A Giant Insurance Company With An Army

With Tax Day now behind us, it’s worth looking, again, at where our tax dollars come from and also how our tax dollars are spent.  The Brown Bear helpfully sent me an article reporting on the Taxpayer Receipt prepared by a nonpartisan group called the Committee for a Responsible Federal Budget.  While the original article is behind the Wall Street Journal website paywall, a Fox Business reprint of the article’s text is available on-line.

ss-recipientThe Taxpayer Receipt shows how every $100 in federal taxes was spent in 2016 — and, to give a sense of the trend lines, how that same $100 was spent in 2011, too.  The result supports the conclusion memorably expressed by the line I’ve used as the headline for this piece:  the United States has become a “giant insurance company with an army.”

Why?  Because half of all federal spending goes to Social Security, Medicare, Medicaid, and health programs, and that number is growing, with Social Security spending up 17% since 2011, Medicare up 15.1%, and Medicaid up 25.4%.  Social Security gets by far the biggest piece of the federal spending pie, receiving $23.61 of every $100 in tax dollars.  Medicare places second, with $15.26.

And what about that army?  National defense comes in third, with $15.24 of every $100 in taxes paid.  That amount dropped 22.3% from 2011 to 2016, incidentally.

On the spending side, the lesson from these numbers is clear:  we’ve become an enormous social welfare state, with benefits continuing to expand.  As the percentage increases from 2011 to 2016 indicate, the growing spending on such programs is crowding out our ability to fund other programs, like transportation infrastructure, federal parks, space exploration, and every other federal initiative you can name.  And the increased spending isn’t helping the nagging problem of Social Security solvency, either.  The program is underfunded by at least 20 percent, and under current projections the Social Security Trust Fund (not exactly an accurate moniker) will run out of money in 17 years.

Oh, and here’s another interesting data point — fully $6.25 of every $100 in tax revenue goes to pay interest on the national debt.  That number is growing, too.

On the tax generation side, the individual income tax provided 47% of the $100, with payroll taxes producing 34%, corporate income taxes 9%, and customs duties and excise taxes another 9%.

Now, get back to work!

Advertisements

Bald-Faced Waste

Imagine, for a moment, that you are a bureaucrat at the National Institutes of Health charged with making decisions about spending the NIH budget.

One of your subordinates comes to you with a proposal for the NIH to spend $22,500, over two fiscal years, to fund the 9th World Congress for Hair Research.  The subordinate notes that the theme of this year’s World Congress, sponsored by the North American Hair Research Society — which will be held at the “luxurious InterContinental Miami” hotel in Miami, Florida — is Reflect, Rejuvenate, and Regenerate.  He says the Congress will bring together “hair biologists, dermatologists, cosmetic scientists and hair transplantation surgeons” to “present new research, share experiences, and discuss new directions for the advancement of knowledge in hair growth, hair and scalp disease, and clinical care” and is sponsored by the likes of Women’s Rogaine, Procter & Gamble, HairMax, Theradome, L’Oreal, Aveda, and the International Society of Hair Restoration Surgery.

baldheadsDo you: (a) tell the subordinate that his proposal is a very funny joke, and share a good laugh at the outlandish idea of federal tax dollars being used to help put on a “luxurious” conference about baldness and hair restoration surgery, (b) gently but firmly tell the subordinate that baldness and hair implant surgery aren’t the kind of serious health concerns that require the attention or support of the National Institutes of Health, or (c) rubber-stamp the proposal because it’s only for $22,500 out of the multi-million dollar NIH budget and note that the session about “Robotic Hair Transplants” looks like it should be interesting.

If you picked (c), you have a future as a federal bureaucrat.

In the grand scheme of trillion-dollar federal budget and trillion-dollar deficits, a $22,500 payment toward the 9th World Congress for Hair Research — which is going on now, thanks in part to your tax dollars — is just a drop of Rogaine in the bucket.  This is about principle, however.  Either the people who make decisions about how federal tax dollars are spent are zealous guardians of the public fisc, or they aren’t.  And while some men and women may fret about losing their hair, there simply is no justification for federal support for a hair-care conference that already is amply supported by large corporate sponsors peddling hair-care products and hair restoration and regeneration treatments and techniques.

Kudos to Senator Rand Paul — whose tousled coiffure is at the other end of the hair spectrum — for calling attention to this little example of spending silliness.  You can see the NIH information about the funding for the 9th World Congress here and here, and the Congress website is here.

Our reckless federal spending has fallen off the political radar screen, both because we’ve become hardened to enormous federal budget deficits and because other issues have come to the forefront.  At some point, though, our federal government’s inability to control its budget and to resist obviously unnecessary spending will have terrible consequences.  And that’s the bald-faced truth.

The Governmental Accountability Problem

On Thursday the State Department’s Inspector General issues a report stating that $6 billion in contracting money spent by the Department over the last six years cannot be properly accounted for. The report noted “significant financial risk” and “lack of institutional control” and, astonishingly, reported that the State Department could not even produce contract files documenting precisely how $2.1 billion was spent.

Perhaps the most damning aspect of the report is the apparent utter lack of concern about accountability in spending our tax money. In the State Department, the inspector general position — which is supposed to be a kind of public watchdog — went unfilled for almost six years. Moreover, there have been fraud warnings and prior reports about slapdash controls and accounting for money shoveled overseas and paid to private contractors, and the State Department failed to address the problems.

I have two reactions to this news. First, this is the kind of story that feeds the fury of fiscal conservatives, who believe that the federal government takes too much of our money and then simply wastes a lot of it. The government takes in and spends so much money that even an astronomical sum like $6 billion is only a drop in the bucket — but we’ll never know precisely how that $6 billion was spent and how much of that money was lost to fraud, corruption, or simple overspending by unconcerned bureaucrats. How could an important position like inspector general go unfilled for six years?

People who support big government spending tend to pooh-pooh the focus on “waste, fraud, and abuse,” but I remain convinced that a federal government that actually had to tighten its belt because of budget reductions would find lots of places where money could be saved or spending reprioritized. At present, with the federal government awash in cash fueled by constant, large-scale deficit spending, the government has no incentive to be careful and prudent in its spending — and as a result reports and warnings about financial accountability tend to be ignored.

Second, this story can’t help whatever presidential aspirations Hillary Clinton may have. She ran the State Department for much of the period when accountability was lacking and warnings apparently were disregarded. As I understand it, part of her pitch is that she would be more fiscally conservative than other Democrats who might seek the presidency — but this report really undercuts the perception of careful stewardship of the public fisc that Hillary Clinton is trying to project. If you strongly believe that the government needs to get its fiscal house in order, how can you vote for someone who presided over a department that couldn’t even document how it spent $6 billion? If a public company were in a similar situation, the CEO would be fired, the SEC investigators would be knocking at the door, and private lawsuits would be inevitable.

It may never happen, but wouldn’t it be refreshing if we elected administrations that actually paid attention to the unglamorous nuts and bolts of accounting for their spending, reassessed whether long-time programs were still truly needed, tried to save a penny here and there, and acted like they took financial responsibility seriously, rather than worrying about immediately jetting off to some faraway location for a photo op with a reset button?

Guns, Guns, Guns . . . And Distraction

Your daily newspaper and your favorite news websites have been dominated recently by news about guns and gun control.  Since the awful shootings at the Sandy Hook elementary school, where a heavily armed lunatic murdered more than two dozen children and adults, our political leaders have been talking a lot about firearms and what we can do to prevent another horrible massacre.

In an odd way, the opportunity to talk about guns must be a kind of welcome relief for our politicians, because the gun control debate lets each party retreat to safe, time-honored positions that appeal to their bases.  Democrats understand that most of their voters will support attempts to license gun owners, register all weapons, and restrict or even ban ownership of “assault weapons” or other firearms.  Republicans, on the other hand, know that their supporters will cheer vigorous defenses of the Second Amendment right to keep and bear arms and stalwart opposition to overly zealous attempts to regulate gun ownership.

I suspect that all of the talk, talk, talk about guns is, in part, a means of distracting voters from other pressing issues.  Members of Congress and the Obama Administration would rather stay snugly in their gun debate comfort zones than deal with the spending, tax, and budget deficit issues that have far more long-term significance for our country.  With all the talk about guns, how much discussion of those core economic issues have you heard recently?  When those issues are in the forefront, and feet are being held to the fire, there are no easy, pat answers and no rote appeals to political bases.

As terrible as the Sandy Hook shootings were, we shouldn’t let our political leaders divert our attention from the federal debt time bomb and other issues that are restraining our economy.  Yesterday we received an unpleasant reminder of these problems when it was announced that gross domestic product dropped in the fourth quarter of last year.  Imagine:  our economy actually shrank during the hottest shopping season of the year.  It’s time we remind Congress and the President of the paramount need to focus on the hard budget and economic issues, before our economy plunges into another recession.

A Few Thoughts On The Paul Ryan Pick

I’ve been off the grid, so I didn’t think much about Mitt Romney’s pick of Paul Ryan as his running mate until today.  As we were driving home, Russell, UJ, and I listened to a replay of Meet The Press, which featured the all-too-predictable conservative and liberal shouting match about whether Ryan’s budget plan will gut Medicare and destroy the student loan program — among other issues.

Of course, it’s too much to expect that any political debate these days could be done at a reasonable decibel level, without yelling or over-the-top metaphors.  Nevertheless, I thought the discussion (if you can call it that) itself said something about the selection of Ryan.  Rather than arguing about whether the pick would help Romney politically in this state or with that constituency, the commentators were talking about something of actual substance — the budget, our debt problems, and how we deal with them.  How refreshing it would be if this election actually involved consideration of those crucial, meat-and-potatoes issues, rather than phony, grossly overheated topics like whether the evil Bain Capital caused a woman to die of cancer!

I think our exploding debt is the most important issue we face.  I therefore applaud anything that gets our country to focus on its budget problems and the hard choices we need to make to actually address those problems.  I recognize that my fellow citizens might disagree with my views on how we should address those issues — but that’s what elections are for, aren’t they?  If the selection of Paul Ryan causes President Obama and Mitt Romney to lay out their plans on taxes and spending and the deficit in sharp detail, and the election becomes a referendum on those plans, I think our country would be much better off.

For these reasons, Romney’s selection of Ryan is a positive thing for us all.  I hope we’ll be talking more about Ryan’s budget, and other fiscal issues, until Election Day.  For now I say, let the debate begin — and let’s see if we can’t have that debate in a civilized way, shall we?

Butt Belts And Budgets

Our political leaders’ approach to our budget woes reminds me of a curious device that we found in my grandmother’s basement, long ago.

We called it the butt belt.  It was a machine linked to a canvas belt.  You stood on a platform, slipped the belt around your keister or waist, and turned on the motor.  The belt vibrated and you leaned back, letting the contraption shake your rump like crazy.

The marvelous concept was that you could just stand there, let the machine do all the work, and the mechanical jiggling of your flesh would make the pounds and cellulite melt away.  Heck, you could even eat a sandwich back there, while the machine whaled away.  And after you were done shrinking your ample butt, you just turned around and let the magic belt cause that stubborn belly flab to vanish.  A few sessions with the butt belt, and you’d be ready to slip into that new bathing suit!

Of course, the machine really didn’t work, which is why we never found Gramma down there, getting shaken all over.  We now know that if you’ve overindulged, lost any sense of dietary discipline, and let yourself go, getting back into reasonable shape is going to require some really hard work on your part.  You’ll have to get some exercise and sweat, reduce your caloric intake, and change your habits to stop the constant snacking if you really want to make progress.

Hey, President Obama and members of Congress!  Standing immobile and hoping that the butt belt machine will magically turn your blubber into muscle won’t do the trick!

On Tax Day, Remember The GSA!

All American taxpayers should be grateful this April 15, as we curse and finish our returns and contemplate how much we pay to our federal government:  we have the General Services Administration out there working for us.

You all know the GSA, of course.  Its website describes the GSA as “responsible for improving the government’s workplace by managing assets, delivering maximum value in acquisitions, preserving historic property, and implementing technology solutions.”  To translate: the GSA are the bureaucrats bureaucrats.

The GSA has been in the news lately, but not due to its selfless performance of its crucial bureaucratic mission.  No, the GSA is in the news because the agency spent $822,000 — $822,000 — on its 2010 Western Regions Conference in Las Vegas.  That included payments for upscale accommodations, commemorative coins, and $3,200 for a “mind reader,” among other indefensible expenditures.  When an Inspector General’s report uncovered the gross waste, the GSA Administrator resigned.  Now the GSA official charged with organizing the event, who has been subpoenaed to testify about the matter before Congress, has indicated he will invoke his Fifth Amendment privilege against self-incrimination.  In short, there’s not just concern about bad judgment — there’s concern that outright criminal conduct may have occurred.

If you look at the GSA website, you’ll find a video of the acting administrator of the GSA, Dan Tangherlini, soberly pledging that the GSA will adhere to the highest standards of ethics and service.  (You’ll also learn that the GSA has its own flag, which appears behind him.  Thank God for that!)  The video is a classic of buzzwords and bureaucratese — other governmental bodies are called “client agencies” and “customers,” and the response to the abuse of the Western Regions Conference talks about rules and “top-down” agency reviews.  In short, the timeless solution to abusive practices in the bureaucracy is more bureaucracy!

Forgive me if I’m not reassured that the same agency that allowed the abuse is recommitted to its end.  The only real solution to waste and abuse in government is to cut back government, period.  Does anyone really think the country would grind to a halt if the GSA budget were reduced to one-third of its current size?

As I sign and send my returns today, I’ll be thinking of the GSA and its careful stewardship of our tax dollars.  And during this campaign season, when we hear candidates for federal offices talk about how “draconian” proposed budget cuts are, and how we need to raise taxes because cutting spending is just too difficult, I’ll think “Remember the GSA!” And then I’ll vote for their opponent.