The massive federal budget deficits of the last several years have resulted in an unprecedented increase in our national debt. Since President Obama came to office, the national debt has soared from $10 trillion to nearly $16 trillion, a 50% increase. This uncontrolled federal spending and the accompanying increase in the level of national debt cannot continue. Otherwise we will find ourselves in the same situation as Greece, Spain, Portugal, Italy and other countries whose massive social programmes have led them to financial collapse. If we do not control the amount of federal spending, stop deficit spending, and stop increasing the national debt, several things will ultimately happen. This isn’t speculation, it is simply economic fact what will eventually happen:
- Higher interest rates—as borrowing and debt increases, particularly since the US Treasury debt has been downgraded for the first time in history, interest rates will eventually rise. Not only will it cost more the Treasury to borrow money, individuals and businesses seeking bank loans, mortgages, etc. will have higher borrowing costs.
- Higher taxes—increased spending will result in higher taxes to fund the spending in addition to the incursion of more debt
- Lower economic growth—as rates rise and taxes rise, economic activity declines
- Weaker dollar—Lower growth+Higher Taxes+Higher Interest Rates=Depreciation in the Dollar
- Inflation—Continued accommodative monetary policy aimed at keeping rates low and stimulating economic activity has massively increased the money supply. More dollars chasing goods=inflation
If the President and the Congress are serious about reducing the deficit, it’s pretty simple—return the budget to 2000 levels immediately. There’s absolutely no reason that the budget can’t be balanced before 2020. Any politician who doesn’t support a return to 2000 spending levels isn’t serious about cutting spending, eliminating the deficit, or reducing the national debt and should be voted out of office. Would it be easy to revert to spending levels from 2000? No. Would it be painful for a lot of government agencies and programmes? Yes. Can it be done? Yes. Would it be effective at eliminating the deficit? Yes. If there a political will to do this in Washington, D.C.? No.
Remember, every dollar that the federal government spends, that is appropriated by members of the Congress and approved by the President, is a dollar from the pocket of a working American or a business that employs workers and creates jobs or is a dollar that is stolen from future generations of American workers and taxpayers. Money doesn’t grow on trees. It comes from someone’s pocket. Borrowing the money to fund spending is only robbing from Peter to pay Paul. Someone down the road will ultimately have to foot the bill for spending today over which they may or may not have had any control or any say.
In addition to reverting to 2000 spending levels, I’ve come up with a few additional ways that the federal government could start saving money.
Eliminate fraud in Social Security—Various estimates place improper payments of Social Security benefits at over $8 billion annually. This could come in several forms such as continuing to issue checks to dead people or people simply cheating the system. You wouldn’t think that checks keep getting sent to dead people, but if their death isn’t properly reported to the Social Security Administration, the checks keep coming. People are milking the system and robbing from the Social Security Trust and every American worker and taxpayer. Review annually the database, do cross checks, or have some computer programmer write a program that enables searches of public death certificates, Social Security numbers, etc. to eliminate the fraud and waste from paying dead people.
In addition, there are far too many instances where strung out and burned out druggies have found some doctor to say they aren’t able to work or they have some mental deficiency that prohibits them from working so they need to collect disability insurance. If you don’t think this happens, go sit at the local Social Security Administration office for a week or two and check out who’s coming in there. If these people are as messed up as their doctors say they are, I don’t think they should be roaming the streets. They should be in institutions collecting their checks and using it to pay for their care and treatment in the institution.
With roughly 207 million insured workers, the $8 billion improper payments are costing each worker about $39 per year.
Investigate Medicare Fraud—Just as there are improper payments in Social Security benefits, there are massive amounts of Medicare fraud resulting in over $48 billion in improper payments annually (not including any improper payments associated with the Part D prescription drug benefits). The biggest perpetuators of Medicare fraud are healthcare providers who bill Medicare multiple times, bill for products not delivered or services not rendered, bill for medically unnecessary services or procedures, misrepresent services, falsify cost reports, increasing units of service, kickbacks, and other fraud that results in overpayments or improper payments. Why not put the IRS to good use and audit any healthcare provider that has received a payment from Medicare? I bet the IRS would recover a good portion of these improper payments.
In addition, if you read the statement by Kathleen King, Director of Health Care, United States Government Accountability Office, in testimony before the Subcommittee on Oversite and Investigations, Committee on Energy and Commerce, from March 2, 2011, it sounds like the Medicare system is plagued by numerous management challenges that enable this type of waste and fraud. If the people overseeing the Medicare programme are not competent to do so, get rid of them and get someone in there who can do the job, put the controls in place, and provide the proper oversight so that billions of taxpayer and workers’ dollars aren’t misappropriated. With the technology we have today, it is inconceivable that we aren’t able to better track payments, etc. to eliminate waste.
This fraud costs each worker in America about $232 annually.
Welfare Fraud—Ronald Reagan once referenced welfare queens driving welfare Cadillacs. He wasn’t far off the mark. We’ve all seen welfare recipients who have multiple children so they can get more welfare money. They see each child as a new check. These women are nothing more than baby mills, pumping out kids so they can milk the system for a bigger welfare check and more food stamps. While this is just plain wrong and a major abuse of the system, it doesn’t really constitute fraud. While we need to make disincentives for welfare recipients to have more kids, we also need to investigate welfare fraud whereby ineligible recipients are receiving benefits or are using food stamps for items like beer or cigarettes. We’ve all seen someone in the grocery store, usually with a couple of kids in tow, using food stamps to buy beer or cigarettes DESPITE FEDERAL LAW AGAINST THIS. The stores don’t care, because they’re not going to get caught because no one is investigating this type of fraud. As an alternative, food stamp recipients can sell their food stamps or their food stamp card for cash which can then be used for the purchase of cigarettes or alcohol. Is this really what we want food stamps, funded by our tax dollars, to be used for? I don’t think so. In this regard, perhaps we should reform the food stamp programme so that food stamp monies are used to fund local food banks for welfare recipients. Each recipient can go to the food bank and receive their weekly or monthly ration of foods—rice, canned goods, etc. It shouldn’t be hard to keep track of welfare beneficiaries in a computer system to allocate the food.
In any event, welfare programmes (not including unemployment) cost taxpayers about $335 billion annually. Statistics on actual fraud are scant to be found, but there are estimates of fraud ranging from 2-3%. I personally think this underestimates the level of fraud which is more likely somewhere in the range of 5-7%. What does this mean in dollar terms? At 3%, welfare fraud costs taxpayers about $10 billion annually. At 5%, welfare fraud costs taxpayers $16.7 billion annually. So, let’s just say this costs the average worker somewhere between $48 and $81 annually.
Now, let’s consider the unemployment benefits fraud. According to the GAO, improper or fraudulent unemployment benefit payments cost taxpayers about $4 billion annually or about $19 per worker annually.
Farm Subsidy Fraud—I’ve advocated for years that we need to end all farm subsidies completely and permanently. Why should we be paying farmers to keep their fields fallow while we buy produce from other countries. I have a serious problem that we pay farmers not to grow crops then buy produce like lettuce, green onions, and strawberries from places like Mexico with very lax standards for sanitation, etc. This is how we end up having salmonella and other sickness outbreaks from eating tainted food brought in from other countries. I don’t think we even grow pineapples in Hawaii anymore; they’re imported from Central and South America. We spend something like $15 billion annually on farm subsidies. A GAO report from a couple years ago indicated that the USDA paid over $1.1 billion in subsidies over six years to 170,000 dead people! The GAO estimates that fraudulent farm subsidies cost taxpayer about $500 million annually. While the fraudulent payments at this level cost each worker about $2 annually, the entire programme costs workers about $72 annually.
Foreign Aid—Did you know that the federal government spends over $50 billion annually on foreign aid? That’s right $50 billion of your tax dollars goes to people overseas. For example, this year’s budget includes $770 million for a Middle East and North Africa Incentive Fund. They hate us. How about $2.4 billion for Pakistan? They hate us too. How about $600 million for Educational and Cultural Exchange Programs? Really? How about $1.6 billion for Contributions to International Organizations (such as the UN)? That’s a waste. And how about the $6 billion for the Economic Support Fund that gives $289 million to South Sudan, $105 million to Liberia, $50 million to Democratic Republic of Congo, $38 million to Sudan, $24 million to Zimbabwe, $250 million to Egypt, $70 million to Lebanon, $38 million to Yemen, $141 million to Haiti, $15 million to Cuba. A lot of those countries hate us and we’re just throwing good money after bad. Anything we give to those countries is likely being misappropriated to dictators, warlords, or people who hate us. Democracy in those countries? We’re only fooling ourselves.
And how about $250 million for forgiving debt that other countries owe us? Anyone forgiving our debt? Don’t think so.
Personally, I think we should be taking care of our own problems here in the United States and our own people first. If private fundraising organizations want to raise private donations to give to these countries and these causes, great! Otherwise, they can do without until we have all our own affairs in order. The government shouldn’t be squandering our hard earned tax dollars on other countries until our financial house is in order.
If you’re one of the 207 million workers in the US who are paying taxes, foreign aid costs you about $242 annually. Does it make you feel good to know that this money is being given to other countries that hate us?
Federal workforce cuts—Federal workers are paid well and receive benefits that would be the envy of most state workers and private sector employees. There are about 1.86 million federal workers. The average pay is about $76,000. About 420,000 federal workers make less than $50,000 and about 420,000 make more than $100,000. Just over 1,000,000 workers make between $50,000 and $100,000. A lot of Americans would love to fall into one of these categories. And, this doesn’t include generous benefits offered to federal workers such as the Federal Employees Retirement System, Thrift Savings Plan, Federal Employees Health Benefits Program (the Cadillac plan), Federal Employees Group Life Insurance, 13 days sick leave, 10 days paid holiday, up to 26 days of vacation based on years of service, Family Friendly Leave Flexibilities, Recruitment Bonuses, Relocation Bonus, Retention Allowance, Student Loan Repayment, Long Term Care Insurance Programs, and Child Care Subsidy Programs.
It is an insult to the American taxpayers that hard earned tax dollars are going to pay for federal workers’ child care, particularly when the majority of the taxpayers have to foot the bill for their own child care. And why should the American taxpayers repay student loans for government workers? Look, these federal employees are, on average, making more than private sector counterparts. Why should all of these benefits be paid for by the taxpayer in addition to these very generous salaries? Let them pay for their own damn childcare and student loans just like everyone else. It seems like the bureaucrats, and that’s what federal workers really are, get to ride the gravy train at the taxpayers’ expense. Salaries for federal workers alone (excluding the cost of benefits) costs each worker about $684 annually.
Federal workers can’t go crying poor mouth. The average state employee in the US makes about $58,000. The average salary of federal workers at $76,000 is over 30% higher than state workers, who make about $2,500 more annually than comparable private sector workers.
I’ve long advocated eliminating completely some federal departments like the Department of Education, the Department of Labor, the Department of Energy, the Department of Agriculture, just to name a few. These departments employee tens of thousands of federal workers, and no one seems to know what they really do. The folks at the Department of Energy haven’t solved our energy problems and dependence on foreign oil. The Department of Education isn’t teaching our students, and so on. They don’t seem to be accomplishing much, so maybe we should start with some personnel cuts in these departments?
But eliminating who departments probably isn’t going to happen overnight, so how about this proposal? Let’s cut the entire federal workforce across the board by 3% OR cut all federal employee pay by 6% OR reduce federal pay to state worker averages. What would this mean in dollar terms? Eliminating 3% of the total federal bureaucracy would eliminate about 56,000 jobs at an average salary of $76,000, saving taxpayers about $4 billion annually. Cutting all federal employee salaries by 6% (this doesn’t touch the issue of “benefits”) would save taxpayers about $8.5 billion annually. Now, let’s say we cut federal salaries to the average state worker salary of $58,000. That would say taxpayers a whopping $34 billion annually.
I don’t have a problem with people being paid well, but the pay for bureaucrats is, quite frankly, ridiculous by any reasonable standards.
Audit each department for fraudulent spending—Here’s a novel idea…let’s have the IRS not only audit for Social Security, Medicare, and Welfare fraud but also audit each and every department of the federal government. Remember the scandal at the GSA where the taxpayers footed millions of dollars in wasteful spending, like the trip to Las Vegas? If the IRS had been auditing the federal government, maybe the GSA wouldn’t have gotten away with this.
The GAO has, in fact, done some auditing of their own and determined that nearly half of all purchases on government credit cards are improper, abusive, or fraudulent for things like gambling, mortgage payments, liquor, iPods, Xboxes, jewelry, televisions, entertainment, prostitutes, and vacations. Apparently, bureaucrats like to wine and dine on the taxpayer dollar—one such dinner cost taxpayers $13,000 at a Ruth’s Chris in Orlando. And how about the $146 million annually on flight upgrades to first class because some bureaucrats refuse to fly coach? Where’s the accountability? Purchases on federal credit cards total over $18 billion annually. If roughly half of these purchases are classified at improper, abusive, or fraudulent, this costs taxpayers $9 billion annually or about $43 per worker annually. It sort of like each worker in America buying a federal employee a dinner at Ruth’s Chris each year. How do you feel about this?
Eliminate ineffective or redundant programmes—Numerous studies have concluded that there is a tremendous amount of overlap or redundancy in federal programmes and a high degree of inefficiency in federal programmes.
First, the GAO did a study a few years back that indicated duplication in over 300 economic programmes, over 100 programmes for at-risk youth, 100 programmes for the disabled, and so on. These are all duplicate programmes being handled by difference departments or agencies within the federal government. It makes no sense for multiple departments to be handling similar programmes. Consolidate them and reduce the overlap and redundancy.
Second, the administration of President George W. Bush reviewed over 1,000 different federal programmes and found that about 20% are either classified as ineffective or results not demonstrated such as the IRS Earned Income Tax Credit Compliance, Workforce Investment Act, Trade Adjustment Assistance, Juvenile Accountability Block Grants, AmeriCorps National Civilian Community Corps, just to name a few. Does anyone actually know what these programmes are or what they do or what they hope to accomplish?
It sounds like these programmes are just a waste of taxpayer money. If they’re ineffective or if the results aren’t sufficient to be noticeably measurable, they’re probably not doing what they were intended to do. Pull the plug on them and quit wasting money! In fact, duplicate programmes or ineffective programmes cost taxpayers over $120 billion annually. That’s about $580 per worker each year. It certainly seems like these programmes are only intended to give some bureaucrats a job or the opportunity to misappropriate taxpayer funds.
Close overseas military bases—Did you know that the US military has more than 700 bases overseas (not including those in Afghanistan)? These bases cost money to operate. They aren’t free. There are utilities, maintenance and repairs, rent, etc. In addition, these bases are concentrated in places where we don’t need to be. There are about 200 bases in Germany, over 100 in Japan, and over 80 in South Korea. We don’t need to be in Europe. Germany isn’t going to rise up again and try to take over France. There are some estimates that these bases overseas cost US taxpayers over $100 billion annually to operate and maintain. Really? Do we really need to be spending taxpayer money to maintain and operate bases in places that aren’t in danger anymore and that don’t have a strategic value in this day and age? World War II is over. The Cold War is over. Let’s get out of these places, close the bases, and bring our troops back home. They can be redeployed to protecting our border and guarding our airports, nuclear facilities, ports, etc. We’ve got about 81,000 active servicemen and women in Europe alone! Keep one base with a skeleton crew and bring the rest home. Do you know what kind of economic boost we would get with 75,000 troops along the border with Mexico? These service personnel with combined salaries of well over $1 billion would be spending money here in the United States not in Germany or Italy or anywhere else in Europe. Putting the money into our economy is a whole lot better for us!
Closing a number of overseas bases and bringing the troops home won’t weaken our military. I’m not suggesting we reduce the size of the military. I’m merely suggesting we close the bases overseas and redeploy the troops to more strategically advantageous locations—like our border with Mexico.
At $100 billion annually to operate the overseas bases, the 207 million workers in the US are each paying about $483 per year to keep these bases open. Is it worth it?
Sell off government owned properties—Even the Obama administration has realized that the federal government has a lot of excess properties—about 14,000 unused or underused properties to be exact. Some government estimates suggest maintaining these properties costs taxpayers over $1 billion annually. Other estimates suggest the cost of unused federal properties is upwards of $25 billion annually. The Department of Defense, for example, may be spending $3 billion annually on maintenance of unused buildings.
The simple fact is that the federal government has a lot of property and it isn’t managing its real estate assets very well. If the building isn’t being used, why keep it and maintain it? Sell it if you can and get some money for it, or if it’s in an area that would have to be remediated, demolish it and eliminate the annual maintenance expense. If the federal government has over 1 billion square feet of excess space, why not consolidate offices as much as possible?
If you have two buildings that are half empty, you’re paying utilities for both buildings, maintenance, etc. Consolidate operations into one building, shut the other building down, save on the utilities of the empty building, and then sell it. If you have two homes and you can only live in one of them and you can’t afford to let the other one sit empty, you have a couple of options: sell the second home or rent it out. In either case, you’re converting an asset that is only incurring expenses into one that has generated a lump sum of cash or monthly cash flow from rental income.
Evidently, the federal government isn’t concerned about that. Of course, it’s easy to spend other people’s money. These excess federal properties or unused federal properties are costing each American worker somewhere between $5 and $121 per year.
Conclusion
The federal government wastes massive amounts of taxpayer money annually on improper payments, fraud, simple waste, excessive salaries for federal workers (not including the generous benefits packages), redundancies, foreign aid, etc. The aforementioned areas where the federal government could start saving money almost immediately are costing the average American worker about $2,000 per year. The IRS has a lot of tenacious employees who would just love to dig into federal departments and audit their expenditures. Let’s have the IRS focus on investigating this type of fraud as well. Isn’t it time we turn the tables and make government departments across the board accountable for the money they are spending? This isn’t their money. It’s money that belongs to each and every taxpayer in America. There is a pervasive lack of concern or lack of caring about waste and fraud in the federal government by employees of government agencies. After all, it’s easy to spend money that isn’t yours, particularly when there is little or no accountability. It’s like the fox guarding the henhouse. Any federal agency or department that is spending taxpayer money has a fiduciary responsibility to the American taxpayer to make sure that money isn’t wasted or misappropriated or fraudulently spent.
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