Baby, The Rain Must Fall, The Wind Must Blow. And Congress Must Spend.

A conservative friend posted a clever and shrewd tweet today.  Democrats (and some Republicans) on the Senate Finance Committee are holding up confirmation of US trade representative Robert Lighthizer, demanding a bailout of union miners’ pension funds in exchange for their votes.  What’s new?  This kind of arm-twisting politics is standard operating procedure in Congress.  But my friend’s exasperated reaction to the benevolent-sounding Miners Protection Act points out a fact that never seems to occur to anybody inside the Beltway:  “Taxpayers are not ATMs!  It’s not your money to give away!”

taxpayers-not-atmsI realized a while back that most legislators (and presidents for that matter) don’t worry about taxpayer disapproval when they pass a spending bill.  Here’s why:

  • Most voters don’t pay federal income tax, or pay very little.  They don’t feel personally impacted by government spending, because they think the money is extracted from somebody else – the “rich guys”.  Members of Congress (especially Democrats who rely on low-income or no-income voters to keep them in office) are heroes to their constituents when they spend more money.  In fact, incumbent legislators are almost always re-elected because they can brag about “bringing home the bacon” to their home districts.
  • Americans don’t worry about spending more money because there doesn’t seem to be any down-side.  Unlike families or businesses, the government never runs out of money, regardless of tax revenue or spending levels.  Our leaders have learned that they can print and/or borrow money without limit, because nobody has the courage to shut down the government and send employees home.  Yes, we have a $20 trillion debt.  Yes, interest on savings has been non-existent for many years.  Yes, wages have been stagnant for decades as the government crowds out private enterprise, gobbling an ever-growing bite of the GDP pie.  Yes, if continued it will all come crumbling down on the heads of our children and grandchildren. But the average Joe still doesn’t relate government spending to his own financial well-being.  In fact, most people think more government spending helps them.
  • And when you get right down to it, our congressmen are only doing what they were born to do.  The job description of a legislator can be boiled down to four words.  What do you do for a living?  Spend other people’s money.  The rain falls.  The wind blows.  Congressmen spend.  It is existential.  In the eyes of a government official, the solution to every problem is to spend more money.  If he isn’t spending money, he is a “do nothing” congressman.

Fortunately, the election showed that there are still (barely) enough Americans with a grasp on reality to step on the brakes before our nation careens off the financial cliff, taking the civilized world along for the plunge.  Our voices were finally heard.  But the narrow victory last November was just the beginning.  Too many of our leaders either still don’t get it, or will soon forget that they got it.  We may have stopped at the edge of the cliff.  But the cliff is still there.

We can’t eliminate all government spending, and in some strategic areas we will have to invest more than we have in recent years.  But it’s childish and dangerous to think that all of our current expenditures are still necessary and untouchable, and our only option is to spend more.

Tom Balek – Rockin’ On the Right Side

Rockin' On the Right Side

Some men climb a mountain,
Some men swim the sea,
Some men fly above the sky:
They are what they must be.
But, baby the rain must fall,
Baby, the wind must blow,
Wherever my heart leads me
Baby, I must go. Baby I must go.

Glenn Yarbrough – Baby The Rain Must Fall

The music scene in the early 60s went through a sometimes awkward transition from “folk” music to “rock”.  The Band was Bob Dylan’s backup group when he first put down his acoustic guitar and went electric.  After getting booed off the stage every night for weeks, Robbie Robertson, Levi Helm and the rest of The Band quit and went their own way, but Dylan soldiered on, clearly ahead of his time.  Here’s another example of the folk/rock insurgency: check out the blonde dancer bravely bouncing through folkster Glenn Yarbrough’s smoothie!

 

 

“Most Govt. Spending Is Mandatory – That’s BS

Federal officials and elite media pundits ridicule conservatives who demand lower government spending levels. They say only 24% of the budget is discretionary, and most of that is military spending, so there is nothing anybody can do about increased spending and debt without taking a hatchet to social security benefits.

Horse Hockey. Federal-Spending-by-the-Numbers-2014-03-2-budget-trends_509There is a heck of a lot of discretion in that “mandatory” spending.

The Heritage Foundation points out that in 1965 only 27% of federal spending was mandatory. By last year mandatory spending had grown to 63% of the total, and it’s not just a function of our aging population. Over time our government has pushed a ton of new spending into the mandatory category.

Our government has made the discretionary decision to give millions of legal and illegal immigrants and refugees social security benefits, medicaid, disability, earned income credits, and a host of other “mandatory” federal benefits and subsidies. The majority of foreign-born in our country are on one or more welfare programs. And this does not even begin to address the cost of education, health care, fraudulent tax returns, cost of police and prisons and other infrastructure that cost billions. Our government has made the discretionary decision to not enforce the borders, to not follow up on visa violations, and to not keep illegal alien criminals out of the country. There is nothing mandatory about inviting foreigners to dip into the American taxpayers’ soup.

Our government has also made the discretionary decision to not crack down on waste and fraud in the mandatory spending programs. A study by Senator Tom Coburn’s office indicated as many as 45% of disability claims were questionable. Social security and food stamp fraud is rampant.

When it comes to spending, our government doesn’t have a reputation for using good discretion. It has dropped billions of public dollars on corrupt and hopelessly inefficient green energy programs and other corporate cronies. It has stifled economic development with disingenuous environmental and social programs. By its fed policy to eliminate interest, it has destroyed the US currency and transferred much of the wealth saved by a generation of middle class families to the big banks and their benefactors.

Our government has made discretionary payroll decisions that have resulted in government workers earning far greater compensation than private sector workers do, and many of them are frightfully ineffective and inefficient. Five of the six wealthiest counties in the United States are Washington, DC suburbs. Much of the cost of these discretionary payroll decisions are embedded in mandatory spending.

Worst of all, our government has made the discretionary decision to pass on an insolvent nation to our future generations by refusing for decades to even write, much less balance, an honest zero-based budget. They didn’t have to do it, they chose to, pandering for the votes that bring them personal power and wealth.

I, for one, am tired of hearing that there is nothing anybody can do to reduce government spending because it is “mostly mandatory”.  Elections have consequences, so we had better elect people who won’t use lame excuses to defend this unsustainable spending and debt.

Tom Balek – Rockin’ On the Right Side

Rockin' On the Right Side

You made me love you,
I didn’t want to do it!
I didn’t want to do it!
You made me want you,
And all the time you knew it!
I guess you always knew it!

You Made Me Love You (I Didn’t Want To Do It) – Judy Garland

 

 

 

Is Federal Waste and Fraud Inevitable?

graphic courtesy of ProofDirectory.orgMy congressman, Mick Mulvaney (R-SC), frequently holds town hall meetings in his home district.  Each meeting includes a half-hour presentation of current, relevant information and a one-hour question and answer period.  Mulvaney tells his constituents what is on his mind, and then really listens to them.   His responses are honest and direct, no evasion or weasel-words. He is knowledegable, articulate, engaged, and pragmatic.

Mulvaney sets the bar high for transparency and communication from a US Congressman.  A while back I attended a meeting by a Republican congressman from North Carolina and the contrast is striking – from the outset he was defensive, unprepared, and seemed to consider the attendees to be combatants rather than constituents.  He cemented his position as a Washington insider, solidly aligned with Boehner and the good-old boys, was not up-to-speed on facts and details, and had no intention of listening to any conservative point of view from his audience.

So I’m tickled to have Mulvaney representing me in Washington, DC.  Still, I always leave his meetings totally bummed.  Here’s why:

Congressman Mulvaney sees the waste, fraud, and over-spending in government first-hand and with clarity.  He is loaded with anecdotes and examples of Washington’s out-of-control checkbook and frequently quotes from Senator Tom Coburn’s (R-OK) “Waste Book”.  Mulvaney knows how bad the corruption and ineptitude is, and hates it as much as we taxpayers do.

But then, after exploding our heads with his tales of fiscal terror, Mulvaney pulls the chain.  “There’s not really much we can do about it,” he says.  “The federal budget is so huge that it is impossible to find and correct problems in large enough increments to make a difference.”

Mulvaney points out that only 29% of our $3.5 trillion annual federal spending is discretionary – the rest is mandatory.  If 5% of that $1 trillion in discretionary spending is wasted, we would need 50,000 fiscal repairs of one million bucks each to fix it.

So nobody even tries to stop corruption and waste.

Does that sound horrific?  It’s actually worse.  I would bet the percentage of waste and fraud in the discretionary part of the budget is much larger than 5%.   Further, I submit that the waste and fraud in the mandatory part of the budget is just as bad or worse!

Our legislators have oversight responsibility, but do not have the time or resources to even begin to supervise federal programs and departments.  And do you think for a minute the government bureaucrats give a damn about 5% of somebody else’s money being wasted or stolen?  Quite the opposite – the more money their respective departments spend, the greater their power, prestige, and salaries.  They know nobody is watching, and they know nobody ever gets fired.

So is our federal fiscal viability as hopeless as Congressman Mulvaney fears?  It shouldn’t be.  And I hate that we, as a nation, have given up.

Here are some suggestions from a retired CFO (me) who has run businesses by the numbers and knows that waste and fraud are not inevitable:

  • Eliminate government employee unions – it is impossible to manage people who can’t be fired, and it is immoral that the campaigns of elected officials are funded by the very employees they are supposed to manage
  • Prosecute any officials who are caught stealing or wasting federal funds
  • Pass a balanced budget amendment, with restrictions on raising taxes – in other words, set and adhere to a real budget
  • Audit and/or eliminate the Federal Reserve – the cancerous growth of our federal government will continue until we stop printing fiat money
  • Return most government functions and authority to the states – restrict the federal government to only those functions specified in the Constitution
  • Require detailed public online reporting of all federal spending – sunshine is the best disinfectant

And that’s just a start.

Could federal government waste and corruption be brought back under control?  You bet!  But, like Mulvaney, I fear that it won’t.  Because as of now not enough Americans give a damn.  Too many of us are under-informed, disengaged, overwhelmed, or mired in self-interest.  Just the way the Washington insiders like it.

It will take a big bang – something really strong – to get our attention.

Tom Balek – Rockin’ On the Right Side

Rockin' On the Right Side

I’ve been feeling so much older
Frame me and hang me on the wall
I’ve seen you fall into the same trap
This thing is happening to us all, yeah

Something so strong could carry us away
Something so strong could carry us today, yeah

Something So Strong – Crowded House

The lights went out but the sound system was working – so the band kept playing!  Crowded House playing in the dark in 2007.