Thursday, February 14, 2008

A Systemic Waste of Taxpayer Treasure

Frequent contributor Dorothy S. recently wrote about her experience of needless waste in the Veterans Administration.
Like the elephant in the room nobody talks about, we all know our Federal and local government agencies are often larded with just this sort of heedless waste. Even more galling, when this is pointed out, we're often told, "it's not worth our time to be more efficient."

"This letter is to gripe about our government's waste problem. Now keep in mind that this particular incident is small in nature, but multiply it out and you have a lot of wasted money.
My father died last October from ALS. He was a veteran and the Veterans Administration took excellent care of him. As the disease progressed the VA gave us many special devices to help our father with his disabilities. Two items in particular were a top of the line, brand new wheelchair and an electronic communication device (a mini computer basically). My father's disease progressed rapidly and both items were never used.

After he died we called the VA and asked where we could send the items back. To our surprise they didn't want them back. We were shocked. I'm sure other vets could use these things. So I went online to see how much they cost. The wheelchair was $375.00 and the communication device was $3000.00.

So my mother and I donated both items to other ALS patients and we're happy they're being used by people who need them, but it upsets me that the VA didn't want them back. This is our money after all. Our taxes go for every expenditure our government makes. I would never run my household like this although I know that most American households do run like our government does. Which is how we have come into our current national crisis.

Which brings me to the topic of the upcoming tax rebate we are suppose to get this year which will miraculously make all of our problems go away. All my friends are tickled pink about it and I'd like to strangle them. It's not that I don't like getting money. But this money is not free like most Americans think. I know that this "rebate" is really our goverment going into more debt which will cause one of four things to happen: (emphasis added-CHS)

1) I will have to pay more taxes in the future to pay down this debt.
2) Watch the goverment try to inflate it's way out of it while eating away at my savings.
3) A combo of options 1 and 2.
4) Option three plus the added bonus of our goverment collapsing causing either Russia or Dubai to take over. I'm thinking this is probably the most likely outcome.

Quite frankly, I'd rather they keep my $600. I don't want to learn to speak Russian.

Thanks for letting me vent."

Great commentary, Dorothy--thank you.

The ways governments blow money are legion. The list is tiresomely long: fraudulent contracts, bridges to nowhere, goods left to rot in warehouses, sprawling computer systems which never work, outdated-the-day-they-fly weapons systems like the B-1 bomber, medicines which don't work for most patients, operations which do more harm than good, and on and on in a mind-numbing profusion. To note but two examples:

Proposal to curb waste in government contracts would not apply to overseas work:

"The number of companies reporting internal fraud in their handling of government contracts has declined sharply. In 1987, contractors voluntarily reported 44 instances of fraud or abuse to the Justice Department. By 2002, the number had dropped to eight. Last year, contractors reported three instances of fraud.

The more notorious recent cases of overseas contract fraud involve:

--Bribes of jewelry, computers, cigars and sexual favors for military personnel by Philip H. Bloom, a U.S. businessman living in Romania whose companies made more than $8 million in Iraqi reconstruction money. Three U.S. Army Reserve officers were later indicted or accused of steering contracts to Bloom between 2003 and 2005 in return for an estimated $1 million in cash and gifts.

--Anthony J. Martin of Houston, a former manager for Kellogg, Brown & Root Services Inc., who pleaded guilty to accepting $10,000 in kickbacks for awarding a $4.67 million project to a Kuwaiti subcontractor in 2003.

--John Allen Rivard, a retired U.S. Army Reserve officer from central Texas who pleaded guilty to conspiracy and bribery after helping steer $21 million worth of contracts for tractor-trailers in Iraq to a government contractor. He admitted taking $220,000 in bribes.

--Terry Hall, a caterer from Rex, Ga., who has been charged with bribing an Army major to help secure contracts worth $20 million for supplies, including bottled water, to military forces in Kuwait. "

Our taxes are really being put to fine use overseas, eh?

Everybody loves Medicare when they're collecting benefits, but what about the poor taxpayers who foot the outrageous bills?

When Geography Influences Treatment Options:

"Dartmouth researchers estimate that as much as one in three dollars spent by Medicare goes to unnecessary care. In that sense, variations in back surgery in South Florida provide a glimpse of Medicare's inefficiencies.

"It's highly improbable that Medicare retirees living in Fort Myers prefer back surgery two times as often as residents of Miami," Weinstein said. "So if it's not the patients, what is it?"

My favorite widespread "government waste" is the mad rush at fiscal year end to spend every last dime of the budget lest the department allotment be trimmed the following year. If you work in a governmental agency, you know the drill: buy something, anything, new desks, more PCs, whatever, but spend that money before it's discovered your department didn't really need its full budget.

Incompetence is an especially pernicious type of waste--of time and thus money. A non-U.S. friend of ours (from Scandinavia) whose husband works at a high-security lab here in the U.S. recently reported her frustration with multiple layers of bureaucratic nonsense. All she wanted to do was open a bank account at a major U.S. bank.

First, a bank employee told her she needed a Social Security number, and she should call the I.R.S. (As a recent arrival, she had no way to know this advice was nonsensical.) She went to the local I.R.S. office as listed on the website, and found an office with a faded sign which read: "The IRS has not had an office here for two years. We have asked them to update their website."

Somebody finally told her to go to the Social Security Administration office, where she was told she didn't need a number to open a bank account. When she called the bank back, she was told that yes, she did not need a Social Security number. Nice.

The bank employees didn't "waste" time or money--yet their incompetence cost the customer a huge amount of valuable time. Though this is a small example, extrapolate the endless time (and money) spent shuffling through the agonizingly slow and stupendously idiotic immigration process, and then you begin recognizing the true cost of systemic incompetence.

No job is superfluous--especially if it's yours. The ratio of school district administrative staff to teachers in the classroom has been dropping for decades. Not that anyone isn't busy--there are meetings to attend, reports to file, etc.

But you have to wonder: are all those mandated reports and meetings and conferences all actually necessary to the teaching? Or are they essentially unproductive lard which has been loaded on by legislatures and school boards? Even well-meaning attempts to "buy American" can end up costing more than the effort is worth when custom-made objects or "special requisitions" (the famous $700 hammer) are the result.

Our politics tend to define what we define as waste. Leftist types always focus on the Pentagon, conveniently overlooking the fact that Medicare is on track to surpass the Defense Department in cost. Rightwingers focus their attention on "welfare queens" and liberal educational frauds (Ebonics, etc.) Anti-pork barrel types look at the bridges to nowhere. Few look at Medicare or Social Security, though both are larded with fraud and undeserved payouts.

And almost everybody ignores the biggest waste of all, which is interest on the National Debt--a debt which has increased by $3 trillion in the past eight years of bogus "prosperity" (and since March 19, 2003, a war in Iraq).

Here are the top budget items in the Federal 2007 budget. Note that both Medicare and Interest on the National Debt are rising far faster than Defense or Social Security:

$586.1 billion (+7.0%) - Social Security
$548.8 billion (+9.0%) - Defense
$394.5 billion (+12.4%) - Medicare
$367.0 billion (+2.0%) - Unemployment and welfare
$276.4 billion (+2.9%) - Medicaid and other health related
$243.7 billion (+13.4%) - Interest on debt
$89.9 billion (+1.3%) - Education and training

President Bush just proposed a $3.1 trillion Federal Budget for the next fiscal year. State and local governments spend around $1.8 trillion. So government sucks up about $5 trillion (and borrows insane amounts of additional money via municipal and state bonds which are usually listed off-budget).

The U.S. is entering or has entered a recession which is sure to reduce tax revenues by staggering sums. Government employees and their unions are sure to demand tax increases to cover the shortfall ($14 billion in California alone, and the recession has barely started.) Private businesses and wage earners, already groaning under high tax rates and rapidly rising "junk fees" for governmental services which are paid by taxes, are certain to refuse all new taxes.

Does anyone else think at least $1 trillion of the $5 trillion is pure waste? Not just bridges to nowhere and crooks in Iraq (I mean the American crooks--the Iraqi crooks have cost us billions more) but meetings that accomplish nothing, positions which are unproductive but protected by union contracts, Social Security payments to people who never paid a dime in U.S. taxes, Medicare operations which enrich the clinic but didn't benefit the patients, interest being paid on money we shouldn't have borrowed, and on and on.

In the real world, inefficient businesses larded with unproductive positions and useless busywork eventually go out of business. Yes, "everybody's working hard" but that doesn't mean much of the budget isn't unproductive.

I once worked for a non-profit organization which employed one fulltime person and 7-8 halftime people for administration. When push came to shove in the last recession, the entire organization's fairly complex admin workload ended up being performed very adequately by one person on 3/4 time. How? No endless meetings, no agendas, no arguments over budgets, no supervisory issues, no conferences and no training.

That seems difficult to believe--unless you're a sole proprietor. Then you're used to running the entire show and wearing however many hats as needed. The most efficient workforce is always one motivated person--even on a project as large as building an entire house. One good carpenter only needs a hand occasionally to set beams and such; the other 95% of the time, other workers just create inefficiencies and mistakes.

Walk into any bureaucratic office, and a significant percentage of the people could be laid off if the inefficiencies and useless meetings and redundancies were sliced away. If you've worked in such an office your entire career, you will probably protest "it's not possible"; but if you're run a business "in the real world" in tough times, then you know what I mean.

Will government be forced to become truly entrepreneural, with the citizen as the customer? If the taxpayers rebel and refuse to pay higher taxes and fees, then government will have only two choices: either become entrepreneural in spirit and practice, or get even less accomplished with fewer people.

When I discuss these issues with employees of universities and government contractors, they generally say that bureaucracies are inherently inefficient. Yes, managing thousands of people requires a complex structure; but why must that be inherently inefficient and wasteful of resources?

Businesses hire people by the thousands when everything's rosy (for instance, Yahoo!) and nobody suggests even one position of thousands is inessential. Yet when things tighten up then suddenly Yahoo! management realizes 1,000 positions, are, well, inessential. Easy come, easy go.
We as a nation may be about to start a grand experiment in "reinventing government" not because it's a noble-sounding goal but because the money's finally run out.

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