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Posts Tagged ‘Federal Spending’

It’s been at least two weeks since the impending “fiscal cliff” disaster was avoided at the last minute.  That means it’s time for our grossly dysfunctional, leaderless government to stumble into crisis mode, again.

This time, the deadlines are in March and April, and one of the key issues is the debt limit.  The debt limit now stands at $16.4 trillion — that $16,400,000,000,000 — but that staggering sum is not enough for our debt-ridden, spending-obsessed, deficit spending-addicted country.  At a press conference yesterday, President Obama said Republicans should just raise the debt limit, without insisting on spending cuts.  We’re not a “deadbeat nation,” he said, and the full faith and credit of the United States should not be a “bargaining chip.”  If agreement on raising the debt ceiling can’t be reached, he says, Social Security and veterans checks might be delayed.

It seems awfully early in the game to play the Social Security card and scare seniors and veterans.  Unfortunately, they aren’t the only ones who are frightened by another crisis brewing.  This morning, global markets are stalling due to concerns about the debt limit, and the ratings agency Fitch says if the debt ceiling issue isn’t resolved promptly America’s credit rating could drop.

At his press conference, the President said he was willing to talk about spending cuts to stabilize the debt, but that such spending cuts should be discussed separately.  We’ve heard that song before, but cuts never get made, programs never get eliminated, and trillion-dollar deficits go on and on.  For all of his talk, talk, talk, the President has shown no willingness to take the courageous spending reduction steps that truly are needed to get our debt problems under control.  Like Wimpy, the President would rather promise to pay us Tuesday for buying him that hamburger today.  After four years, however, the bill hasn’t been paid, and there is no sign it will be paid.

I think Republicans have concluded that, deep down, President Obama would be perfectly comfortable to let the spending and big deficits continue until he leaves office, and that is exactly what will happen if he isn’t forced to sit down at the table and bargain.  If the Republicans see the debt ceiling as a fail-safe means of forcing some hard negotiations with the President that produce real progress on federal spending and the deficit, the President has only himself to blame.

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You have to hand it to federal employees — they may be mindless bureaucratic drones in their jobs, but when it comes to spending tax dollars, they’ve got more creativity than Pablo Picasso.

The latest evidence of this phenomenon comes from the Department of Veterans’ Affairs, which ponied up $5 million for two week-long training sessions for human resources personnel at the World Center Marriott in Orlando, Florida — apparently the world’s largest convention hotel.  The $5 million included $52,000 spent to create a parody of the opening scene of the film Patton, as well as $84,000 for promotional items like highlighters and hand sanitizers.  (A story about the contents of the video, with a link to the video itself, is here.)  In all, 1,800 people attended the conferences, at a cost of $2,734 per person.

The VA has an important function, of course, but spending $5 million so HR personnel can be trained at a glitzy conference center — as opposed to spending the funds to better help veterans with their health care, job training and placement, and social reintegration needs — doesn’t seem like a wise use of tax dollars.

Credit should be given to the House of Representatives committee that is investigating this incident, as well as the possibility that the VA officials deciding where to hold the conference may have received improper gifts.  Congress has an important role to play in examining federal funding and shining a spotlight on waste.  The current oversight work recalls the watchdog efforts of prior legislators, such as former Democratic Senator William Proxmire and his “Golden Fleece” awards given to agencies that engaged in frivolous spending.  Ferreting out and ending wasteful federal spending shouldn’t be a partisan issue.

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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?

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The Treasury Department has announced that our federal government, in May, racked up a deficit of $124,600,000,000 — $124.6 billion.  That brings the deficit for the first eight months of the October 1 to September 30 fiscal year to $844,500,000,000.  I use the full numbers because the long strings of zeroes better convey the colossal scale of the spending hole that we continue, relentlessly, to dig for ourselves and the Americans of future generations.

The Congressional Budget Office forecasts that this year’s deficit will be $1,170,000, 000,000 — $1.17 trillion.  That breathtakingly huge number comes on the heels of the $1,300,000,000,000 deficit in the last fiscal year.  Our deficits topped $1,000,000,000,000 during each of President Obama’s three years in office.

No rational person can believe such deficits are sustainable or that it is a good idea to go farther into hock without doing anything about it.  Yet that is precisely how our federal government has responded.  Where responsible people would be cutting non-essential programs, reducing payrolls and salaries, developing rational revenue policies, and taking the practical, meaningful steps necessary to bring revenue and spending into balance, our government does . . . nothing.

There’s plenty of blame to go around.  Congress has shirked its responsibility to pass honest budgets and specific spending bills, administrators have wasted tax dollars, and huge segments of the American public have an apparently insatiable appetite for federal benefits and perks.  But I have grown sick to death of President Obama’s constant attempts to dodge his share of the blame for the ignominious failure of the government that he — and he alone — heads.  Successful Presidents are able to lead and work within our political system to deal the issues of the day.  President Obama, in contrast, throws out unrealistic budgets that don’t even receive the votes of members of his own party in Congress and then blames his predecessor — the one who left office more than three years ago — for our mounting debt problems.  Meanwhile, the spending and deficit binge continues.  I don’t view President Obama’s approach as quality leadership.  In fact, I don’t view it as leadership at all — and if a President doesn’t lead, he has failed on the most fundamental part of his job.

Many of us have known people who appeared to live well beyond their means.  We wonder how it can continue, and then, inevitably, the crash comes and the entire house of cards collapses with awful results.  If you’ve seen that scenario, you can’t help but be uneasy about the direction in which our country is heading.  The many zeroes in those trillion-dollar deficit numbers are like the lead weights on the chains binding Marley’s ghost, dragging us slowly and inexorably downward to a fate we fear will be filled with terrible consequences.

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A story has been rolling around the internet about how, since 2001, Medicare has spent $240 million — i.e., almost a quarter of a billion dollars — on penile pumps for elderly men who are experiencing erectile dysfunction.  The Centers For Medicare and Medicaid Services Local Coverage Determination states that, for Medicare to pay for such a device, the “patient’s medical record must contain sufficient documentation of the patient’s medical condition to substantiate the necessity for the type and quantity of items ordered.”

This is the kind of story that, obviously, can become the subject of jokes and double entendres — but I think the jollity just obscures a deeper, serious question.  When the federal government pays for medical care, what is it supposed to be paying for?

Is it simply paying for whatever care is necessary to keep someone alive?  Is it paying for a level of health necessary to achieve a certain quality of life?  Or, is it obligated to pay for whatever drugs, devices and other forms of treatment that the covered person thinks he or she needs to keep their health as close to 21-year-old perfection as it can possibly be?

If it is the first option, then we are going to spend a lot less — but some governmental agency is going to be making some brutal baseline decisions.  If it is the second option, then bureaucrats are going to be making uncomfortable judgments about what constitutes a “reasonable” quality of life.  And if it is the third option, our debt-ridden nation is going to be spending millions of dollars on things like penile pumps for aging men who think their bedroom performance level should be as close as possible to what it was when they were horny 20-year-olds.

The comical penile pump spending story, therefore, is worth pondering as an example of the kinds of questions that are raised when the federal government becomes a primary payer for health care.  I’m not quite sure where I come out on the three options described above — but I do think it is ludicrous that the federal government has spent nearly $250 million on penile pumps in the last decade.

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Mr. Webner, this is your securities analyst from the Treasury Department.  I wanted to give you an update on your investments.

You again?

Yes, Mr. Webner.  We’re closing in on the end of another banner year, and we just wanted to share the good news with you.

Good news, eh?  Well, what is it?

We’re happy to report that we’ve only had to increase the estimate of our loss on our auto industry investment by $9 billion.

Wait . . . did you say you are increasing the estimate of our loss by $9 billion?

That’s correct.  Unfortunately, GM’s stock price has taken a beating lately.  But let’s not get mired in details, Mr. Webner!  What’s important is that we originally thought we would lose far more money than we now think we’ll lose — so you really can look at what we have done as a gain!

So you’re trying to take credit for a disastrous investment that just might not be as disastrous as many people expected?

That’s correct, Mr. Webner.  And in the meantime, you’ve supported the development of groundbreaking technology like the Chevy Volt!  How do you like the Volts you’ve seen on the streets?  Sweet, aren’t they?

Actually, I’ve never seen a Chevy Volt on the street.  I don’t know anyone who owns one.

Well, take my word for it, Mr. Webner.  That car is poised, in a state of cat-like readiness, to take the country by storm!  Now, can I take just a few more minutes of your time to talk about our terrific investments in Fannie Mae and Freddie Mac and Solyndra?

Click.

Calling To Report On That GM Investment

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Toledo, Ohio is on track to demolish a record number of abandoned houses this year.  By the time 2011 is done, Toledo city officials expect to have torn down more than 400 blighted residential structures.

What I find interesting is not that Toledo is having a problem with abandoned houses — Toledo, like many Midwestern cities, has been hard hit by our ongoing economic woes and home foreclosures — but that the demolition effort is being funded in significant part by the federal government.  The U.S. Department of Housing and Urban Development is contributing more than $1 million toward the total cost.  Although the story linked above doesn’t identify the specific source of the federal funds, a look at the HUD website suggests that the funds are part of the Neighborhood Stabilization Program that began in 2008.  In 2010, Congress and President Obama allocated an additional $1 billion for that program, which makes grants to states and local governments to support, among other things, demolition activities.

I’m sympathetic to the problems that struggling cities like Toledo are confronting, but I think it is ludicrous that the federal government — using borrowed money, of course — is making grants to cities to deal with neighborhood issues like abandoned housing.  We simply don’t have the money, at the federal level, to become involved in every local issue that needs attention.  If Toledo concludes that abandoned houses are eyesores or crime magnets that need to be destroyed, Toledo should figure out how to prioritize and pay for that activity itself.

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Sometimes it is the little stories that are the most instructive.  I think that may be the case with the story about the State Department, through various U.S. embassies, spending more than $60,000 on books authored by  President Obama.

According to a federal database, the American embassy in Paris spent more than $8,300 on Dreams From My Father in French.  Embassies in Indonesia, Turkey, and South Korea made similar purchases.  The embassy in Egypt led the way, spending a whopping $37,000 on copies of Dreams From My Father.  According to a State Department spokesman, diplomats “often use books to engage key audiences in discussions of foreign policy” and he notes that “[t]he structure and the presidency of the United States is an integral component of representing the United States overseas.”  He says the books stock “information resource centers” that are located around the world and include books about U.S. culture, history and values, and that the State Department also provides “key library collections with books about the United States.”

Sorry, I don’t buy it.  I’m not suggesting the President had anything to do with this — I think it’s an example of bureaucrats using discretionary spending to curry favor with their political appointee bosses.  Could it really be true that Americans conduct diplomacy by handing foreign counterparts The Audacity Of Hope and asking them to read through chapter 12 before tomorrow’s meeting?  If so, that may explain some of our recent foreign policy problems.  And has anyone looked lately at the value of maintaining a worldwide network of “information resource centers” stocked with hard copy books?  If we’re spending so much on President Obama’s biographies, the “information resource centers” must be enormous — unless those books are the only ones that have been found to reflect the American viewpoint on culture, history, and values.  How often are the “resource centers” used?  Wouldn’t a more diverse, more cost-effective “information resource” be a computer terminal with internet access?

I recognize that $60,000 is just a tiny molecule of water in the great, slopping, steaming ocean that is the federal budget — but every journey begins with a single step.  Programs that permit the purchase of thousands of dollars of the President’s books are programs that can be cut.

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The Congressional Budget Office recently released its statistics on the federal budget for fiscal year 2011.  The results are staggering — and completely inconsistent with the notion that the federal government has engaged in any kind of belt-tightening.

According to the CBO, the federal government spent $3.6 trillion in fiscal year 2011, and racked up a budget deficit of $1.298 trillion.  Those numbers are titanic.  This is an instance where words are a poor substitute for zeros.  $3.6 trillion, written numerically, is $3,600,000,000,000.00.  Our deficit, for the 2011 fiscal year, was $1,298,000,000,000.00.  According to the CBO, in the last three years our federal government has incurred by far the three largest annual budget deficits during the entire time period since 1945.  Each of those three annual deficits exceeded $1,290,000,000,000.00.  In those three years, we’ve added $4,000,000,000,000.00 to our national debt.

Those are figures that should be read with a shrill, rising mental voice, to properly reflect how truly alarming they are.  But, no one in charge seems very alarmed.  Instead, we have Democrats who act like Republicans are forcing our federal government to accept the most draconian cuts imaginable, Republicans who act like they’ve been budgetary hardasses, and a President who is out on another bus tour, kissing babies and eating barbecue and arguing that we should spend even more than we do.

It’s as if they are in their own little fishbowl world, as divorced from reality as Nora Desmond in Sunset Boulevard.  Does any rational person think we can continue to borrow more than $1,000,000,000,000.00 a year, largely from foreign investors, without experiencing life-changing consequences to our country and our lifestyles?  If we don’t change course, soon we’ll find ourselves floating face down in the pool, like hapless screenwriter Joe Gillis.

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The United States Department of Agriculture — the same entity that proved unable to answer the question a farmer posed to President Obama recently — is paying western farmers and ranchers millions of dollars to protect a bird that is not on the endangered species list because there are too many of them.

The bird is the sage grouse.  In the last two years, the USDA will have paid $112 million to farmers and ranchers in 11 western states to implement practices to preserve the bird’s habitat.  Yet, the sage grouse — which is found in Wyoming, Colorado, Montana, Idaho, South Dakota, North Dakota, Utah, Nevada, Washington, Oregon and California — is too numerous to be included on the endangered species list.  Indeed, 10 of the 11 states where the bird is found allow it to be hunted.

I’m all in favor of sensible environmental protection programs, but the key word is “sensible.”  With our current budget issues, paying millions of dollars to farmers and ranchers to try to preserve the habitats of birds that aren’t endangered is not a prudent use of federal funds — particularly when about 40 percent of every dollar spent on the program must be borrowed.  I recognize that $112 million is a mere drop in the federal budget, but we need to pay attention to every penny if we are going to bring our enormous budget problems under control.

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A week has gone by, the August 2 default deadline creeps ever nearer, and still the antic debt ceiling political dance continues. 

It’s like an old fan dance, where the flashing fans of the dancer seek to tantalize while hiding what lies beneath.  The Senate has contributed the ill-defined “Gang of Six” proposal.  The House Republicans passed “cut, cap, and balance.”  President Obama continues to insist on a “balanced approach.”  Everybody uses every opportunity to trumpet that everybody else is behaving abominably and making outrageous proposals.  And the latest report is that the President is sitting down with House Republicans to try to cut a deal

Is real progress being made?  Who knows?  Appallingly, everything is done behind closed doors, with no public input.  How can anyone be comfortable with politicians making deals in private on this huge issue?  And most of the purported “savings” and “cuts” and “revenue enhancements” seem to be vague, generic promises to delegate the task of making actual changes to the same congressional committees that have, for years, proven themselves unable to restrain spending, exercise prudence, and govern responsibly.

I’m not going to be distracted by the waving fans.  I want this embarrassing dance to produce some real changes to how things are done.

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President Obama, and many other others, have pointed out that those saying we can balance the budget solely by eliminating “waste, fraud and abuse” are taking a phony approach to fiscal discipline.  However, that doesn’t mean that “waste, fraud and abuse” doesn’t exist — a fact proven by yesterday’s Washington Post piece on spending by HUD on community housing projects.

The Post story found that in recent years more than $400 million in HUD money has been spent on stalled or abandoned projects.  In some cases, money was loaned and projects never got underway.  Many of the people to whom money was given had no experience in construction or had questionable qualifications for getting the federal booty.  The overall picture painted by the article suggests that our tax dollars were spent with little concern for how they would actually be used, and then with little attention to how they were actually being spent.

I recognize that $400 million is only a tiny drop in our colossal deficit bucket — but $400 million is still a lot of money in my book, and the Post article looks at only one program administered by one agency.  What would we find if every federal program were subjected to similar scrutiny?

I’m not surprised by the waste found in the HUD housing efforts, nor am I surprised by the attitude reflected in the quotes from government officials who are involved in this poorly run program.  One person who manages HUD money says we need to reduce the risk by enacting “basic standards” — which suggests that hundreds of millions of dollars have been spent without even “basic standards” that apply.  Could that possibly be true?  The Post quotes another government official, Mercedes Marquez, HUD’s assistant secretary for community planning and development, says “We can do better and we will.”  But why on Earth should we believe her?  Isn’t it safe to assume that every HUD official since that agency was formed has said pretty much the same thing?

This is an example of where governments and businesses diverge.  In any business, a division that failed to insist on basic accountability and frittered away $400 million would be shut down — period.  Why shouldn’t we take the same approach with this badly administered program?

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I was very interested in President Obama’s speech yesterday about our serious budget problems.  Because I wanted to get an unfiltered understanding of his position, I read the speech in its entirety on the White House website, here.  After I finished, I was left with a lot of questions.  The biggest one was:  “Who is this guy, and what does he truly believe?”

In the first part of the speech, the President talks about American history, the development of social programs, and how our deficit spending problems came about.  Eventually, he describes the four parts of his plan.  It really doesn’t have the kind of details you would expect to find in a concrete plan, however.

The first part of the plan deals with domestic spending.  The President’s description of this part is found in a paragraph that reads:

“The first step in our approach is to keep annual domestic spending low by building on the savings that both parties agreed to last week.  That step alone will save us about $750 billion over 12 years.  We will make the tough cuts necessary to achieve these savings, including in programs that I care deeply about, but I will not sacrifice the core investments that we need to grow and create jobs.  We will invest in medical research.  We will invest in clean energy technology.  We will invest in new roads and airports and broadband access.  We will invest in education.  We will invest in job training.  We will do what we need to do to compete, and we will win the future.”

What are the “tough cuts”?  Who knows?  This paragraph says more about what the President wants to spend money on than its does about what he will cut.  Seriously, in all of the thousands of programs administered by the federal government, couldn’t the President name at least one or two that he thinks could be sacrificed on the altar of fiscal responsibility?  When our nation’s leader can’t even bring himself to name one specific cut, it doesn’t instill much confidence that cutting is really going to occur.

I’m sure some of my friends will respond that President Obama would be foolish to name particular programs, because it would be like a poker player tipping his hand.  I disagree.  Being President means leading, and it is time for President Obama to stop being cagey about his positions.  If he wants Republicans to yield on some aspects of the budget debate — like reducing defense spending, for example — he needs to show where he will yield.  He hasn’t done so.

This is one of the instances where I wonder about what President Obama really believes.  At times during the campaign and during his presidency, he has talked about getting our fiscal house in order, bringing spending under control, and living within our means. Where is the evidence that he really believes what he has said?  If the President’s big speech on a “plan” to deal with our crippling budget deficits fails to identify any actual spending reductions, I think it is fair to question whether the President really believes the platitudes found in his speeches.

I’ll have some more to say about other aspects of the President’s speech and four-part plan in later posts.

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ABC News had an interesting story today that demonstrates why cutting spending and balancing the federal budget is so difficult.

The story is based on an email sent out by an unnamed Democratic staff member on the Senate Appropriations Committee subcommittee that will address the Labor and Health and Human Services budget.  The email set up a meeting with hundreds of lobbyists who support programs that fall within that budget and encouraged them to band together to oppose cuts to that budget.  The article quotes the email as saying that “[o]ne thing everyone should be able to agree on now is that a rising tide lifts all boats,” and that a higher budget allocation “improves the chances for every stakeholder group to receive more funding.”

Don’t you just love the phrase “stakeholder group”?  It aptly captures the reality of the out-of-control federal budget, where every bloated federal program is strongly supported by some interest group that has a huge stake in continuing to get funding for their pet program.  And now, thanks in part to the efforts of committee staffers who in reality are beholden to those interest groups rather than to voters, legions of K Street lobbyists will be hired and funded and encouraged to band together to stoutly resist the funding cuts that are essential to restoring some form of fiscal sanity to the federal budget.  The mind reels at the prospects of legions of lobbyists descending on Capitol Hill and of the legislative logrolling, campaign contributions, and stealthy cloakroom deals that will define the budgeting process during this Congress as a result.

Those of us who are interested in reducing the budget deficit and the federal debt shouldn’t kid ourselves.  The people and entities who are dependent on federal programs are highly motivated, well-funded, and will do whatever they can to see that efforts to cut spending are blunted and frustrated at every turn.

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