I’m always surprised by people that think government can run something better and more efficiently than a private entity. Oh sure, there are things that are best left to government – like national defense – because it simply makes more sense when it comes to that. But the fact that we charge them with that duty doesn’t mean they run it efficiently.
Governments have no incentive to be efficient. We’ve talked about how, in private concerns, the profit motive provides incentive to be efficient. In government there is no such motive. So waste, fraud and abuse are rampant.
How rampant? Take a look at this chart:
We’ve all been told by the Democrats that the government can help lower costs in health care. But when you look at the 4 health care items on the chart (Medicare fee for svc, Medicaid, Medicare part C and D), you are looking at $63.5 billion … that’s with a “b” … dollars a year in “improper payment rates”. Also look at the percentage of error. In the EITC program, 22.7% or 12.6 billion of what they pay out is in error. (Don’t forget, the chart looks only at programs of $750 million or more a year – and we all know there are literally thousands of government programs below that threshold doing the same thing.)
Add all these up and government is making about $100 billion dollars a year in improper payments. So if anyone wonders why I snort derisively when I hear Congress talk about a $10 billion savings over 10 years (not to mention that usually means not spending as much as they now spend) you can understand why. We’re not bleeding money at a federal level, we’re hemorrhaging it. What in the world is a 10 year $10 billion dollar “savings” worth when government is blowing a trillion dollars in 10 years via waste, fraud and abuse?
But do they actually address the problem? No. We’ve known about this level of waste, fraud and abuse for years … decades even. And absolutely nothing of worth has been done to correct it. In fact, given the amount of expansion the federal government has seen in the last decades, it’s gotten worse. As the Mercatus Center says:
While people of good conscience on both sides of the political aisle can debate the merits of whether or not government should be involved in certain activities, none should tolerate the high levels of improper payments currently associated with government spending on social welfare programs. Federal spending has grown too massive to be adequately overseen. Waste, fraud, and abuse squanders public resources and undermines trust in government.
Indeed. But there is one sure fire way to at least reduce this waste, given the apparent fact that government hasn’t a clue about how to reduce it. Get government out of areas it has no business and cut spending. Simplistic? Not really. That is a solution, or at least a partial solution. I certainly understand there will be argument about the areas where government should be involved or not, but hey, crazy me, I’ve always found the Constitution provides some pretty good guidelines. And, of course, then you have to elect legislators with both balls and a charter to do that (and who won’t succumb to “Potomac fever” when they arrive on the scene) and stay on them until they do what is necessary to accomplish the task.
Yeah, I know, not going to happen anytime soon. People like their government cheese too much and most don’t mind at all that someone else is paying the freight.
Meanwhile this atrocious and unacceptable waste of your tax dollars will continue unabated (and likely get worse) – a victim of “government efficiency”.
I’d like to say this is astonishing, and it would be if a Republican was in the White House because our press would make it so. But with Obama? Meh:
“President Obama said that increasing the debt limit does not increase the debt,” the minority side of the Senate Budget Committee says in a statement. “But when the Treasury department started using so-called extraordinary measures to avoid a breach of the debt ceiling in May, 2011, the debt limit stood at $14,294 billion.
“Today it stands at $16,699 billion, which was reached when Treasury started using extraordinary measures in May of this year. That’s a $2,405 billion increase in 2 years.
“Meanwhile, the economy, as measured by GDP only increased by $1,199 billion between the second quarter of 2011 and the second quarter of this year.
“So the debt increased twice as much as the economy over the last two years, the very definition of unsustainable. The growth of a nation’s debt cannot for long exceed the growth of its economy – which is precisely what is happening now.”
If you need a picture, try this:
And, of course, they’re asking for more. So here’s the question: If we give them more, what will they want next? Answer: Why more, of course.
So at some point, you have to say “no” don’t you?
Well common sense says you do, but apparently for this crowd, that sense isn’t at all that common.
So we do the circus thing, year after year after year and we build charts like this?
Hell, that’s the chart of a 3rd world country.
And the word that should be plaster across the top of it is “unsustainable”.
Meanwhile, in DC, they continue to wrangle over more debt.
I told you a while back how I get email from politicians that I never asked for and from which I can’t opt out because they don’t give any mechanism for that. I got a real doozy yesterday.
It’s from Marlin Stutzman, Congressman from Indiana, bragging about separating the Farm Bill out from a bunch of other Ag Department stuff:
Transparent government won an important victory today. Conservatives seized an opportunity to split the Farm Bill, a landmark reform that breaks the unholy alliance between food stamps and agriculture policy. For the first time since the 1970’s taxpayers will have an honest look at how Washington spends their money on agriculture and food stamp policy.
Supporters of this farm-only farm bill wasted the golden opportunity that separation could have provided: the ability to promote policies that benefit taxpayers, farmers, and consumers in a fiscally responsible way. With the passage of this bill, the House has gone even further to the left than the Senate bill. It would spend more money than Obama on the largest farm program, crop insurance [emphasis mine].
On top of all this, the process House Republicans used to get this 600-plus-page bill to the floor in a mere 10 hours essentially violates their own promise to conduct business in an open and transparent manner [emphasis mine]. They prohibited legislators from introducing amendments. And, they played a game of bait and switch by claiming this bill was the same text from the failed House farm bill of a few weeks ago.
In fact, they made this new bill even worse—by making sneaky changes to the bill text so that some of the costliest and most indefensible programs no longer expire after five years, but live on indefinitely. This means the sugar program that drives up food prices will be harder to change, because it doesn’t automatically expire. It also means the new and radical shallow loss program that covers even minor losses for farmers will indefinitely be a part of the law.
Note the sleazy irony. Congressman Stutzman starts by bragging about transparency in a bill that was passed in a process that was about as transparent as toxic sludge.
This is today’s GOP – paying off their corporate cronies and bragging about how transparently they did it.
Orwellian, in that his claim is as follows:
President Obama is marketing his new budget by saying it has “more than $2 in spending cuts for every $1 of new revenue.” Is this true?
In a word, no.
In fact, his spending increases and advertised spending cuts cancel each other out—leaving only a massive tax increase.
Here’s a graphical representation of the point:
Yeah, I know … big surprise.
A politician lied again.
Apparently President Obama is sure his newest budget proposal is so good there’s no room or need for negotiation. Or so a senior White House official says:
“We don’t view this budget as a starting point in the negotiations. This is an offer where the president came more than halfway toward the Republicans,” a senior administration official told reporters Tuesday, speaking on condition of anonymity to detail the forthcoming document.
“So this is our sticking point,” the official said. “And the question is: are Republicans going to be willing to come to us to do serious things to reduce our deficits?”
Obama is proposing a $3.78 trillion dollar budget. Estimated tax revenues for 2014 are $3.22 trillion. Yet, this is being touted as a “budget cutting” budget and the White House claims it is exactly what the Republicans have wanted.
What … another deficit?
By the way, I don’t want “reduced deficits”. I want NO deficit. I.e. any budget that begins with an amount higher than the estimated tax revenues for the year is Dead On Arrival.
And that’s precisely the declaration this budget (like all the other budgets Obama has submitted) deserves.
It’s hard, in a nutshell, because no one wants to see their favorite programs defunded. The system encourages politicians to pander to these constituencies for votes. The result is ever increasing spending while both the public and the politicians claim to be for spending cuts.
A perfect example of the process can be found in microcosm in Chicago, where, to save money in the wake of intemperate government spending, the school system plans on closing 54 schools. The constituency affected are not going to let this go quietly. Even though the plan would save the city $600 million over 10 years and certainly help close the 1 billion dollar shortfall it suffers, the people (voters and teacher’s unions) who don’t want those schools closed are taking their protest to the politicians (aldermen) who depend on their votes.
The problem now being realized with the process described above is there’s a thing called “reality” that intrudes on this system of ever increasing spending to satisfy the demands of ad hoc constituencies. It’s called economics. And it has laws that resist being broken. Laws such as you can only spend more than you have for so long before you can’t get anymore to spend. And at a local level, where a city government can’t print money, that reality has come to bear on the process that the city of Chicago has indulged in for so long.
It can’t afford the process any longer. And that means the process and its cycle will, of necessity, have to be broken if the city isn’t to become another Detroit. In the case of the school closings in Chicago, the only question that remains is whether or not the politicians, in the face of opposition by a coalition of voters/unions/politicians, will do what is necessary or – as we see on a national level time after time – endeavor to find a way to satisfy the coalition and kick the can down the road?
To the story:
Chicago Public Schools officials ended months of speculation when they released the list of 54 schools the city plans to close, but the pushback against Mayor Rahm Emanuel and his schools chief is likely just starting to ramp up.
As word of the schools on the long-awaited closings list trickled out Thursday, parents, teachers and community members — some furious, some in tears — vowed to fight the closings. One group took a bus of people to protest in front of the homes of school board members, and some parents spoke of a lawsuit. The Chicago Teachers Union already had scheduled a mass protest march through downtown for next week.
"We are the City of Big Shoulders and so we intend to put up a fight," union President Karen Lewis said. "We don’t know if we can win, but if you don’t fight, you will never win at all."
Emanuel and schools CEO Barbara Byrd-Bennett say the closures are necessary because too many Chicago Public School buildings are half-empty, with 403,000 students in a system that has seats for more than 500,000. But opponents say the closures will further erode troubled neighborhoods and endanger students who may have to cross gang boundaries to attend school. The schools slated for closure are all elementary schools and are overwhelmingly black and in low-income neighborhoods.
About 30,000 students will be affected by the plan, with about half that number moving into new schools.
So 30k out of 403k will be effected in a school system that appears to have a declining population. Any sensible person would understand that even if money wasn’t a problem, at some point adjustments would need to be made.
But we’re a schizo population who somehow believes – even as our reality reminds us in our own lives daily that we’re delusional – that we can have our cake and eat it too.
This problem and the reality aren’t unique to Chicago:
Chicago is among several major cities, including Philadelphia, Washington and Detroit, to use mass school closures to reduce costs and offset declining enrollment. Detroit has closed more than 130 schools since 2005, including more than 40 in 2010 alone.
The problem is, however, pretty unique to cities who’ve followed that process I described above and, for the most part, have been “blue” strongholds for decades. Reality is weighing in on their misguided governance with a vengeance.
What’s interesting is it is pitting blue against blue (blue city government against teacher’s unions, etc.). And, it also has a coterie of politicians who refuse to accept reality because, well because it could cost them their jobs and the perks that come with it:
The issue has again pitted Emanuel against the Chicago Teachers Union, whose 26,000 members went on strike early in the school year, idling students for seven days. Chicago aldermen and other lawmakers also have blasted the plan.
Of course they have. Common sense and reality say the plan is the way to go.
But we all know, in the world of politics, common sense was killed off decades ago and reality is ignored as long as possible.
And look at the result.
Thought these two graphs illustrated part of it very well:
But remember — they want you to believe it is a revenue problem.
I continue to be stunned by the apparent willingness of all involved on the left to whistle past the graveyard when it comes to understanding what our fiscal governmental problem is and how to fix it. Here … let’s try a picture:
Oh, look … it’s spending. Specifically, spending on entitlements and interest on the money we’ve borrowed to do so. And what are we talking about cutting? The military, of course. Because, you know, it is in the blue slice of the pie. Make sense?
Pac Man’s revenge. By 2050, he will have swallowed all of the blue.
But, hey, it’s “absurd” to argue about raising the debt limit. By the way, does anyone remember when Sen. Obama declared that raising the debt limit signaled a failure in leadership?
The more I see politics of today the more I think George Orwell simply listed by about 30 years. Imagine a politician a few decades ago trying to make this argument and then calling the other guy’s argument “absurd”.
“While I’m willing to compromise and find common ground over how to reduce our deficit, America cannot afford another debate with this Congress over how to pay the bills they’ve already racked up,” Obama said in the East Room of the White House at what aides have billed as the final news conference of his first term. “To even entertain the idea of this happening, of America not paying its bills, is irresponsible. It’s absurd.”
But the problem is, thanks to both Congress and this administration, we are not paying our bills. We’re borrowing money that we don’t have and have been spending it. I find it ironic, that the president who has run up the largest deficit in history is talking about being irresponsible.
And then, there’s this:
“They will not collect a ransom in exchange for not crashing the American economy,” Obama said. “The full faith and credit of the United States of America is not a bargaining chip.”
But that is precisely what Obama is doing, using the credit rating of America as a bargaining chip – to justify more spending on credit. No irony there. Interesting that Obama is suddenly concerned about “not crashing the American economy” when his profligacy has put us in a position we are in today.
“The issue here is whether America pays its bills,” Obama said. “We are not a deadbeat nation.”
Yes we are. He just doesn’t know it yet, or at least won’t admit it. And much of the cause rests with him as signified by his absurd argument.
In case you’re looking for an “fiscal cliff” bottom line, here it is in one sentence.
According to the Congressional Budget Office, the last-minute fiscal cliff deal reached by congressional leaders and President Barack Obama cuts only $15 billion in spending while increasing tax revenues by $620 billion—a 41:1 ratio of tax increases to spending cuts.
If there’s any good news in this “compromise” bill, it is that the Democrats will get their tax on the rich, and it will make absolutely no difference in the debt.
As we’ve been saying for years, it’s not a revenue problem, it is a spending problem.
In fact going over the fiscal cliff is not been avoided, the chasm has just been deepened. Or said another way, the can has been firmly kicked down the road.
The word of the day?
UPDATE: In case you were wondering what this means in nice round numbers in terms of debt:
The fiscal cliff deal approved by Congress will increase deficits over the next decade by close to $4 trillion, according to the Congressional Budget Office.
Like I said, in full sarcasm mode, “great job!”