Freeman

ARTICLE

Most Outrageous Government Waste

Bureaucrats Have Little Incentive to Spend Taxpayer Dollars Responsibly

JUNE 01, 1996 by THOMAS A. SCHATZ

Filed Under : Government Spending, Taxation, Special Interests

Mr. Schatz is president of Citizens Against Government Waste.

Since my job is to be a watchdog on government waste, I’m often asked about the most outrageous cases.

That’s a tough call because government bureaucrats never take care of your money as carefully as you would take care of it yourself. More important, bureaucrats spend money on what government wants, not what you want—which is the whole point of taxing away your money.

Without authorization, for instance, the feds spent $19.6 million annually on the International Fund for Ireland. Sounds like a noble cause, but the money went for projects like pony-trekking centers and golf videos.

Congressional budget-cutters spared the $440,000 spent annually to have attendants push buttons on the fully automated Capitol Hill elevators used by Representatives and Senators.

Last year, the National Endowment for the Humanities spent $4.2 million to conduct a nebulous “National Conversation on Pluralism and Identity.” Obviously, talk radio wasn’t considered good enough.

The Pentagon and Central Intelligence Agency channeled some $11 million to psychics who might provide special insights about various foreign threats. This was the disappointing “Stargate” program.

The Department of Education spent $34 million supposedly helping Americans become better shoppers and homemakers. Wasn’t it about time?

The federal government proposed spending $14 million for a new Army Museum, although there already were 47 Army Museums around the country. We helped stop that idea.

Dubious government spending schemes abound since bureaucrats play with other people’s money. For example, the National Institutes of Mental Health (NIMH) spent $70,029 to see if the degu, a diurnal South American rodent, can help us better understand jet lag . . . they spent $77,826 to study “Coping with Change in Czechoslovakia” . . . $100,271 to see if volunteering is good for older people . . . $124,910 to reduce “School Phobia” in children . . . $161,913 to study “Israeli reactions to SCUD Attacks during the Gulf War” . . . and $187,042 to study the quality of life in Hawaii.

Over the years, political wrangling twists the most noble-sounding government programs beyond recognition. For example, the Social Security Administration’s $25 billion a year Supplemental Security Income (SSI) program. Almost 250,000 children qualify for SSI checks because they can’t participate in “age appropriate activities.” Worse, thousands of prisoners get SSI checks relating to their alleged disabilities—costing taxpayers about $20 million a year.

That’s not all. In Denver, the government reportedly sent $160,000 to recipients at their “official address”—a tavern. A San Francisco addict used his SSI check to buy drugs, which he subsequently sold on the street for a profit. A Van Nuys, California, alcoholic received a $26,000 SSI check, then spent the money on a van and two cars which he subsequently wrecked while driving drunk. Los Angeles SSI recipients reportedly faked mental illness and had a doctor concoct false medical records, so they could pocket $45,000 worth of checks. An estimated 79,000 alcoholics and drug addicts are believed to spend SSI checks—some $360 million annually—on their habits.

Again and again, programs aimed at the poor are captured by well-heeled interest groups. For example, the Commerce Department’s U.S. Travel and Tourism Administration (USTTA) gave away $440,000 in so-called “disaster relief” to Western ski resort operators when there wasn’t much snow.

The Economic Development Administration spent “anti-poverty” funds to help build a $1.2 million football stadium in spiffy Spartanburg, South Carolina. During the summer, it will serve as a practice facility for the National Football League Carolina Panthers, and the rest of the year it will be used by Wofford College, which has a $50 million endowment.

Look at one of the most enduring legacies of Lyndon Johnson’s “War on Poverty”: the Appalachian Regional Commission. It was billed as help for an impoverished region. During the past three decades, this bureaucracy you’ve probably never heard of has spent $6.2 billion, yet the region remains impoverished.

Where did the money go? Two-thirds was spent building 26 highways connecting well-to-do urban centers. The money went to construction workers whose wages are definitely above-average. Despite revolutionary talk in Washington, the Appalachian Regional Commission goes on and on.

Or take the plight of the family farmer. I know you’ve been regaled about wasteful spending on agricultural subsidies, so I’ll just cite a single intriguing example: 1.6 million farm subsidy checks for $1.3 billion, mailed to urban zip codes during the past decade. New York City “farmers” pocketed $7 million during the past decade, Washington, D.C., “farmers” $10 million, Los Angeles “farmers” $10.7 million, Minneapolis “farmers” $48 million, Miami “farmers” $54.5 million, and Phoenix “farmers” $71.5 million. Among those on the take, to the tune of $1.3 million: 47 “farmers” in Beverly Hills, California—one of America’s wealthiest cities.

A lot of government spending is justified as necessary for national security. For instance, maritime subsidies supposedly help maintain a fleet for an emergency. Laws require government agencies to use U.S.-flag vessels which are U.S.-built, U.S.-owned, and U.S.-crewed, costing two to four times the world market price of comparable vessels available elsewhere. When the U.S. Department of Agriculture and Agency for International Development give away surplus grain, they must use U.S.-flag vessels for at least 75 percent of shipments, adding $233 million to the taxpayer burden. The U.S.-flag requirement adds $1.75 billion to the defense budget. Subsidy per maritime job: over $100,000.

The defense budget is larded with waste not because it’s run by bad guys but because it’s big, and bureaucrats are, as always, spending other people’s money. The Pentagon has an “operational support airlift” consisting of some 500 airplanes and 100 helicopters for flying military brass and civilian bureaucrats on 1,800 trips a month—costing taxpayers $380 million a year. Many of the destinations are served by commercial airlines.

Last year, the Pentagon announced it would spend $5.1 million to build a new 18-hole golf course at Andrews Air Force Base in suburban Maryland, which already has two. Golf Digest reported there are 19 military golf courses around Washington, D.C. Why a new golf course? One Pentagon official was quoted as saying “a lot of golf gets played out there. On Saturday mornings, people are standing on top of each other.”

Can It Continue?

How can such outrageous waste go on year after year? Simple: bureaucrats aren’t doling out their money, so they have little incentive to be responsible. Politically connected special interests, who are usually better off than the average taxpayer, seem to get most of the loot.

The most powerful special interest is government itself. In fiscal year 1993, the federal government owned 569,556 vehicles—one for every six full-time employees. Included were 117 limousines. The government’s fleet expanded more than 130,000 vehicles since the Grace Commission called for it to be cut in half more than a decade ago.

Government officials multiply the number of regulations regardless of the waste they cause. For example, the Defense Department has 1,357 pages of regulations about how officials travel. Complying with these regulations adds about 30 percent to travel costs. If the Pentagon adopted the best practices of private companies, it could save an estimated $650 million to $840 million every year. Of course, government regulations cause enormous waste in the private sector—tax compliance costs alone run into the billions—but that’s a vast subject unto itself.

The federal government wastes money through grants to the most politically powerful environmental lobbyists. For example, between 1990 and 1994, the Natural Resources Defense Council got $246,622; Defenders of Wildlife, $1,285,658; Environmental Defense Fund, $1,493,976; and the World Wildlife Fund, $26,584,335. All together, environmental lobbyists collected $156,644,352 during this period. Every one pushes the federal government to enact more regulations.

Whenever you hear a politician propose that government take over some private business, like New York’s troubled Long Island Lighting Company, there should be red flags all over the place, because government operation means high costs. At the U.S. Government Printing Office, for instance, costs are estimated to be 50 percent higher than in the private printing industry. If the U.S. air traffic control system were transferred to private companies and the services paid by user fees, taxpayer savings would probably be around $18 billion over the next five years.

With a $1.5 trillion annual budget, the feds take so much of your money that they can’t possibly keep track of it even if they wanted to. For example, a contractor sold $27 electronic relays to the government’s Strategic Petroleum Reserve for between $484 and $521 apiece. The Department of Energy paid some of its employees $5,000 a year to lose weight—the outlays totaled $10 million a year. The owner of a California apartment building got Department of Housing and Urban Development subsidies, then illicitly diverted $610,000 into his own accounts. One “farmer” collected $1.6 million in government insurance payments for non-existent crops. Forty-three people in New York City pocketed over $40 million in phony food stamp claims. Five Floridians stole $20 million from Medicare—part of the estimated $17 billion of annual Medicare fraud.

What to do about such waste? The government is crawling with auditors, and there have been a zillion investigations, yet waste goes on. Citizens Against Government Waste will continue to be a watchdog. The only long-term solution, though, is to somehow cut big government down to size. Only when it’s much smaller will you be able to keep more of your hard-earned money, which, after all, is yours.

ASSOCIATED ISSUE

June 1996

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