James Pethokoukis

Politics and policy from inside Washington

50 examples of U.S. government waste

Oct 8, 2009 17:31 UTC

Ending or fixing this stuff (via Heritage Foundation) is not going to fill a $1.4 trillion budget gap, but they would be nice confidence builders:

1. The federal government made at least $72 billion in improper payments in 2008.
2. Washington spends $92 billion on corporate welfare (excluding TARP) versus $71 billion on homeland security.
3. Washington spends $25 billion annually maintaining unused or vacant federal properties.
4. Government auditors spent the past five years examining all federal programs and found that 22 percent of them–costing taxpayers a total of $123 billion annually–fail to show any positive impact on the populations they serve.
5. The Congressional Budget Office published a “Budget Options” series identifying more than $100 billion in potential spending cuts.
6. Examples from multiple Government Accountability Office (GAO) reports of wasteful duplication include 342 economic development programs; 130 programs serving the disabled; 130 programs serving at-risk youth; 90 early childhood development programs; 75 programs funding international education, cultural, and training exchange activities; and 72 safe water programs.
7. Washington will spend $2.6 million training Chinese prostitutes to drink more responsibly on the job.
8. A GAO audit classified nearly half of all purchases on government credit cards as improper, fraudulent, or embezzled. Examples of taxpayer-funded purchases include gambling, mortgage payments, liquor, lingerie, iPods, Xboxes, jewelry, Internet dating services, and Hawaiian vacations. In one extraordinary example, the Postal Service spent $13,500 on one dinner at a Ruth’s Chris Steakhouse, including “over 200 appetizers and over $3,000 of alcohol, including more than 40 bottles of wine costing more than $50 each and brand-name liquor such as Courvoisier, Belvedere and Johnny Walker Gold.” The 81 guests consumed an average of $167 worth of food and drink apiece.
9. Federal agencies are delinquent on nearly 20 percent of employee travel charge cards, costing taxpayers hundreds of millions of dollars annually.
10. The Securities and Exchange Commission spent $3.9 million rearranging desks and offices at its Washington, D.C., headquarters.
11. The Pentagon recently spent $998,798 shipping two 19-cent washers from South Carolina to Texas and $293,451 sending an 89-cent washer from South Carolina to Florida.
12. Over half of all farm subsidies go to commercial farms, which report average household incomes of $200,000.
13. Health care fraud is estimated to cost taxpayers more than $60 billion annually.
14. A GAO audit found that 95 Pentagon weapons systems suffered from a combined $295 billion in cost overruns.
15. The refusal of many federal employees to fly coach costs taxpayers $146 million annually in flight upgrades.
16. Washington will spend $126 million in 2009 to enhance the Kennedy family legacy in Massachusetts. Additionally, Senator John Kerry (D-MA) diverted $20 million from the 2010 defense budget to subsidize a new Edward M. Kennedy Institute.
17. Federal investigators have launched more than 20 criminal fraud investigations related to the TARP financial bailout.
18. Despite trillion-dollar deficits, last year’s 10,160 earmarks included $200,000 for a tattoo removal program in Mission Hills, California; $190,000 for the Buffalo Bill Historical Center in Cody, Wyoming; and $75,000 for the Totally Teen Zone in Albany, Georgia.
19. The federal government owns more than 50,000 vacant homes.
20. The Federal Communications Commission spent $350,000 to sponsor NASCAR driver David Gilliland.
21. Members of Congress have spent hundreds of thousands of taxpayer dollars supplying their offices with popcorn machines, plasma televisions, DVD equipment, ionic air fresheners, camcorders, and signature machines–plus $24,730 leasing a Lexus, $1,434 on a digital camera, and $84,000 on personalized calendars.
22. More than $13 billion in Iraq aid has been classified as wasted or stolen. Another $7.8 billion cannot be accounted for.
23. Fraud related to Hurricane Katrina spending is estimated to top $2 billion. In addition, debit cards provided to hurricane victims were used to pay for Caribbean vacations, NFL tickets, Dom Perignon champagne, “Girls Gone Wild” videos, and at least one sex change operation.
24. Auditors discovered that 900,000 of the 2.5 million recipients of emergency Katrina assistance provided false names, addresses, or Social Security numbers or submitted multiple applications.
25. Congress recently gave Alaska Airlines $500,000 to paint a Chinook salmon on a Boeing 737.
26. The Transportation Department will subsidize up to $2,000 per flight for direct flights between Washington, D.C., and the small hometown of Congressman Hal Rogers (R-KY)–but only on Monday mornings and Friday evenings, when lawmakers, staff, and lobbyists usually fly. Rogers is a member of the Appropriations Committee, which writes the Transportation Department’s budget.
27. Washington has spent $3 billion re-sanding beaches–even as this new sand washes back into the ocean.
28. A Department of Agriculture report concedes that much of the $2.5 billion in “stimulus” funding for broadband Internet will be wasted.
29. The Defense Department wasted $100 million on unused flight tickets and never bothered to collect refunds even though the tickets were refundable.
30. Washington spends $60,000 per hour shooting Air Force One photo-ops in front of national landmarks.
31. Over one recent 18-month period, Air Force and Navy personnel used government-funded credit cards to charge at least $102,400 on admission to entertainment events, $48,250 on gambling, $69,300 on cruises, and $73,950 on exotic dance clubs and prostitutes.
32. Members of Congress are set to pay themselves $90 million to increase their franked mailings for the 2010 election year.
33. Congress has ignored efficiency recommendations from the Department of Health and Human Services that would save $9 billion annually.
34. Taxpayers are funding paintings of high-ranking government officials at a cost of up to $50,000 apiece.
35. The state of Washington sent $1 food stamp checks to 250,000 households in order to raise state caseload figures and trigger $43 million in additional federal funds.
36. Suburban families are receiving large farm subsidies for the grass in their backyards–subsidies that many of these families never requested and do not want.
37. Congress appropriated $20 million for “commemoration of success” celebrations related to Iraq and Afghanistan.
38. Homeland Security employee purchases include 63-inch plasma TVs, iPods, and $230 for a beer brewing kit.
39. Two drafting errors in the 2005 Deficit Reduction Act resulted in a $2 billion taxpayer cost.
40. North Ridgeville, Ohio, received $800,000 in “stimulus” funds for a project that its mayor described as “a long way from the top priority.”
41. The National Institutes of Health spends $1.3 million per month to rent a lab that it cannot use.
42. Congress recently spent $2.4 billion on 10 new jets that the Pentagon insists it does not need and will not use.
43. Lawmakers diverted $13 million from Hurricane Katrina relief spending to build a museum celebrating the Army Corps of Engineers–the agency partially responsible for the failed levees that flooded New Orleans.
44. Medicare officials recently mailed $50 million in erroneous refunds to 230,000 Medicare recipients.
45. Audits showed $34 billion worth of Department of Homeland Security contracts contained significant waste, fraud, and abuse.
46. Washington recently spent $1.8 million to help build a private golf course in Atlanta, Georgia.
47. The Advanced Technology Program spends $150 million annually subsidizing private businesses; 40 percent of this funding goes to Fortune 500 companies.
48. Congressional investigators were able to receive $55,000 in federal student loan funding for a fictional college they created to test the Department of Education.
49. The Conservation Reserve program pays farmers $2 billion annually not to farm their land.
50. The Commerce Department has lost 1,137 computers since 2001, many containing Americans’ personal data.

COMMENT

Nice piece

Posted by Camron Barth | Report as abusive

VAT Attack! The value-added tax, Bruce Bartlett, the GOP and deficits

Oct 8, 2009 17:16 UTC

I have been exchanging emails with economic analyst Bruce Bartlett, a supply-side economist who has come out for higher taxes.  (See the NYTimes article on him earlier this week.) Bartlett (who blogs at the wonderful Capital Gains and Games) thinks Uncle Sam will never cut spending, thus taxes must go up, preferably in the form of a VAT.  He also has book coming out next week, The New American Economy: The Failure of Reaganomics and a New Way Forward.

Here a bit of what he has been telling me:

Bartlett on how much revenue a VAT would raise:

If we only need to raise taxes by a percentage point or two, to say 20% of GDP, then we don’t need a VAT unless we want to use it as a pure tax reform. We could use the revenue to abolish the AMT, abolish the estate tax, maybe abolish the corporate tax, whatever. That would be fine with me because we don’t need the revenue today. But I think we will need it in the future because I don’t see any natural limit to spending or any appetite in either party for significant spending cuts. Therefore, unless we want deficits of 10% of GDP forever we have to raise revenue. When the day comes that the political class finally agrees to raise net new revenue it will be better to raise it through a VAT a percent or even fraction of a percent at a time. If the VAT is already in place that will be easy—too easy, you probably think. But the only other alternative is to raise tax rates, which is worse.

Bartlett on a tax system he likes better than the VAT:

My ideal tax system is a Hall-Rabushka flat tax, always has been. One reason I like it is because it is essentially a subtraction-method VAT. But I think the time for it has passed. At this point I think it is inevitable that if we adopt a VAT it will basically be as an add-on to all the other taxes—that’s the way it is in every other country. If we can get rid of some worse taxes as part of the deal, that’s great. But to make that deal, conservatives have to play the game. If Democrats have to raise taxes on their own, they will do it in the worst possible way, economically. But if the Republican alternative is to do nothing, then Democrats will do what they have to do as they did in 1993. If they decide to do a VAT they would undoubtedly be very amenable to using some of the revenue for tax cuts that would enhance growth. But, again, if Republicans refuse to play the game and won’t commit themselves to support the final package, then Democrats will do it on their own and we will end up with something worse—multiple rates, exemptions that create inefficiency, and higher income tax rates to boot.

Bartlett on Republicans and budget deficits:

At some point, conservatives have to realize that they have to make a choice. Refusing to make one by living in a dream world where truly massive spending cuts are enacted to keep spending and taxes as a share of GDP in their historical range is not an option, in my opinion. If conservatives think I am wrong about the need for significantly higher taxes, then I think they have a responsibility to put plans on the table to seriously cut Social Security, Medicare and Medicaid and put real effort into getting them enacted.  But I don’t see it.  All I see are pie-in-the-sky plans to privatize these programs and somehow magically cut spending without reducing anyone’s benefits. Those aren’t going to happen, ever. So if we are going to live in the real world, how will spending be cut enough to prevent the need for higher taxes. If you find out, let me know.

Me: I would rather push hard for Hall-Rabushka, a flat consumption tax, and massive entitlement reform which would eliminate the need for taxes to rise as a percentage of GDP. But Bruce thinks both are politically impossible, and thus the GOP needs to push for a VAT while also dropping marginal rates.

COMMENT

Giving the politicians an unlimited amount of cash is insane!

No VAT tax forever!

Posted by Steve Freedman | Report as abusive

How to get a strong dollar

Oct 8, 2009 16:56 UTC

The enlightening David Malpass in the WSJ:

Measured in euros (a more stable ruler than the ever-weakening dollar), U.S. real per capita GDP is down 25% since 2000, while Germany’s is up 4% and tops ours. The solution is a strong U.S. jobs and wealth program. It has to include stable money, a flatter, more competitive tax structure, spending restraint, and common-sense bank regulation so small business lending can restart. Treasury has to rapidly lengthen the maturity of the national debt and take steps to protect the Fed from market losses on its long-term debt holdings.

Me: Absolutely. Don’t worry about the dollar per se, just put in place policies that keep inflation low and productivity high. While Team Obama likes the weak dollar (though Congress is getting worried), the chances of a sharp dollar tumble are rising and will force it to reduce the deficit soon than it would prefer.

Why the cost of healthcare reform will rise

Oct 8, 2009 16:51 UTC

A great analysis of the Baucus healthcare bill by Jim Capretta. Read the whole thing, but this is a key graph:

Congressional Democrats are already racing ahead with amendments to demonstrate their commitment to insurance “affordability” for the middle class.  It would be only a matter of time before Congress responded to the inevitable political pressure and expanded the entitlement, perhaps in steps, to larger and larger numbers of Americans.

Should America be more like Denmark?

Oct 8, 2009 16:37 UTC

Blogger Matthew Yglesias talks up Denmark and high taxes over at ThinkProgress:

The overwhelming fact about Danish public policy is that taxes in Denmark are really high. There’s a substantial VAT and also a substantial income tax. You pay taxes to buy a car, and you pay higher taxes for heavy cars. Gasoline taxes are high (gas costs almost $7.50 a gallon) as are taxes on electricity, which account for more than half the cost of electricity to consumers. In exchange for all this, the Danes have basically achieved all the stuff progressives say they want. The country is rich, clean, and highly egalitarian. The high taxes finance generous public services, and the high levels of expenditure allow the country to do without a lot of extraneous business regulation which helps keep the place economically dynamic. According to surveys, the people are all very happy, which is exactly what you would expect from a very rich, very egalitarian society. And as this trip has emphasized, they do it all while doing much less polluting than Americans do, despite a higher average material standard of living.

There’s more to that than taxes, of course, but the high taxes really are integral to the whole thing. And that includes the environmental piece. In part because there are directly pro-environment taxes. But also, I would say, in large part because it’s the egalitarian income distribution and robust redistributive state that makes the environmental policies tolerable. Cheap gas and electricity are, in part, what we do in the United States instead of real social policy.

All of which is just to emphasize a point I’ve been making a lot over the past few months: there’s no way to have a progressive renaissance in the United States unless progressives find some politically feasible way of directly making the case that higher taxes for better services can be a good trade. And it’s worth trying to be honest about this.

Me: Yes, that last point is a problem.  A recent poll shows Americans think half of all government spending is wasted, while data from Gallup shows Americans fear Big Government more than Big Business by 55-32. That is narrower than the late 1990s, but higher than the early 1980s when Reagan successfully campaigned against Big Government. (The Cold War was probably also a factor.)

2012 Watch: Romney goes after cap-and-trade

Oct 8, 2009 16:31 UTC

Mitt Romney attacks cap-and-trade via video over at his PAC website, Free and Strong America. He basically portrays it as an energy tax on Americans (which it is) that will hurt American competitiveness vs. India and China (which is it will.)

But, more interestingly, he makes is clear that does believe in climate change (which the conservative talk radio crowd generally does not).  And you can be sure his campaign for president will have a more expansive energy policy than just “drill, baby, drill.” During his last run, Romney told me he was certainly willing spend many billions on government investment in alternative energy and other new energy technologies. That’s right, government spending — though I am sure venture capital would play a huge role as well.

COMMENT

learn more about myths and facts about climate legislation here: http://www.wri.org/stories/2009/08/clima te-change-legislation-myths-and-reality

Posted by Sarah | Report as abusive

Is Geithner Wall Street’s man in Washington?

Oct 8, 2009 16:21 UTC

Yes, the treasury secretary talks to bankers, says the Associated Press:

The calendars, obtained by the AP under the Freedom of Information Act, offer a behind-the-scenes glimpse at the continued influence of three companies — Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc. — whose executives can reach the nation’s most powerful economic official on the phone, sometimes several times a day.

But as my pal John Carney of Clusterstock points out, he’s isn’t talking to everybody:

But these generalized claims miss something important: not all banks are equal in the eyes of Treasury Secretary Tim Geithner. Today the AP revealed that Geithner doesn’t give equal access to all of the banks, or even all of the largest banks. Likewise, being one of the biggest, most well-connected investment banks doesn’t get you close to Geithner. Instead, it’s a small select group of financial firms that have Geithner’s ear, at least judging by a review of his phone records.

Who is Geithner chatting with on the phone.?

  • Goldman Sachs
  • JP Morgan Chase
  • Citigroup

Most obviously left off the list are Bank of America, Wells Fargo and Morgan Stanley.

Me: To me, the interesting question is to what extent Geithner shares Wall Street’s world view, and how that has influenced policy. He certainly is sensitive to the systemic nature of these institutions and their role in the financial system, which is why he was a voice against nationalization or debt-for-equity ideas. As Megan McArdle put it earlier this year:

It’s easy to blithely say “Why don’t they just make the bondholders take a haircut?”  Harder when you think about who those bondholders are:  insurers.  pension funds.  the bond component of your 401(k).  Financial debt makes up something like a third of the bond market, and the largest holders are pensions and insurers.

The insurers are the biggest problem, because they’re just so heavily regulated.  They’re not allowed to hold risky assets.  Convert their bonds to equity and they will be forced to dump that equity at prices that will trend towards zero.  Many insurers will see their capital impaired below the regulatory limits, requiring a government bailout.

Pension funds are the next biggest problem.  They’re already in big trouble because of stock market declines.  The bonds are the “safe” portion of their portfolio, the stuff that’s supposed ot be akin to ready cash.  Convert their bonds to equity–or worse, default–and suddenly they’re illiquid and even further underwater.

Nor is the 401(k) problem small.  Bond funds are typically held most heavily by the people closest to retirement; they’re for income, not capital gains.  What is your mother going to do when a third of her mutual fund income gets converted to equity that produces no cash and can’t be sold because the insurers have all had to dump their shares on the market at once?  Or simply disappears into the land of bankruptcy lawsuits?

I think what Geithner et. al. fear is that nationalizing or reorganization will put the government on the hook for massive and immediate losses in both the banking system, and the “safe” entities that lent it money

:

COMMENT

Concerning the Restructuring of the Global Financial/Economic System and Recent Discussion of Nationalizing “Banking” Interests

With regards to “nationalizing” Banks and other “investor owned” Institutions, we must be realistic concerning the inter-national composition of the investing institutions, corporations, and individuals.

Writing from a libertarian socialist point of view, I think it is necessary to clarify the objectives of any comprehensive program to re-dedicate private resources to a quasi-public mission and to consolidate equity and assets for the purposes of sharing the former and writing off the economically paralytic inflationary cost aspects of the latter.

In lieu of an economic system based on credit and equity trading, whose motivation is the underwriting of speculative ventures, we need to transform our fundamentally inflationary financial/economic system to one that is based on equity sharing and meeting the needs of people in the form of community betterment.

Such a financial system would be the right hand, the resource allocation facilitating function and services of an ambidextrous ecological, democratic, economic “plan and implement” economy that would respect and favor the sovereignty of villages/neighborhoods, educate-foster-facilitate-inculcate inter-community and inter-regional equality, unity and cooperation based on the basic principles of inclusion, equity, humanity, mutualism, altruism, quality of life (in lieu of standard of living), environmental/public health and wellness, sustainability, and peace.

Such a system would seek to establish a more just balance between competitive advantage and comparative advantage with the concerns of those indigenous to a community being paramount.

Such an economic system would recognize the necessity to embrace and implement conservation ethics for shorter term programs and projects of ecological economic redevelopment dedicated to survival pursuits and skills and its concomitant ubiquitous environmental improvement activities, and to the longer term programs and policies related to the legacy of the human race and its dominion (i.e. the recognition and respect of the resource limits imposed by a finite planet).

I call such a proposal an equity union and believe it to be a prudent and practical alternative to the extant economic/financial system. I believe such an economic rearrangement based on the fundamental mission of world unity and cooperation is the best hope for the purpose of entering an unprecedented era of peace and human progress and success.

Mike Morin
Eugene, OR, USA
wiserunion@earthlink.net
(541) 343-3808

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