, which ran from Oct. 1, 2009 to Sept. 30, 2011. Pay records show she worked as a GS-12 level interior designer and made $80,000 each year. Colleagues said they never saw Jackson in the office. …In fiscal years 2008 through 2010, the company had $222,000 in contracts with the VA, federal records show. …she was being paid as a full-time employee for almost a whole year while also working on a contract for the same agency and at the same hospital and for the same type of work. Her job as an employee was to buy furniture for the VA, and her job as a contractor included selling it.

Wow, sort of reminds me of the bureaucrat from the National Weather Service who created a contractor position for himself.

But Ms. Jackson took it to the next level, getting a paycheck and being a contractor at the same time. How did she get away with all this?

Well, her boss set a good example of how to waste money and bilk the system.

Robert Benkeser, a high-level manager in charge of facilities, was told that Jackson appeared to have a no-show employment arrangement, but did nothing. Benkeser is the same manager who was in charge of an official vehicle fleet from which 30 of 88 cars disappeared. He fired the employee who exposed the missing cars as well as the fact that government credit cards from the same unit appeared to have been used fraudulently. Benkeser received only “counseling” for the misconduct.

Gee, I wonder if he was one of the VA bureaucrats who got a big bonuses after the agency put veterans on secret waiting lists?

But what makes Ms. Jackson special is the way she doubly double-dipped.

That’s an odd way of describing something, but somehow appropriate because she got herself classified as “disadvantaged” so that she could get contracts without the usual competitive bidding process.

A 2009 contract, in which records from USASpending.gov classify the company as HUBZone while listing its Beverly Hills address, says she was paid $72,000 for outfitting the Federal Aviation Administration with “framed artwork for CMEL guest room and main building [and] conference rooms.” The company subsequently moved to Los Angeles. Jackson charged $70,000 for an unspecified “21 [inch] freestanding unit” and $17,000 for a five-person outdoor table. Ninety-eight percent of the nearly $7 million in contracting dollars awarded to Jackson’s company came without the government weighing her offer against those of other companies.

So instead of paying twice as much as something would cost in the private sector, which is typical for government, her no-bid scams probably resulted in taxpayers paying four times as much as necessary. So she was a bureaucrat, a contractor, and disadvantaged, which we can consider a form of triple-dipping.

As the old saying goes, nice “work” if you can get it.

There’s no question that Ms. Jackson has “earned” her way into the Bureaucrat Hall of Fame. Congratulations, Ronda!

By the way, the article raises a bigger issue.

Jackson’s case underscores questions about VA’s army of 167 full-time interior designers. Nearly every VA hospital in the country has one or more.

I can understand why it might be acceptable to have one interior designer (assuming the VA stays in the business of running hospitals, which obviously shouldn’t be the case), but why 167 of them?

Oh, it’s government and we need to remember what Milton Friedman said about “other people’s money.” Forget that I even asked such a silly question.

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Two months ago, I decided that the new President of the Philippines was the winner of the 2016 award for politician of the year.

It takes a remarkable amount of chutzpah, after all, to freely admit to having mistresses (yes, more than one). But the icing on the cake is that he then bragged that none of them are on the public payroll. I imagine Filipino taxpayers are very grateful that he self-finances his extracurricular activity.

This is all quite noteworthy, but I may have jumped the gun when giving President Duterte this award.

That’s because we now have another politician who has gone above and beyond the call of duty. This politician, you will see, has displayed a stunning degree of arrogance and elitism, acting as if the normal rules of decorum and prudence don’t apply.

No, I’m not talking about Hillary Clinton getting a free pass for endangering national security. Though that would be a good guess.

Instead, our new contestant for politician of the year is Monsieur Francois Hollande.

And the reason he has vaulted into contention is this amusing story (though presumably very aggravating story for French taxpayers) about the elitist and wasteful habits of France’s socialist leader.

French President François Hollande’s hairdresser earns a gross salary of €9,895 a month, according to a report in French weekly Le Canard Enchaîné, to be published Wednesday. …Over the course of the president’s mandate, which ends next year, the hairdresser will have received a gross salary of more than €590,000. The hairdresser regularly follows Hollande during his travels, according to Le Canard.

I realize I may be a bit old fashioned, and maybe my reactions are influenced by my minimalist approach to hair care (shower, comb with fingers, done), but why does a male politician need an on-staff hairdresser?!?

Especially when he doesn’t have that much hair to begin with!

By the way, it’s not 100 percent clear that taxpayer money is financing Hollande’s hairdresser, though I suspect that’s almost certainly the case. The article mentions that the hairdresser signed the contract with Hollande’s top staffer, which certainly makes it sound as if the French President isn’t spending his own money.

Though maybe the Socialist Party or some other entity is paying the bills, so I will leave open the possibility that Hollande is merely guilty of being a vain clown instead of being a vain clown who wastes taxpayer money.

What makes this story particularly interesting is that Hollande a few years ago publicly cut back on some of the lavish perks he and his cabinet were enjoying. But I guess that was all for show.

Though I’d actually consider it a bargain if politicians spent all their time preening in front of the mirror.

That would leave them less time to tax our earnings.

Or regulate our behavior.

And discourage our productivity.

Or corrupt our nation.

And they’d have less time to reward their donors at our expense!

Or to reward themselves.

Or to be disingenuous hypocrites.

But no need to belabor the point. Maybe now it’s easy to understand why I prefer “do-nothing” politicians.

Heck, I’d be willing to double their pay if they promised to stay home.

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I realize it’s presumptuous, but I periodically make grandiose claims that a single column will tell readers “everything” they need to know about a topic. I’ve used that tactic when writing about tax loopholes, entitlements, fiscal policy, bureaucracy (twice), tax evasion, France, Greece, corporate inversions, and economic policy.

Sometimes I even claim a single image, chart, or cartoon provides a reader with “everything” needed to understand an issue. Examples include the minimum wage, economic policy, the welfare state, supply-side economics, the tax code, Europe’s fiscal crisis, Social Security reform, demographics, overpaid bureaucrats, healthcare economics, inequality, fiscal policy, and the Ryan budget (twice).

Needless to say, I don’t actually think these columns give readers “everything” on a topic. But I do hope the information makes a compelling and informative point about an issue.

So it’s time to expand this tactic and present one sentence that tells readers “everything” they need to know about the failure of big government. And it’s not even the full sentence, just the bolded portion in this excerpt from a BuzzFeed story about how Belgium is trying to deal with terrorism.

One Belgian counterterrorism official told BuzzFeed News last week that due to the small size of the Belgian government and the huge numbers of open investigations…virtually every police detective and military intelligence officer in the country was focused on international jihadi investigations. …the official, who spoke on condition of anonymity because he was not authorized to speak to the media, said. “It’s literally an impossible situation.”

When I read that sentence, my jaw dropped to the floor. Belgium has one of the biggest and most bloated governments in the world.

You don’t have to take my word for it. Go to the OECD’s collection of data and click on Table 25 and you’ll see that the public sector in Belgium consumes almost 54 percent of the nation’s economy. That’s bigger even than the size of government in Sweden and Italy.

So the notion that fighting terrorism is hampered by the “small size of the Belgian government” is utterly absurd.

The real problem is that politicians and bureaucrats have become so focused on redistributing money to various interest groups that there’s not enough attention given to fulfilling the few legitimate functions of government. Not just in Belgium, but all over the world. Here’s what I wrote on this issue back in 2012.

…today’s bloated welfare state interferes with and undermines the government’s ability to competently fulfill its legitimate responsibilities. Imagine, for instance, if we had the kind of limited federal government envisioned by the Founding Fathers and the “best and brightest” people in government – instead of being dispersed across a vast bureaucracy – were concentrated on protecting the national security of the American people. In that hypothetical world, I’m guessing something like the 9-11 attacks would be far less likely.

What I said about America back then is even more true about Belgium today. Big governments are clumsy and ineffective, and bigger governments are even more incompetent. There’s even scholarly research confirming that larger public sectors are associated with higher levels of inefficiency.

And the same point has been made by folks such as Mark Steyn and Robert Samuelson (though David Brooks inexplicably reaches the opposite conclusion).

The good news is that the American people have an instinctive understanding of the problem. When asked to describe the federal government, you’ll notice that “effective” and “efficient” are not the words people choose.

P.S. On a related note, I argued in a column from 2014 that the federal government should be much smaller so it could more effectively focus on genuine threats such as the Ebola virus.

P.S. It’s worth pointing out that Israel, which faces far greater security challenges than Belgium, manages to do a better job with a government that is not nearly as large.

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If you did a word-association test with people after describing jaw-dropping examples of government incompetence, you would probably get answers like “angry” or “wasteful.” Especially if you asked around April 15.

Though in some cases of spectacular and inexplicable ineptitude by government, you reach a stage where the answers might even be “preposterous” or “comical.”

Unfortunately, today we’re going to look at an example of bone-headed government behavior that can only be described as “deadly.”

That’s because the New York Times just revealed that there were very obvious red flags about one of the San Bernardino terrorists, yet federal bureaucrats apparently were too stupid, lazy, or incompetent to check sites such as Facebook and Twitter.

Tashfeen Malik, who with her husband carried out the massacre in San Bernardino, Calif., passed three background checks by American immigration officials as she moved to the United States from Pakistan. None uncovered what Ms. Malik had made little effort to hide — that she talked openly on social media about her views on violent jihad. She said she supported it. And she said she wanted to be a part of it. …The discovery of the old social media posts has exposed a significant — and perhaps inevitable — shortcoming in how foreigners are screened when they enter the United States, particularly as people everywhere disclose more about themselves online. …In an era when technology has given intelligence agencies seemingly limitless ability to collect information on people, it may seem surprising that a Facebook or Twitter post could go unnoticed in a background screening.

But you’ll be happy to know that the Keystone Cops in the bureaucracy are now contemplating whether to even look at the barn door now that we know the horses keep escaping.

…a debate is underway at United States Citizenship and Immigration Services, the agency that approves visas and green cards, over whether officers conducting interviews should be allowed to routinely use material gathered from social media for interviews where they assess whether foreigners are credible or pose any security risk.

What makes this story so aggravating is that national security is one of the few legitimate functions of the federal government.

Yet we get glaring examples of failure, perhaps because Washington has become so bloated that sensible management is increasingly difficult.

For another example of government incompetence in the area of national security, let’s go to the Middle East, where ABC News reported that a program to train supposedly moderate fighters in Syria achieved remarkable levels of inefficiency.

…only “four or five” of the first 54 U.S.trained moderate Syrian fighters remain in the fight against ISIS. …there are currently between 100 and 120 fighters in a program that was slated to have trained 5,400 fighters in its first 12 months. …So far, $42 million has been spent to develop the $500 million program which began training in April.

Wow. If my math is right, that’s about $10 million per fighter. I’m tempted to joke about getting fighters for a lot cheaper by placing an advertisement in Solider of Fortune.

But a more serious point is that  the fact that the program surely has been a huge success for the bureaucrats and contractors. After all, they got lots of taxpayer money, so who cares about actual results.

But the more serious point is why the US is involved in Syria in the first place? Writing for Reason, Steve Chapman argues for nonintervention and even makes the point that the U.S. should instead welcome Russia’s involvement.

Vladimir Putin…has sent Russian planes to bomb rebels in Syria. …he reaffirmed his commitment to Syrian President Bashar al-Assad. …Republicans regard this as a calamity. But what’s the downside? There are two main ways this gambit could go. …The first possibility is that he will inflict significant damage on Islamic State. In that case, one of our most vicious enemies would be weakened—at little cost or risk to Americans. The only thing better than defeating Islamic State is getting someone to do it for us. …The second possibility is that Putin will fail… He could find himself in a costly, bloody war. Or he might decide the prize is not worth the effort and pull back, which would dash his dreams of regional power and discredit him at home. Either way, he’s worse off, and we’re not.

Now let’s shift to a story that goes beyond routine government incompetence and deserves a special category.

Because when you read about military bureaucrats turning a blind eye to child rape in Afghanistan, words like “evil” and “soulless” are far more appropriate.

Rampant sexual abuse of children has long been a problem in Afghanistan, particularly among armed commanders who dominate much of the rural landscape and can bully the population. The practice is called bacha bazi, literally “boy play,” and American soldiers and Marines have been instructed not to intervene — in some cases, not even when their Afghan allies have abused boys on military bases, according to interviews and court records. …soldiers and Marines have been increasingly troubled that instead of weeding out pedophiles, the American military was arming them in some cases and placing them as the commanders of villages.

Unsurprisingly, as reported by the Washington Examiner, the Obama Administration is leading from behind.

The White House dodged questions…about allegations that U.S. military officials are ordering U.S. soldiers to ignore child abuse in Afghanistan committed by Afghan militia, military and police, and instead indicated that those orders reflect Defense Department policy.

Not exactly a proud moment for the United States.

To be sure, you have to make compromises with right and wrong during wartime. Heck, we were allies in World War II with one of the world’s most murderous and sinister regimes.

But surely we can disallow child rape on American military bases!

Let’s return to a more mundane example of bad policy, one that shows the U.S. government can waste money overseas just as effectively as it wastes money at home.

U.S. taxpayers footed the bill for a $43 million natural-gas filling station in Afghanistan, a boondoggle that should have cost $500,000 and has virtually no value to average Afghans… A Pentagon task force awarded a $3 million contract to build the station in Sheberghan, Afghanistan, but ended up spending $12 million in construction costs and $30 million in “overhead” between 2011 and 2014.

Wow. Reminds me of being in a meeting last decade and a representative of the Bush Administration was arguing that its nation-building exercise (I forget whether it was Iraq or Afghanistan) was going well because we had successfully built so many schools and sewer systems.

I was being a curmudgeonly libertarian and made myself unpopular by pointing out that I didn’t think it was the responsibility of the federal government to fund those projects in the United States, much less overseas.

Let’s end where we started, with an example of government incompetence that could have deadly consequences.

Hillary Clinton’s “reset” with Russia was a miserable failure and the United States increasingly is worried about Putin’s adventurism. Yet the federal government didn’t exercise sufficient oversight to make sure that citizens of a potential enemy didn’t get to work on classified computer code.

The Pentagon was tipped off in 2011 by a longtime Army contractor that Russian computer programmers were helping to write computer software for sensitive U.S. military communications systems…the software they wrote had made it possible for the Pentagon’s communications systems to be infected with viruses. …the work had been done in Moscow and elsewhere in Russia.

Doesn’t exactly leave one with a great feeling of confidence.

So there are two lessons from today.

First, politicians and bureaucrats and wasteful and incompetent, and that applies even in areas where there is a legitimate role for government.

Second, we’ll have a better chance of getting sensible and competent decisions if government is a lot smaller. After all, it will be a lot easier to have oversight when government is doing 100 things instead of 10,000 things.

Here’s what I wrote back in 2014.

There are some legitimate functions of government and I want those to be handled efficiently. But I worry that effective government is increasingly unlikely because politicians are so busy intervening in areas that should be left to families, civil society, and the private sector.

Mark Steyn made the same point in a much more amusing fashion.

Which is why these cartoons are such a good depiction of government.

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Government intervention has messed up the healthcare sector, leading to needlessly high prices and massive inefficiency.

Fixing the mess won’t be easy since it would involve addressing several contributing problems, including Medicare, Medicaid, the healthcare exclusion in the tax code, Obamacare, and the mess at the Veterans Administration.

But at least we know the right solutions. We need entitlement reform and tax reform in order to restore a genuine free market and solve the government-created third-party payer crisis.

And to bolster the case for reform, we’re going to look at three new examples of how government intervention makes the healthcare system worse rather than better.

For our first example, let’s look at a new report from the National Center for Policy Analysis, which compares what happens when the federal government decides to build a hospital with a similar project constructed by a local government with private-sector involvement.

We’ll start with a look at Veterans Administration project.

…the VA hospital in Denver, Colorado, was run-down, crowded and outdated. …the VA considered renovating the medical facilities of the Fitzsimons Army Medical Center at a cost of $30 million. Then, the University of Colorado Hospital offered to open jointly-operated facilities for $200 million. VA officials passed on both ideas due to cost concerns. Instead, officials sought and received approval for a stand-alone facility.

That decision was very costly for taxpayers.

The VA failed to produce a design that could be built for its budget of $604 million, ultimately causing a budget-busting $1 billion overrun. …Soon, the plan to build an affordable replacement morphed into the most extravagant and expensive hospital construction project in VA history.

And, as is typical of government projects, the cost to taxpayers was far higher than initial estimates used to justify the project.

Now let’s look at another project, this one in Dallas, Texas.

…the original Parkland Hospital was built in Dallas to serve the young city’s indigent population. …its aging facilities could no longer meet the demand of 1 million patients admitted each year. …The project to rebuild Parkland, split roughly 60/40 in revenue sources, was accountable to both the public and its private donors. …Project managers hired an independent auditor to monitor all project transactions. Budget progress reports were made available to both Parkland’s Board and the public.

The final outcome was far from perfect (after all, local governments are also quite capable of wasting money). But the involvement of the private sector, combined with the fact that the local government was spending its own money, created incentives for a much better outcome.

On the first day of construction, Parkland’s project team was $100 million over budget. But a flexible design, and a willingness to balance needs and wants, allowed the team to deliver a larger, more cost-effective hospital than originally conceived for a mere 6 percent increase in budget.

And here’s a chart from the NCPA report that perfectly captures the difference between the federal government and a project involving a local government and the private sector.

Can you think of a better argument for local private-public partnerships over the federal government?

Yet policy keeps moving in the wrong direction in Washington.

The Obamacare boondoggle was all about increasing the federal government’s control and intervention in the healthcare sector.

And this brings us to our second not-so-great example of government-run healthcare.

The New York Times has a story with a real-world example showing how the President’s failed legislation is hurting small businesses.

LaRonda Hunter…envisioned…a small regional collection of salons. As her sales grew, so did her business, which now encompasses four locations — but her plans for a fifth salon are frozen, perhaps permanently.

And why can’t she expand her business and create jobs?

Because Obamacare makes it impossible.

Starting in January, the Affordable Care Act requires businesses with 50 or more full-time-equivalent employees to offer workers health insurance or face penalties that can exceed $2,000 per employee. Ms. Hunter, who has 45 employees, is determined not to cross that threshold. Paying for health insurance would wipe out her company’s profit and the five-figure salary she pays herself from it, she said.

And Ms. Hunter is just the tip of the iceberg.

For some business owners on the edge of the cutoff, the mandate is forcing them to weigh very carefully the price of growing bigger. “There’s kind of a deer-in-headlights moment for those who say, ‘I have this new potential client, but if I bring them on, I have to hire five additional people,’” said Philip P. Noftsinger, the payroll unit president at CBIZ, a financial services provider for businesses. “They’re really trying to assess how much the 50th employee is going to cost. …Added to that cost are the administrative requirements. Starting this year, all companies with 50 or more full-time workers — even those not yet required to offer health benefits — must file new tax forms with the Internal Revenue Service that provide details on employee head count and any health insurance offered. Gathering the data requires meticulous record-keeping. “These are some of the most complex informational returns we’ve ever seen,” said Roger Prince, a tax lawyer.

Here’s another real-world example.

The expense and distraction of all that paperwork is one of the biggest frustrations for one business owner, Joseph P. Sergio. …He is reluctant to go over the 50-employee line and incur all of the new rules that come with it. That makes bidding for new jobs an arduous and risky exercise. …”If you ramp up, and it pushes you over 50, there’s all these unknown costs and complicated rules. Are we really going to be able to benefit from going after that opportunity? It freezes you at a time when you need to be moving fast.”

And don’t forget that while Obamacare discourages entrepreneurs from creating jobs, it also discourages people from seeking jobs.

That’s the kind of two-for-one special that’s only possible with big government!

Now that we’ve cited examples of bad policy from the Veterans Administration and Obamacare, let’s turn to Medicare for our third example.

Veronique de Rugy of the Mercatus Center writes about rampant Medicare fraud in her syndicated column.

Medicare is rife with fraud, and every year, billions of dollars are improperly paid out by the federal government’s giant health care bureaucracy. According to the government’s latest estimates, Medicare fee-for-service (parts A and B) made $46 billion in improper payments last year. And Medicare Advantage (Part C) and Medicare Prescription Drug Coverage (Part D) combined for another $15 billion in improper payments. Even more disturbing is the possibility that these numbers underestimate the annual losses to taxpayers from fraud and bureaucratic bungling. According to the work of Harvard University’s Malcolm Sparrow, fraud could account for as much as 20 percent of total federal health care spending, which would be considerably higher than what the government’s figures indicate.

None of this should be a surprise. Medicare has a notorious history of waste, fraud, and abuse.

But there is a glimmer of good news. There’s actually a program to identify and recover wasted funds.

The RAC program is geared toward correcting improper payments… The auditors thus pay for themselves with the money they recoup instead of simply being handed a lump-sum check. That the RAC program has an incentive to reduce wasteful spending and save taxpayers money makes it fairly unusual among government initiatives.

Unfortunately, no good deed goes unpunished in Washington.

…bureaucrats are set to greatly diminish the program’s effectiveness in 2016. Rather than empower these fraud hunters, they are drastically reducing the number of paid claims that auditors can review every 45 days (from 2 percent down to just 0.5 percent). The new limits will make it that much harder for auditors — whose cost already amounts to just a drop in the bucket — to recoup taxpayer losses.

I’ve also written about this absurd effort to curtail the RAC program, but Veronique makes a critically important observation that has widespread applicability to so much of what happens with government.

Agency failure is routinely rewarded in Washington with bigger budgets and greater authority, but here success will not be.

This, in a nutshell, is the difference between the private sector and the government.

In my speeches, I sometimes point out that people in the private economy make mistakes all the time, but I also explain that the incentive to earn profits and avoid losses creates a powerful incentive structure to quickly learn from mistakes.

That means resources quickly get reallocated in ways that are more likely to boost economic efficiency and increase growth and living standards.

In government, by contrast, this process is reversed. Bureaucrats and politicians reflexively argue that failure simply means that budgets should be expanded.

All of which explains why these cartoons are such perfect depictions of government.

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