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Posts Tagged ‘Waste’

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.

Feb 23, 2021 addendum: This screenshot from the video summarizes the various ways government spending can undermine prosperity.

Costs #1 and #2 apply to every penny in the budget, as explained in the video.

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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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Great Moments in Local Government

As a good libertarian, I believe in the right of contract, including the right to insist on stupid employment conditions. After all, neither employers nor employers are obliged to enter into any particular agreement. But that certainly does not prevent me from commenting on the inane practices of government – including the recent decision to fire a high school softball coach because a few parents drank modest amounts of alcohol at a team pool part. A DC-area radio station has a report on local government run amok:

The man who guided his varsity softball team to a 2A Western Region title this spring was terminated last week for violating a school alcohol policy. In a phone interview Monday, Walkersville High School coach Brad Young acknowledged that a couple of parents brought beer to the annual post-season team cookout and pool party at his home in June — a violation of Frederick County Public School rules prohibiting alcohol at any school function. Young, in his fifth year as head softball coach, does not work for the school system and said he was unaware that parents drinking at his home during a post-season team party constituted a violation of the alcohol-free, drug-free, tobacco-free school system rules. …Young and team parents said none of the students at the party drank or had access to alcohol. The letter Young received from the school system does not allege that any students drank or had access to alcohol at the party. None of the adults at the party were intoxicated, the parents and coach said. …Bob McNally, father of two players on this year’s team, said he brought beer to the team function at Young’s home, unaware it would be a school system policy violation for the coach to permit it at a team party. “None of the students had access to alcohol or were drinking,” McNally said in a phone interview Monday. “The girls simply had a lot of fun. And Brad (Young) did not drink. In no way shape or form did any parents or school employee put any of the students in jeopardy or do anything illegal or immoral.” McNally described Young as a “great role model for those kids,” and “a mentor who gives 150 percent” for the students-athletes in his charge.

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America Suffers When Washington Wins

The Washington Post has a “feel-good” story about how the huge expansion in the federal government has created a relatively strong job market in the D.C.area. The story mentions that the federal workforce will expand by another 200,000 during the Obama years, yet at no point does the author bother to mention (or perhaps does not even understand) that all these new bureaucrats are financed by draining resources from the productive sector of the economy:

They came in droves wearing dark suits and carrying résumés yesterday — some lined up for a block in the hot sun waiting for the doors to open — to the only employer in this dismal economy hiring by the thousands: the federal government. More than 6,000 people jammed into the National Building Museum in Washington to apply for openings at 75 agencies, including the departments of Treasury, Homeland Security, Justice, Veterans Affairs and Energy. …in the government, added Shipp of Silver Spring, “you get stability, you get great benefits and [an opportunity] to move up and progress in your job.” The federal government represents about one-third of the Washington region’s $401 billion economy. Some analysts said they think the ramp-up in federal hiring and spending will help the area emerge from the recession before most other metropolitan regions. From May 2008 to May 2009, the region lost 55,000 jobs. But during that same period, nearly 20,000 jobs were created, mainly in the federal government and federal contracting sector. …The Partnership for Public Service, a nonprofit that sponsored the job fair and is surveying federal agencies to determine their staffing needs, estimates that the government will hire about 600,000 people over the next four years, as many as 120,000 of whom would work in the Washington region. The federal workforce, currently at 1.9 million, is expected to grow to about 2.1 million during the Obama administration, according to the Partnership for Public Service. That is comparable to the staffing level during the Johnson administration’s Great Society programs of the 1960s.

One of the most shockingly inaccurate parts of the story is the assertion that pay for bureaucrats does not match the private sector. Actually, that statement is technically true, but in the opposite sense of what the reporter writes. As Cato’s Chris Edwards has noted, compensation for bureaucrats is far above levels in the productive sector of the economy:

While the government currently cannot always match private-sector salaries, job seekers say it can offer something else: stability in an unsteady economy, a sense of mission and, in some cases, student loan forgiveness and tuition reimbursement programs.

Last but not least, the story inadvertently concludes with a perfect example of how bloated government hurts growth. It quotes a student who is angling for a job in government rather than doing something productive. We have no idea what Mr. Moore would wind up doing in the absence of a federal sinecure, but even a job at McDonald’s would mean contributing to national income rather than diverting it to unproductive uses:

Alexander Moore, 22, who recently graduated with an economics degree from the College of William and Mary, said he hopes the Bureau of Economic Analysis will hire him and help pay for a master’s degree. “If you would have asked me six to eight months ago [about his employment preference], it would have been the private sector,” Moore said. “Now it’s the public sector, because it’s becoming a bigger part of our society.”

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Social Security Administration Bureaucrats Have a Party…and Taxpayers Pick Up a $700,000 Tab

With so much money being squandered in Washington, $700,000 does not even rise to the level of an asterisk. But when that much money is being wasted so that senior bureaucrats from the Social Security Administration can enjoy a party (oops, a training session) at a four-star resort in Arizona, it becomes a symbol of Washington profligacy. As referenced in an earlier post, conservatives already have been complaining about this waste of taxpayer funds, but kudos to ABC news for running a story on this travesty. Make sure to watch the embedded video of bureaucrats “reducing stress” at your expense:

…nearly 700 executives from the Social Security Administration (SSA) gathered for a lavish three-day conference in Phoenix, AZ last week, costing taxpayers about $700,000. …The conference, which included a performance by a motivational dance company that was captured on tape by Phoenix affiliate ABC15, was held at the Arizona Biltmore, a hotel described as the “Jewel of the Desert” with an oasis of 39 acres of lush gardens, swimming pools and a golf course. SSA executives were invited to join in the dancing.

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Can a Story About Government-Run Health Care Have a Happy Ending?

In a previous post, I commented about how Oregon’s government-run health system gives people advice on how to kill themselves. The statist system in the United Kingdom has a different approach, relying instead on people dying as they languish on waiting lists. But the bureaucrats across the pond are not a bunch of joyless robots. They managed to divert some of their budget to produce leaflets telling kids about the cardiovascular benefits of orgasms. The Telegraph reports on this innovative use of taxpayer funds:

NHS guidance is advising school pupils that they have a “right” to an enjoyable sex life and that regular sex can be good for their cardiovascular health. The advice appears in leaflets circulated to parents, teachers and youth workers and is meant to update sex education by telling students about the benefits of enjoyable sex. The authors of the guidance say that for too long, experts have concentrated on the need for “safe sex” and committed relationships while ignoring the principle reason that many people have sex. …The leaflet carries the slogan “an orgasm a day keeps the doctor away”. It also says: “Health promotion experts advocate five portions of fruit and veg a day and 30 minutes’ physical activity three times a week. What about sex or masturbation twice a week?”

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Taxpayers Foot the Bill for Bureaucrats’ Fancy Party at Posh Resort

Remember the much-deserved outrage when AIG executives partied at five-star resorts after getting bailed out with taxpayer funds? So why is the establishment media so quiet about an equally outrageous story involving Social Security Administration bureaucrats partying at an Arizona resort? Austin Hill’s Townhall.com column exposes the story others are ignoring:

Last week the Social Security Administration flew approximately 700 of its managers from across the U.S. and Guam to Phoenix, Arizona’s posh Arizona Biltmore Hotel and Resort, for “organizational training.” The event, which included musical entertainment and dancing, skits, catered food, cocktails, and a “casino night” featuring “door prizes,” cost us lowly taxpayers approximately $750,000. …Ignore the fact that SSA is estimated to waste hundreds of millions of taxpayer dollars each year in faulty overpayments.” …forget all that stuff. Pay no attention to the fact that our overnment is bankrupt. The managers of our Social Security Administration needed to get out of the office, come together face-to-face, let their hair down and have some fun together, do some “team building,” and get trained on how to “reduce workplace stress.” And when William La Jeunesse of the Fox News Channel showed up at the resort asking to speak to the SSA, the childish incompetence of our public servants was put on display for all the nation to see. …So La Jeunesse wanted to know why the SSA’s taxpayer funded retreat was okay, when the AIG Corporation’s retreat was not. “There’s a clear distinction between the two” SSA Spokesperson Peter Spencer explained. “They (the AIG Corporation) received specific bailout funds, we did not…” Mr. Spencer was, of course, playing the American people for fools. Whether you call it “bailout funds” or an operating budget, government money is our money, the people’s money. All the money that government possess comes from our tax payments. And while American workers in the “real world” face layoffs, pay-cuts, the elimination of expense accounts, and moratoriums on corporate travel and entertainment ( wasn’t the annual “holiday party” eliminated at your place of employment a year or two ago?), it is disgraceful that government employees think its okay to sit in the lap of luxury at our expense.

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