Episode 7 Show Notes- How Congress Defrauds the Taxpayer Through Wasteful Spending

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Episode Description

In this episode, Professor Giordano explains how Congress and the bureaucracy have little regard for how it spends our hard-earned taxpayer dollars. From drunken monkeys to lions on treadmills, Congress has proven its incompetence. The news media continually focuses on gossip rather than the issues that matter to you. Our politics are broken, and it is time the American people learn how their money is being spent. This episode should outrage every listener and motivate us to say- No More and begin to hold these politicians accountable!

Intro

Welcome everyone to another episode of The PAS Report Weekly Roundup Podcast. This is your host Nick Giordano, and another week gives us another chance to bash Congress for their irresponsibility. I appreciate the feedback. Last week we discussed how we could correct some of the defects within the system by using Article V, the Convention of States method. If you haven’t yet listened, I encourage you to do so, and I hope you visited conventionofstates.com for more information. What surprised me was how many people reached out with genuine concern as they were unaware of the massive debt we have and how Congress is spending our hard-earned money.

This episode should serve as a wakeup call, and you should be outraged over the waste and abuse within the system. At the same time, we need to recognize our culpability. The bureaucracy has grown exponentially, and so has the spending. There has been no accountability, no oversight, and little desire to reign in the waste. Both political parties are responsible for our debt. While we constantly hear pledges of fiscal responsibility, once these people get into office, they get drunk off power and spend taxpayer money at will. This episode we will outline the bureaucracy. I will examine the benefits, but more importantly, I will focus on the negative aspects of the all-consuming bureaucracy.

Why bureaucracies form

To understand how powerful the bureaucracy has become, we need to examine why bureaucracies form and the role Congress plays within the system. There are three key ingredients the bureaucracy needs to grow in size, power, and strength.

1) A problem must exist and be identified. (I.e., 9/11)

2) The people must demand that the government gets involved in fixing the problem.

3) The government believes the people are incapable of solving the problem themselves, and so they must be the ones to resolve the issue.

 

Benefits of the Bureaucracy

I won’t lie. The Bureaucracy does provide us with great benefits.

1) National Defense– The bureaucracy keeps us safe. Between the military, our law enforcement, and the intelligence community, we are asked to do very little (perhaps to our detriment)

2) Social Safety Nets– The bureaucracy provides temporary social safety nets to help Americans when we are down on our luck. Let’s face it, we cannot predict the future, and anything can happen. So benefits can provide for temporary assistance for those in need.

3) Public Safety/Public Health– Whether it’s a natural disaster and FEMA aids States and local governments in responding to a disaster, or it’s the FDA that inspects meat and other agricultural products to ensure food safety, the bureaucracy plays a major role in ensuring the health and safety of our society.

4) Civil Rights– While it was the bureaucracy that implemented slavery and segregation, it was also the bureaucracy that abolished slavery as Union soldiers fought the South or the Civil Rights era that ended Jim Crowe. Today, anyone who feels their civil rights have been violated can go online a file a complaint with the DOJ.

 

Drawbacks of the Bureaucracy

While there are benefits to the bureaucracy, there are also major drawbacks that have the potential to destroy us, particularly economically.

1) Expensive

Our bureaucracy is extremely expensive to operate. Our federal revenue totals approximately $3.4 trillion- $1.9 Trillion in corporate and individual income taxes, $1.2 trillion in payroll taxes, and $230 billion in ad valorem (other taxes and fees). (U.S. Government Spending)

While we take in an enormous amount of money, we also spend an enormous amount of money and run deficits in the 100s of billions of dollars each year. The fiscal irresponsibility of Congress and the bureaucracy has led to a $22 trillion dollar debt that continues to grow. We currently spend $389 billion a year to service the debt. Think about that- $389 billion just in interest payments. Imagine what we can do with an extra $389 billion each year. (Congressional Budget Office)

The insanity is that we have a whole bunch of candidates that are promising even more. I would like to know where we are getting the money for a universal healthcare system. We need to start asking questions. No one asks where the money is coming from. According to recent studies, a “Medicare for all” system would cost nearly $3.2 trillion dollars a year. (Bloomberg) Just looking at the financial aspect:

• We currently spend close to $600 billion a year on Medicare. (Congressional Budget Office)
• Double the income tax rate for every bracket (highest earners 74%, lowest earners 20% most people 44-48% and that does not include State and local taxes), brings an additional $1.9 trillion
• This would still leave us short by $700 billion and does not include the budget deficit at $800 billion a year
• So what else are we going to cut? (I.e., defense by 50% does that sound like a good idea? Education, infrastructure, homeland security?)
• Rather than change the entire system for everyone, why don’t we try free solutions? The politicians are morons, and they are trying to tackle the cost of health insurance when the real problem is the cost of care. If you focus on where the problem is, it is the cost of care, and if you bring that down, the cost of insurance goes down.

 

2) Waste, Fraud, and Abuse

Congress and the bureaucracy waste an extraordinary amount of money each year, and there is enormous fraud in the system.

• Fraud and Abuse

We spend $557 billion a year in Medicaid (Kaiser Family Foundation), and the Government Accountability Office estimates that 15-30% of Medicaid is fraudulent (Government Accountability Office). Improper payments, over billing, and those who do not qualify.

Look at disability over the years. Each year, those collecting disability or workman’s compensation has increased in most years (Government Accountability Office). More people than ever are claiming these benefits. But what’s going on? Over the last 50 years, has the work place gotten safer or more dangerous? Does it make sense that safety in the workforce is at all-time highs, yet disability claims for work-related injuries are increasing?

• Waste

I got a lot of emails where people were shocked at some of the waste I brought up in last weeks episode such as the $490 million in office furniture, nearly $12k for a foosball table, and $250k so kids in Pakistan can attend summer camp in the U.S. (The Washington Times)

I figured to expand the list and let you know just some of the things our Congress has authorized spending on over the last several years. While some of this will make you laugh, we all should be outraged:

1) The National Institutes of Health (NIH) awarded $181,406 in a grant called “Enhancement of Sexual Motivation” this year to a researcher at the University of Kentucky to study how cocaine enhances the sex drive of Japanese quail. The study isn’t intended merely to learn about birds, but about drug abuse and sexual habits of humans, that can lead to public health problems. (University of Kentucky)

2) $239,100 The National Science Foundation sent to Stanford University to study how Americans use the Internet to find love. (Senator Tom Coburn 2010 Wastebook)

3) The National Institutes of Health is spending $3.2 million to get monkeys to drink alcohol excessively to determine what effect it has long term on their body tissue. (The Washington Times)

4) The National Institute of Health spent $387,000 providing Swedish massages to rabbits. The study concluded that other studies were right, and massage seemed to help in recovery. The rabbits were euthanized at the end of the study. (ABC News)

5) The National Institute of Health also has handed out $69,459 to the University of Missouri to study whether text messaging college students before they attend pre-football game tailgates will encourage them to drink less and “reduce harmful effects related to alcohol consumption.” (Illinois Times)

6) $50,000 National Science Foundation, a study that concluded Democratic women in Congress were less feminine than Republican women. (UCLA/The Atlantic)

7) National Science Foundation $1 million dollars to study where it hurts the most to get stung by a bee. The Lip and nose. (The Hill)

8) The Department of Defense spent $300,000 on coffee mugs. The cost of these special custom mugs is $1,280. (Reason Magazine)

9) The Department of Defense spent $170,000 to study why coffee spills when we walk. From the abstract “In our busy lives, almost all of us have to walk with a cup of coffee. While often we spill the drink, this familiar phenomenon has never been explored systematically. Here we report on the results of an experimental study of the conditions under which coffee spills for various walking speeds and initial liquid levels in the cup.” the researchers said in explaining their project to the magazine Science. The researchers concluded that walking slower and steadier reduces the chances of spilling. (American Physical Society)

10) The NIH spent $371,000 on researching women’s emotional state when they see their dog compared to seeing their child and if they are more emotionally attached to their pet over their children. (Politico)

11) $1.2 million was spent developing “Kiddio: Food Fight,” a smartphone game aimed at empowering parents in vegetable-eating negotiations with their children. (Small Business Administration)

12) $144,000 to see if pigeons follow human economic laws.

13) The National Science Foundation spent $856,000 taxpayer dollars to determine if captive mountain lions could be trained to ride a treadmill. The University of California-Santa Cruz researcher even boasted about receiving the grant saying, “People just didn’t believe you could get a mountain lion on a treadmill, and it took me three years to find a facility that was willing to try.” If anyone was wondering, it took the lions all of eight months to learn. (The Federalist)

14) The National Science Foundation spent $331,000 to study whether hungry people tend to be more angry and aggressive. (Washington Post)

15) Another NSF grant funded the study of gambling monkeys to the tune of $171,000. The University of Rochester devised a computer game, taught monkeys to play it, and studied how they responded to winning and losing. A doctoral candidate who worked on the study seemed pleased to learn, “Luckily, monkeys love to gamble.” The study is set to continue through May of 2018. (John Hopkins University)

16) The National Institute of Alcohol Abuse and Alcoholism, which is a part of the National Institutes of Health spent $2.6 million tax dollars to study the drinking habits of Chinese prostitutes and HIV/AIDS among sex workers in China. (Reason Magazine)

17) The Department of Agriculture was authorized to spend $9 million to quarantine fruit flies. (Citizens Against Government Waste)

18) $65 million was spent on the Pacific Coastal Salmon Recovery Fund to reverse Pacific salmon in California, Oregon, Washington, Idaho, and Alaska. (Citizens Against Government Waste)

19) $120 million for upgrades of the M1 Abrams tank to the M1A2SEP variant. Congress thereby maintained its longstanding tradition of jamming through unwanted funding for the M1 Abrams tank program in FY 2014. This earmark was added despite the repeated protests of Army Chief of Staff General Ray Odierno. (Military)

20) $800 million to create the Health Exchange website which was plagued by security issues and constantly crashed. (Washington Post)

I just gave you 20 examples of the waste, fraud, and abuse within the system all at taxpayer expense. I could go on and on with examples, but we don’t have enough time. While the media focuses on gossip that will not affect your life in any way, they ignore real stories. Because of the lack of awareness, how can Congress be held accountable?

We need to return to fiscal sanity, and we must hold members of Congress accountable for their actions.

3) The 3 E’s- Equality, Efficiency & Effectiveness– Members of Congress, both Republicans, and Democrats, have been highly irresponsible when it comes to spending our taxpayer dollars as I just illustrated. However, they also must take responsibility for the lack of oversight within the bureaucracy.

Equality- There is no equality within the system, and the Congress while they try to force equality, it simply doesn’t work. Unfortunately, when something goes wrong, people’s knee-jerk reaction is to look to the federal government to solve the problem. Rather than do their job, Congress obliges by passing bills that don’t make sense or make the problem worse.

During the great recession, Congress passed bills to extend unemployment benefits several times. (The Balance) Depending on when you were laid off, you were able to collect benefits from 33 weeks-99 weeks so, if you got laid off at the wrong time, you only received 33 weeks.

During the same period, I suffered because I was unable to write off my closing costs on my home in October of 2009, but if you closed on a home starting in November 2009, you were able to write-off all of your closing costs.

Efficiency- There is no efficiency in government programs. Look at how long it takes to get permits and do major construction projects. Look at how much it costs to run a school or government facility. They overpay on everything, and the cost vs. benefit analysis doesn’t make sense.

The Government Accountability Office found that there are dozens of overlapping and redundant programs at the federal level. The government could save billions in taxpayer money by consolidating these programs. For example, three agencies conduct catfish inspections- USDA, FDA, & National Marine Fisheries Service under NOAA to look at the same catfish. (GAO)

Effectiveness- The government rarely reviews programs to see if they are meeting their objectives. We continually hear that there is not enough money going into education, and that’s why student performance has been declining. We increase spending on education each year. We spend more than almost every country combined. So rather than looking at it as a money problem, perhaps we need to examine to see what other factors exist.

The War on Poverty is another great example. When announced by Lyndon B. Johnson, the poverty rate was 17.3%. After $22 trillion spent, the poverty rate hovers between 14-15% today. (Heritage)

The War on Drugs is another example. We have 76 drug prevention and treatment programs at the federal level, of which 56 overlaps according to the GAO. (GAO) This does not include all the state and local programs, as well as the nonprofit and for-profit programs. Drug addiction is at its highest levels. (PBS) Shows inefficiency and ineffectiveness.

Fiscal disaster lies ahead

While Congress should be held accountable, we cannot go without some blame. The media has kept us in the dark and continues to turn a blind eye to the abuses in the system. Instead, they have chosen to focus on innocuous entertainment stories. This has left the American people blind and deaf as to what is going on in Washington. Also, we have disengaged from the political process, and have remained willfully ignorant by ignoring the problem and not learning about our system under the Constitution and the roles and responsibilities of our institutions.

However, there are other things we can do. We the People need to stand up and say no more. We need to hold the government and bureaucrats responsible for their failures. Sadly, the opposite is happening. Instead of recognizing governments failures and limitations, the people are willing to entrust government with even more power even though most are not aware of the staggering numbers we face. In addition to the $22 trillion debt, we have a total of $124 trillion in unfunded liabilities as deficits increase, and social security and Medicare begin to go into the red.

We need to be honest with ourselves and understand that we are part of the problem as we place increasing demands on government. Sadly, the candidate who is honest will not win an election. No one is going to vote for the candidate that says, “I am going to make your life more difficult by increasing taxes where companies like Amazon should be paying into the system, cutting spending by 15% across all departments and agencies, and we will all have to sacrifice, but if we do this, we will become financially independent.” It is much easier for a candidate to win by offering stuff.

Final Thoughts

Last week I brought up invoking Article V and calling for a Convention of States. If you want detailed information on the Convention of States process, listen to last week’s episode. You can also visit www.conventionofstates.com. One of the amendments I would introduce is tying Congressional pay to the budget. If after three years Congress cannot get to a balanced budget, their pay gets decreased by 10%. If they start generating a surplus and paying down the $22 trillion national debt, they get a 5% increase in pay. By making Congress have a financial stake in the system, they will become much better stewards of our taxpayer dollars. They will be far more responsible and will have the incentive to make sure the programs we run are meetings goals and expectations.

Another solution is to bring in outside auditors to examine government programs every two years to determine whether these programs are meeting their objectives. It doesn’t make sense for those running the programs to be the ones evaluating the programs.

We should also force the government to try solutions that don’t cost taxpayers a dime. It’s time to be creative and try the free solutions first, as I stated when discussing Medicare for all earlier in the program.

Finally, and most importantly, we must recognize that governments capabilities are limited, and we must stop looking to government to solve our problems because they can’t. Our government is designed to be slow, awkward, and inefficient. The federal government was never meant to take on this wide array of responsibilities, and power needs to be restored to the state and local governments, more importantly, power has to be restored to the people.

Closing

I want to thank you for joining us. As always, if there is a topic you would like me to analyze, send an email to podcast@pasreport.com. As our movement continues to grow, we become a force for real common-sense change in the United States. By using education and facts, we win the arguments. If you believe in the message and find the value in this podcast, please share this episode with others. Thank you for joining us, stay safe, and I’ll be back next week.

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