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Monday, February 28, 2011
Friday, February 25, 2011
Thursday, February 24, 2011
Wednesday, February 23, 2011
Committee Investigates Causes of the Federal Spending Binge
Washington (GoinsReport.com) – Government contracts. DOD Weapons Acquisitions. Tax loopholes. Medicare and Medicaid. Corporate subsidies. Unused or underused federal property. Agriculture business subsidies. $700 billion TARP funds. $862 Billion Stimulus Package.
They all have something in common. They all contribute to the massive federal spending binge.
And, with the exception of the stimulus for which most of the money has been spent, the recent panelists at the latest Committee on Oversight and Government Reform meeting have a near-consensus that they all should either be cut, de-funded or reformed.
At the panel, witnesses and committee members rallied on the point that waste, fraud, and abuse in government must be addressed.
Comptroller of the United States Gene L. Dodaro, relying on the GAO’s 2011 High-Risk Series Report, testified that the GAO found over 30 areas where billions of dollars could be saved; and first on his list was Medicare and Medicaid.
“These are complex programs that are highly susceptible to billions of dollars in improper payments” Dodaro said. “When we first put these programs on the high-risk list, there really were no measures of improper payments” he continued.
Because of recent administration initiatives and legislations, such as the Improper Payments Elimination and Recovery Act, there are estimates to improper payments but “there is a long way to go” to bring these costs under control and provide the accountability that the GAO is searching for. For example, for Medicare Part D there is no estimate for improper payments.
Government contracting remained one of the biggest targets for reform as the day went on. Senator Claire McCaskill (D-MO) noted that while some claim that the federal government is shrinking, ultimately those claims are deceptive because work done by federal workers is shrinking but work done by federal contractors is growing.
As problematic as waste, fraud and abuse is, Dr. Veronique de Rugy, Senior Research Fellow at the Mercatus Center, testified that current congressional spending patterns overshadows those three areas of concern.
“Fraud, waste and abuse are indeed problems worthy of congressional attention. However, the $125 billion in overt waste that comes from improper payment pales in comparison to the waste that exists in current congressional spending patterns and economic damage caused by the misallocation of capital and the creation of perverse incentives” de Rugy said.
De Rugy had her own three of areas of concern: federal spending in place of the private sector (“corporate welfare” to Amtrak, farmers, small businesses and energy companies), federal spending in the place of the state spending (federal grants to state and local governments), and fruitless federal spending (American Recovery and Reinvestment Act).
To combat these problems, de Rugy suggested avoiding budgetary gimmicks and having honest accounting that show the real fiscal situation; putting all spending on the table; and immediately putting in place budget rules that “tie Congress’ hand” and restores fiscal discipline.
One of the programs that both Democrats and Republicans on the committee could agree was the Market Access Program managed by the Department of Agriculture. Formerly known as the Market Promotion Program, a name change that suggests that even foreign companies will benefit from the deal, the program sends taxpayer money to well off corporations and agricultural producers such as Sunkist Growers, Inc., Welch Foods, Inc., and the American Forest & Paper Association to promote U.S. products overseas.
The $1.7 billion that goes to the operation of unused federal property and underutilized property also is a costly expenditure that virtually the entire panel agreed remains a problem, -- although the GAO report noted that recent corrective measures failed to address root causes of long-standing problems, such as budget limitations which leads to an increasing reliance on leasing.
Neither the panel nor the GAO report mentioned the war in Afghanistan or Iraq as being part of the federal spending binge, although the wars have collectively cost American taxpayers $1.21 trillion since the 9/11 attacks, according to the September 2010 “The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11” report from the Congressional Research Service.
They all have something in common. They all contribute to the massive federal spending binge.
And, with the exception of the stimulus for which most of the money has been spent, the recent panelists at the latest Committee on Oversight and Government Reform meeting have a near-consensus that they all should either be cut, de-funded or reformed.
At the panel, witnesses and committee members rallied on the point that waste, fraud, and abuse in government must be addressed.
Comptroller of the United States Gene L. Dodaro, relying on the GAO’s 2011 High-Risk Series Report, testified that the GAO found over 30 areas where billions of dollars could be saved; and first on his list was Medicare and Medicaid.
“These are complex programs that are highly susceptible to billions of dollars in improper payments” Dodaro said. “When we first put these programs on the high-risk list, there really were no measures of improper payments” he continued.
Because of recent administration initiatives and legislations, such as the Improper Payments Elimination and Recovery Act, there are estimates to improper payments but “there is a long way to go” to bring these costs under control and provide the accountability that the GAO is searching for. For example, for Medicare Part D there is no estimate for improper payments.
Government contracting remained one of the biggest targets for reform as the day went on. Senator Claire McCaskill (D-MO) noted that while some claim that the federal government is shrinking, ultimately those claims are deceptive because work done by federal workers is shrinking but work done by federal contractors is growing.
As problematic as waste, fraud and abuse is, Dr. Veronique de Rugy, Senior Research Fellow at the Mercatus Center, testified that current congressional spending patterns overshadows those three areas of concern.
“Fraud, waste and abuse are indeed problems worthy of congressional attention. However, the $125 billion in overt waste that comes from improper payment pales in comparison to the waste that exists in current congressional spending patterns and economic damage caused by the misallocation of capital and the creation of perverse incentives” de Rugy said.
De Rugy had her own three of areas of concern: federal spending in place of the private sector (“corporate welfare” to Amtrak, farmers, small businesses and energy companies), federal spending in the place of the state spending (federal grants to state and local governments), and fruitless federal spending (American Recovery and Reinvestment Act).
To combat these problems, de Rugy suggested avoiding budgetary gimmicks and having honest accounting that show the real fiscal situation; putting all spending on the table; and immediately putting in place budget rules that “tie Congress’ hand” and restores fiscal discipline.
One of the programs that both Democrats and Republicans on the committee could agree was the Market Access Program managed by the Department of Agriculture. Formerly known as the Market Promotion Program, a name change that suggests that even foreign companies will benefit from the deal, the program sends taxpayer money to well off corporations and agricultural producers such as Sunkist Growers, Inc., Welch Foods, Inc., and the American Forest & Paper Association to promote U.S. products overseas.
The $1.7 billion that goes to the operation of unused federal property and underutilized property also is a costly expenditure that virtually the entire panel agreed remains a problem, -- although the GAO report noted that recent corrective measures failed to address root causes of long-standing problems, such as budget limitations which leads to an increasing reliance on leasing.
Neither the panel nor the GAO report mentioned the war in Afghanistan or Iraq as being part of the federal spending binge, although the wars have collectively cost American taxpayers $1.21 trillion since the 9/11 attacks, according to the September 2010 “The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11” report from the Congressional Research Service.
Tuesday, February 22, 2011
If I Were President
Things I would have done on January 20, 2009
1) Ended the Wars in Iraq and Afghanistan
2) Closed All overseas military bases
3) Proposed a bill to end the federal minimum wage (Encouraged the states to do the same)
4) Leave setting minimum wages to the states
5) Ended all agriculture subsidies
6) Ended all corporate subsidies
7) Proposed a bill to allow currencies to compete for use in the marketplace
8) Student Loan Reform (Bankruptcy Law Reform, Allow debt consolidation, Allow bankruptcy)
9) End the relationship between the U.S. Treasury—U.S. Dept of Education—Sallie Mae
10) Make the Federal Reserve legally required to stabilize the inflation rate and penalize it for not reaching expectations (including firing the Fed Chairman and Board of Governors with no exit pay)
11) Force the federal reserve to raise interest rates on T-bills to at least 10 percent, but closer to the market rate is best.
12) End all foreign aid
13) End the Department of Education
14) End the Small Business Administration
15) End all housing subsidies
16) End the Department of Agriculture
17) Emergency Bill to end the Patriot Act
18) End Guantanamo Bay
19) Legalize drugs, especially marijuana.
20) Cut government spending by ending these departments (some redundant)
21) End all forms of federal subsidies (no corporate welfare, no social welfare)
22) Limit unemployment insurance
23) End Sarbanes-Oxley
24) Legalize Free-Banking (to compete with fractional reserve banks)
25) Deregulate the farming industries (allow fresh food)
26) Open U.S. Offshore drilling to oil companies
27) Returned remaining TARP funds
28) No stimulus package
29) Taken the advice of the Downsizing Government website.
30) Raise the age for social security and medicaid
31) Comprehensive social security and medicare reform (including privatizing both programs; introduce retirement accounts to existing and new recipients)
32) End higher education subsidies
33) End federal funding for abortion and planned parenthood
34) Propose tax credit program for students wanting to opt out of public school to attend private or charter schools
35) End K-12 Education Subsidies (More money to schools does not equal better education)
36) Encouraged laid off teachers to begin their own private schools. (eligible to receive tax credits from tax credit program in #34)
This is just a start. For more, refer to my previous posts (click the links): Here.
Timely Classic:
Rothbard on the National Debt
Timely Website:
Downsizing Government
Sunday, February 20, 2011
Chris Edwards Juxtaposes Wisconsin w/Egypt
I recently had the chance to interview Chris Edwards. Unfortunately, this is not it:
Chaos in government. Tens of thousands of angry protesters in the streets. Schools closed. Yes, Wisconsin looks a lot like Egypt this week. But while Arabs are fighting to end extraordinary overreach by government, Wisconsin union protesters are fighting to preserve it.Read the rest of the column here.
Friday, February 18, 2011
The Student Loan Scam
Yeah, the list of student loan abuses is just that long. Check out the source here. (The picture is much bigger.)
Thursday, February 17, 2011
The Immorality of Student Loans
In a recent commentary, the Rev. Michael P. Orsi expresses why he thinks federal student loans are detrimental to America.
It also presumes that students, some of whom owe an excess $200,000, can pay the interest and eventually the principal. The federal government’s assumption of all student loans as part of the Obamacare package has not only added to an insurmountable deficit but has put most loan recipients into perpetual government clientage.Read "Federal Student Loans Are Detrimental to America"
Wednesday, February 16, 2011
Gary North on our Impending Fiscal Disaster
I agree with this statement:
In this report, I am making a point: the country is headed for a fiscal disaster, and there is no broad-based political movement inside the country to put on the brakes. The train is headed for the collapsed trestle, and it is speeding up. The President as the engineer is talking about slowing the train a little, but he has not yet put on the brakes.Read the rest here.
No one will put on the brakes.
Tuesday, February 15, 2011
Coming to a store near you: Increases in Prices
In his 1946 classic book on economics, the late Henry Hazlitt, who is one of my favorite journalists and economists, wrote that once inflation settles in the firms in the higher orders of production will eventually have to push costs onto consumers.
That time has come.
The New York Times recently published an article on this exact idea. It explains that consumer prices are expected to rise 15, 20, and 30 percent in some areas by the end of this year and many big name companies like Kraft, Hanes, and Polo Ralph Lauren are being open about it.
The pressure to raise prices is just that great.
It works like this:
Retailers, while trying to maintain profits, will keep prices the same or raise them slightly. But the time will come when the costs increases can no longer profitably be absorbed by retailers, so the cost will be pushed on to consumers instead.
Who gets hurt in all of this? The NYT gets it right:
Well, I think cutting into profit margins is the last thing that should be done. Profits are a necessary function for a free-economy. They help market participants/firms to gauge whether or not they are providing good service to customers or using their resources in the best way that benefits other market participants. Profits aren't units that people wantonly hoard and accumulate to keep for themselves; they are gauges for success. Inflation makes that function even harder.
Inflation tends to have another effect that the NYT rightly points out.
It means lower quality:
Here’s a thought:
And the reason is that companies operate on profit margins. Even when under inflationary pressures, business can’t cut even. They can't help the consumer by keeping prices low and cutting into their own profits. If they do, they will have less money for capital investment, wage increases, the expansion of goods and services and employment.
Read chapters 21 and 22 of Henry Hazlitt's Economics in One Lesson to Understand in depth. It's free.
That time has come.
The New York Times recently published an article on this exact idea. It explains that consumer prices are expected to rise 15, 20, and 30 percent in some areas by the end of this year and many big name companies like Kraft, Hanes, and Polo Ralph Lauren are being open about it.
The pressure to raise prices is just that great.
It works like this:
Retailers, while trying to maintain profits, will keep prices the same or raise them slightly. But the time will come when the costs increases can no longer profitably be absorbed by retailers, so the cost will be pushed on to consumers instead.
Who gets hurt in all of this? The NYT gets it right:
People at the bottom of the income scale struggle more as these prices rise, of course, because a larger share of their spending is on such essentials.To raise prices or not to raise prices:
These companies are constantly walking a tightrope on how far do I go,” said Jack Russo, a consumer goods analyst at Edward Jones. “Do I offset with price or other cost cuts, or do I just take it and have it eat into my profit margins?”
Well, I think cutting into profit margins is the last thing that should be done. Profits are a necessary function for a free-economy. They help market participants/firms to gauge whether or not they are providing good service to customers or using their resources in the best way that benefits other market participants. Profits aren't units that people wantonly hoard and accumulate to keep for themselves; they are gauges for success. Inflation makes that function even harder.
Inflation tends to have another effect that the NYT rightly points out.
It means lower quality:
Restaurants, which resisted raising prices to keep customers coming through the doors last year, are also fretting. They may take other steps too, like lowering thermostats, shrinking packaging or reducing portion sizes to minimize the sticker shock.
Here’s a thought:
This year, “you’re going to have to raise prices to stay in business,” said Len M. Steiner, owner of the Steiner Consulting Group, which works with restaurant companies on ingredient purchasing.
And the reason is that companies operate on profit margins. Even when under inflationary pressures, business can’t cut even. They can't help the consumer by keeping prices low and cutting into their own profits. If they do, they will have less money for capital investment, wage increases, the expansion of goods and services and employment.
Read chapters 21 and 22 of Henry Hazlitt's Economics in One Lesson to Understand in depth. It's free.
Sunday, February 13, 2011
Tuesday, February 8, 2011
Monday, February 7, 2011
Tuesday, February 1, 2011
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