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”.
If you’re not very confident in government competence to begin with, this story should add fuel to that fire:
Investigators say the Internal Revenue Service may have delivered more than $5 billion in refund checks to identity thieves who filed fraudulent tax returns for 2011.
They estimate that another $21 billion could make its way to ID thieves’ pockets over the next five years.
$5 billion. $21 billion in 5 years if the ID thieves can’t be rooted out prior to sending the checks.
Surely they have a way of doing that. There have to be simple checks like, oh, I don’t know, an address getting more than one return hoisting a red flag maybe? Or maybe a single bank account receiving more than one return?
For example, investigators found one single address in Michigan that was used to file 2,137 separate tax returns seeking a total of more $3.3 million in refunds. In other cases, hundreds of refunds were deposited into the same bank account.
Guess not. Guess these new fangled computers and programming security checks are just beyond them (such a system would likely cost much less than $5 billion, huh?).
IRS incompetence costs you $5 billion. Add that to the $60 billion a year in Medicare waste, fraud and abuse, and we’re talking real money. And then just imagine all the other waste, fraud and abuse throughout the rest of the federal government and it isn’t at all difficult to understand why we constantly find ourselves in a deficit situation. Or why government, in the form of the Obama administration is raising taxes on everyone (see ObamaCare and the new Medicare tax) and wanting to raise them on the “rich” segment of the society.
So it can give it away to ID thieves and Medicare fraudsters, among other grifters.
[HT: Jamie Dodge]
Are you wearing a cotton shirt? Undies? Neal Boortz is wondering:
Now while you’re sitting there surrounded by all that cottony comfort, I thought you might like to hear about the $20 million dollars that was spent last year by the Cotton Council International. Spent where? Spent in India, that’s where. Spent on what? Well …how about a reality show? Sounds like a good idea, doesn’t it? $20 million for an Indian reality show.
Not much right? But here’s the point. This is something repeated over and over and over again through unnecessary programs such as this using your tax dollars. Crony capitalism. The Cotton Council International needs your tax money like you need a hole in your head. They have members, let them finance the Cotton Council International. My bet is you wouldn’t see money spent like that.
Want to cut waste? Here’s a perfect example of where to begin cutting. As Boortz emphasizes:
Oh … and the $20 million? That came from YOU. It’s taxpayer money. Part of the Department of Agriculture’s Market Access Program.
Now just remember that $20 million. That $20 million represents the entire federal income tax liability of about 2000 American families. That money is money taken from these families that could have been used to pay some past-due bills, get a home out of foreclosure, pay for a family vacation, or put that new roof on the house. But those families didn’t have that money to spend. They didn’t have it because some sharp lobbyist for the Cotton Council managed to talk some political types to seize that money instead and send it to India to swath some Indian babes in brightly colored sarongs for an Indian TV reality show.
Then there’s this little beauty for you to consider.
Amtrak, the heavily government subsidized and controlled passenger rail system, sent out this email to its customers:
Yes, it says exactly what you think it says. If you join a lobbying group that works to increase Amtrak subsidies, you will get a discount. Those who don’t join the lobbying group will pay full fare (such that it is). Or as the recipient of this email says:
Whatever you think of government funding for train travel in the United States, is it problematic that a government corporation will give people discounts if they pay to join an organization that will lobby the government for more subsidies?
Put another way, Americans who pay to support more subsidies get charged less to travel on subsidized trains than those who oppose the subsidies. Two classes of citizens, based on political beliefs, when riding the train?
Apparently that’s fine.
But remember, any cuts we make in spending will lay off police, teachers and fireman. Because everything else that’s being spent right now is both critical and necessary.
I know, I know … it’s just so unusual, right?
What if you could get a free phone with a calling plan whose cost was paid by the federal government? What if you could have eight free cell phones? You can, and people do, Rep. Tim Griffin told The Daily Caller. The annual bill runs over $1 billion, and he’s trying to stop it.
The federal government started the Lifeline program to provide phones to low-income Americans. It originally provided only landlines, but cell phones were added several years ago.
“That’s when the program absolutely exploded and has become a nightmare,” Griffin said in a phone interview with TheDC. Calling it “Uncle Sam’s unlimited plan,” the Arkansas Republican has proposed a bill that would scale back the program to its original form: landlines only.
“People are not only getting [one free cell phone], they’re getting multiples. There are reports of people getting 10, 20, 30 — just routinely getting more than one, selling them, storing them up, whatever,” Griffin said.
The phones come with 100 minutes or more of free air time. And they’re not just basic models either, they’re smart phones, like that one you paid a couple of hundred dollars for along with the contract you are obligated to pay each month.
Silly you. Playing by the rules and trying to make it on your own. Ever wonder what that line on your bill that says “universal service fund” was all about? Well, this is what its about. Your government giving away cell phones with no apparent accountability and you paying for them.
And the companies filling the requests for these phones? Much like what happened in the housing market, they’ve been given incentives by government to fill as many requests as they can.
This is an outgrowth of a program that was initiated to ensure that low-income people had a land line and access to emergency services. Then came cell phones and somehow the yahoos in DC thought it was only “fair” (one supposes) to give those who qualify as low-income individuals access to them too (why, I’m not sure, if the intent was to have a point of access to emergency services, a land line serves that purpose).
The inevitable result is good old waste, fraud and abuse to the tune of a billion dollars a year – something for which government is justly famous.
Oh, and here’s my favorite part:
The Federal Communications Commission, the government agency that is in charge of Lifeline, has also called for an overhaul of the program to deal with fraud and abuse. The FCC’s proposed changes call for a database to keep track of who already has phones, to prevent any one person from gaming the system. The proposed overhaul would also institute “a one-per-household rule applicable to all providers in the program.”
Seriously? Now they think they need a “database” of users? Now?
Have they any idea of who has the phones now?
And, most importantly, why wasn’t this done in the beginning? You know, we do live in the computer/information age. How hard would that have been?
Just another in a long line of well thought out, well run and efficient government programs.
Yeah, let’s campaign for even more, shall we?
This out of control.
Obviously what I’m about to list isn’t going to make or break us as a nation in terms of monetary outlay. Each taken individually is but a drop in the sea of $16 trillion dollar debt we now float in. But the fact remains that each is an indicator of why we’re in that deep of a hole. Each points to another area where government has no business, especially spending taxpayer, or more likely borrowed money. Or it points to an expenditure not made on its reasoned merits, but on bureaucratic inertia, lack of control or monitoring or any of a great number of reasons the payment shouldn’t have been made. Doug Bandow provides us with the list.
Now, on with the show:
~The U.S. Agency for International Development (U.S. AID) spent $30 million to spur mango production and sales in Pakistan—and failed utterly.
Yup, mango production … in Pakistan.
~The Air Force spent $14 million to switch three radar stations to wind power; poor planning forced cancellation of one turbine and consideration of the same for the other two.
Because we all know windpower is proven and reliable.
~The Federal Aviation Administration devoted $6 million to subsidize air service at small, underused airports.
Market smarket … we’ll just create one. Until the money runs out, of course.
~A federal grant for $765,828 went to—I am not making this up, to quote Dave Barry—bring an International House of Pancakes franchise to Washington, D.C.
Because bringing IHOPs to DC is a primary function of the United States government and worthy of every dollar spent.
~The Department for Housing and Urban Development (HUD) provided a $484,000 grant to build a “Mellow Mushroom Pizza Bakers” restaurant in Texas.
Because it is not the market’s job to decide what restaurants should exist in a certain area, it’s the job of government.
~Another HUD grant, this one for $1 million, went to a foreign architectural firm to move its headquarters from Santa Monica to Los Angeles.
Because we knew you’d want us to do it. You need to move? Tough cookies.
~NIH gave the University of Kentucky $175,587 to study the impact of cocaine on the sex drive of Japanese quail.
Because we’re sure Japanese quail are the next target of drug dealers. Or something. But this is important … important enough to up the debt over and don’t you forget it.
~The Federal Highway Administration (FHA) gave $916,567 to underwrite horse-drawn carriage exhibits and survey shipwrecks in Wisconsin.
Because, well, we couldn’t think of anything else to do with the money.
~The Oregon Cheese Guild received $50,400 to promote cheese.
Because obviously the Oregon Cheese Guild wouldn’t be able to promote cheese without this.
~Uncle Sam spent $111,000 to send brewery experts to conduct classes in China.
Because the folks making Tsing Tao obviously couldn’t handle that.
~The ever busy NSF devoted $300,000 to developing a dance program to illustrate the origins of matter.
Because without it … oh nevermind.
And my personal favorite:
~Washington helpfully gave almost $18 million in foreign aid to China—money effectively borrowed from China.
The circle is complete. Borrowing money to give money back to the entity from which we borrowed it while still owing the balance.
Your government at work. Be sure to read the rest of the top 100 wastes of money that Sen. Tom Coburn has helpfully put together. And remember. They’re the top 100. There are plenty more than just didn’t make the cut.
We found out recently that the government perpetrated myth that the health insurance industry were a bunch of “robber barons” was a load. So how about this point that it likes to push about “waste” in our health care system?
Well Reuters obligingly publishes an article today entitled, “Healthcare system wastes up to $800 billion a year.”
The estimate is actually 505 to 800 billion but why not go with the higher number when your “perspective” is to support government reform. Anyway:
The U.S. healthcare system is just as wasteful as President Barack Obama says it is, and proposed reforms could be paid for by fixing some of the most obvious inefficiencies, preventing mistakes and fighting fraud, according to a Thomson Reuters report released on Monday.
The U.S. healthcare system wastes between $505 billion and $850 billion every year, the report from Robert Kelley, vice president of healthcare analytics at Thomson Reuters, found.
“America’s healthcare system is indeed hemorrhaging billions of dollars, and the opportunities to slow the fiscal bleeding are substantial,” the report reads.
“The bad news is that an estimated $700 billion is wasted annually. That’s one-third of the nation’s healthcare bill,” Kelley said in a statement.
So now we have 3 numbers to go with telling anyone with an ounce of sense that they’re really not sure how much waste there is. But for the sake of argument, let’s stick with the 800 billion. Obviously they intend too because this is the sop they’re going to throw out there and claim it will “pay” for their “reform”.
The list is rather interesting. For instance:
* Fraud makes up 22 percent of healthcare waste, or up to $200 billion a year in fraudulent Medicare claims, kickbacks for referrals for unnecessary services and other scams.
200 billion or 25% (not 22%) of the waste comes from the portion of the medical system the government already runs. The same system which now saddles us with 52 trillion dollars worth unfunded future obligations. To this point, the government has demonstrated absolutely no ability to curb such fraud or waste. In fact, it has never shown any interest or desire in tackling the problem. Why should we believe they’re serious about it now?
* Unnecessary care such as the overuse of antibiotics and lab tests to protect against malpractice exposure makes up 37 percent of healthcare waste or $200 to $300 billion a year.
37.5% of additional “waste” comes from doctors protecting themselves from malpractice law suits. Yet there is nothing addressing tort reform in these bills. How, then, does what the administration and Congress are offering address this problem? It doesn’t. It would be a fairly easy fix – but they’re ignoring it. It’s called special interest politics.
That means, to this point, 500 billion of the 800 billion dollars in “waste” are either unaddressed (tort reform) or have never been successfully addressed (Medicare).
* Administrative inefficiency and redundant paperwork account for 18 percent of healthcare waste.
Ever talk to a doctor about the administrative hoops one has to go through to get Medicare to pay for service. Certainly private insurance can be a hassle as well, but there are few if any doctors who won’t treat patients with private insurance while there are a whole host (and growing) who won’t treat Medicare patients. Or said more succinctly – it’s mostly a government paperwork problem.
* Preventable conditions such as uncontrolled diabetes cost $30 billion to $50 billion a year.
And that may or may not be helped by more preventive medicine – there are very mixed reviews on how cost effective it really is. However, even if it did a 100% better job than is now being done (which is extremely unlikely), a) it won’t cost less and b) it still remains up to those needing such treatment to seek it out. Regardless, at most it is 6% of this 800 billion in “waste”.
In summary, the government is responsible for 25 – 40% (add in about 15% of that admin number). Malpractice avoidance – something they could fix or at least lower with tort reform – accounts for 37.5% of the total. Preventable conditions may or may not constitute the final 6% described here. That leaves 14% or in undocumented waste, probably broken down in numerous smaller categories that are going unaddressed.
What this all means is government could clean up its own mess and cut waste to 600 billion, pass tort reform and cut it to 300 billion, make Medicare easier for doctors to administer and cut it to about 150 billion.
Instead we’re stuck with an attempt at a complete overhaul with the government trying to sell us on the idea that the problem is with the private sector and giving government more power over health care is the cure.
The cognitive dissonance is so loud you have to wear earplugs.
The Promise And The Reality (Part II) – Massive Waste, Fraud And Abuse Likely With Passage Of “Stimulus” Bill
The fear-mongering and panic inducing rhetoric used by the Obama administration and Congresional Democrats concerning the “stimulus” bill has set up another probable broken promise – this time on an unimaginably massive scale.
The Promise: The end of wasteful government spending and more accountability:
-Make Government Spending More Accountable and Efficient: Obama and Biden will ensure that federal contracts over $25,000 are competitively bid. Obama and Biden will also increase the efficiency of government programs through better use of technology, stronger management that demands accountability and by leveraging the government’s high-volume purchasing power to get lower prices.
– End Wasteful Government Spending: Obama and Biden will stop funding wasteful, obsolete federal government programs that make no financial sense. Obama and Biden have called for an end to subsidies for oil and gas companies that are enjoying record profits, as well as the elimination of subsidies to the private student loan industry which has repeatedly used unethical business practices. Obama and Biden will also tackle wasteful spending in the Medicare program.
The administration’s promise was transparency, bid competition, and new auditing resources and oversight boards.
The Reality: But this “stimulus” bill will most likely overwhelm any ability to properly monitor the spending anticipated. And, if such proper monitoring and regulating of spending is indeed required, it will drastically slow the spending process which is supposed to provide the stimulus.
The Obama administration’s economic stimulus plan could end up wasting billions of dollars by attempting to spend money faster than an overburdened government acquisition system can manage and oversee it, according to documents and interviews with contracting specialists.
The $827 billion stimulus legislation under debate in Congress includes provisions aimed at ensuring oversight of the massive infusion of contracts, state grants and other measures. At the urging of the administration, those provisions call for transparency, bid competition, and new auditing resources and oversight boards.
But under the terms of the stimulus proposals, a depleted contracting workforce would be asked to spend more money more rapidly than ever before, while also improving competition and oversight. Auditors would be asked to track surges in spending on projects ranging from bridge construction and schools to research of “green” energy and the development of electronic health records — a challenge made more difficult because many contracts would be awarded by state agencies.
The stimulus plan presents a stark choice: The government can spend unprecedented amounts of money quickly in an effort to jump-start the economy or it can move more deliberately to thwart the cost overruns common to federal contracts in recent years.
“You can’t have both,” said Eileen Norcross, a senior research fellow at George Mason University’s Mercatus Center who studied crisis spending in the aftermath of Hurricane Katrina. “There is no way to get around having to make a choice.”
So here’s the choice – remove the oversight, drop the transparancy, go with “no-bid” contracts and eschew the auditing process which will slow the spending to a trickle, or keep them in place and accept the molasses slow flow of supposed stimulus funds.
The probability is we’ll see the promise go by the boards. Why? Because of the insistence by both Congressional leaders and the administration that this bill be passed now, that it can’t wait and that it shouldn’t be debated (and by implication, shouldn’t be closely examined either).
“We don’t have the means to make sure we don’t blow through billions of dollars and give it to the wrong people,” said Keith Ashdown, chief investigator at the nonpartisan Taxpayers for Common Sense. “We’re on track to lose billions, if not tens of billions, to waste, fraud and abuse.”
Goodger said the federal contracting system has been extremely troubled in recent years. He emphasized the lack of trained employees to manage contracts, which he called a “human capital crisis.”
Stan Soloway, president of the Professional Services Council, a group that represents government contractors, does not oppose the stimulus package. But he said the government appears to lack the planning and the “infrastructure and architecture” upfront to manage the spending.
“Without it,” he said, “we’re going to have a repeat of what we’ve seen over and over and over, from major weapons systems to Katrina and Iraq.”
Hope and change.