Spend, Spend and More Spend

Few will argue with the idea that federal government spending is out of control. The Heritage Foundation's Federal Spending by the Numbers is a comprehensive look at the situation. We'll share a few of the many bullet points that just make me (and I'm sure many of you) wonder why our political leaders can't realize that the current course is a disastrous one.

  • Over the past 20 years, federal spending grew 71 percent faster than inflation.
  • In 1962, defense spending was nearly half the total federal budget (49 percent); Social Security and other mandatory programs were less than one-third of the budget (31 percent). Two major entitlement programs, Medicaid and Medicare, were signed into law by President Johnson in 1965.
  • In 2012 entitlements were nearly 62 percent of total spending, while defense dropped to less than one-fifth (18.7 percent) of the budget.
  • Federal spending per household reached $29,691 in 2012, a 29 percent increase (adjusted for inflation) from $23,010 in 2002. The government collected $20,293 per household in taxes in 2012.
  • The excess of spending over taxes produced a budget deficit of $9,398 per household in 2012.
  • For every $6.80 the federal government collected in taxes in 2012, it spent $10. Consequently, $3.20 out of every $10 spent was borrowed.
  • Major entitlements (Social Security, Medicare, Medicaid, Children's Health Insurance Program, Obamacare) will increase from 44 percent of federal spending in 2012 to 57 percent in 2022.
  • In 1993, Social Security surpassed national defense as the largest federal spending category, and remains first today.
  • Federal energy spending has increased steadily over the past decade with the government increasingly subsidizing activities like energy efficiency, energy supply, and technology commercialization. An unprecedented $42 billion was spent in 2009 as part of the stimulus, a nine-fold increase over the 2008 spending level.
  • Interest on the debt is the fifth largest federal spending category, even at today’s low interest rates.
  • All entitlements (excluding net interest) total nearly 62 percent of all federal spending today.
  • Spending on the largest, Social Security, Medicare, and Medicaid, will leap from 10.4 percent of GDP in 2012 to 18.2 percent by 2048.
  • The big three entitlements alone will absorb all tax revenues by 2048. Other spending, such as national defense or interest on the debt would have to be financed completely on borrowed money.
  • Medicare is the fastest-growing major entitlement, growing 68 percent since 2002. Medicaid grew 38 percent and Social Security 37 percent.

Heritage Looks at Indiana’s Push for Right-to-Work

More analysis on right-to-work and seperating fact from fiction from the Heritage Foundation’s blog, The Foundry:

Heritage’s James Sherk says the law is a common-sense solution for states wanting to create more job opportunities for workers.

Right-to-work laws reduce the financial benefit from organizing workplaces where unions have limited support. This makes unions less aggressive and encourages business investment, creating jobs. States can and should reduce unemployment by becoming right-to-work states.

Sherk’s analysis also found that right-to-work laws have little effect on wages, despite union claims to the contrary. Opponents of Indiana’s bill are making that argument a major issue in their campaign to defeat the effort.

While supporters in Indiana maintain their focus on the bill’s effect on job creation, there’s also a case to be made about the anti-American concept of forced unionization. Currently in Indiana, the government gives workers no choice. Their dues — 1 percent to 2 percent of wages — are given to union bosses, often to advocate for an agenda that workers might not support.

Passage of the bill in Indiana could boost efforts in other states. Last year New Hampshire lawmakers adopted a right-to-work bill, only to have it vetoed by the governor. The New York Times noted other campaigns in Maine, Michigan and Missouri.

Surface Funds Go Far Beyond the Surface

When is federal transportation funding not really transportation funding? According to the Heritage Foundation, it’s when 35% of the allotted funds that come from our gasoline taxes are "diverted to high-cost, underutilized programs like trolley cars, transit, covered bridges, hiking trails, earmarks, administrative overhead, streetscapes, flower planting, hiking and bicycle paths, museums, transportation enhancements, tourist attractions and archaeology."

I don’t think Heritage or anyone else is questioning the need for at least some of the initiatives identified above. The concern, a legitimate one, is where should the money come from. Interested to hear your perspective on this one?

Below is an explanation from Heritage about the requirement to divert funds, the 12 categories eligible for diversion and how one state has used its funding:  

Under current law, each state is required to devote 10 percent of the Surface Transportation Program (STP) funds it receives each year from the federal highway trust fund to eligible enhancement projects as defined in existing statutes. Under legislation extended by SAFETEA-LU (P.L. 109-59), fiscal year 2012 spending authorizations for the STP will total $9.3 billion, implying that enhancement spending would then total $930 million that year.

According to current law, enhancement program spending must be limited to the following 12 purposes:

  • Provision of facilities for pedestrians and bicycles;

  • Provision of safety and educational activities for pedestrians and bicyclists;

  • Acquisition of scenic easements and scenic or historic sites (including historic battlefields);

  • Scenic or historic highway programs (including the provision of tourist and welcome center facilities);

  • Landscaping and other scenic beautification;

  • Historic preservation;

  • Rehabilitation and operation of historic transportation buildings, structures, or facilities;

  • Preservation of abandoned railway corridors;

  • Inventory, control, and removal of outdoor advertising;

  • Archaeological planning and research;

  • Environmental mitigation; and

  • Establishment of transportation museums. 

The Virginia Department of Transportation provides detailed information on its enhancement projects, and its annual list illustrates just how silly the program can get, as measured by the misspending on approved projects using scarce federal transportation dollars. Among the 82 approved projects costing $30.2 million for FY 2012 are the restoration of the historic Bull Mill in Scott County, a hiking trail on an abandoned rail bed in Buchanan County, renovation of a former rail passenger waiting area in Danville, renovation of the LaCrosse Hotel, restoration of the Assateague and Cape Henry lighthouses, construction of a pilot schooner for a Norfolk museum, smartphone-based battlefield tours, and gateway signs to various Virginia wine regions.

 

Spending in America: The Unfunny Story of Where Some of it is Going

In the recent debt deal, there was plenty of debate from pundits and voters about the need — or lack of need — for more taxation. But one thing almost everyone seemed to agree on — politicians included — was that the U.S. simply must start cutting its spending. The Heritage Foundation has an interesting post showing some places we could likely start:

Late-night comedian Conan O’Brien’s blog has a new post parodying Washington’s excessive spending. “Team Coco has found out why our government is so broke,” the blog explains, “They’ve been spending all our hard earned tax dollars on some pretty ridiculous programs.” The post contains a list of humorous fake programs and encourages readers submit their own.

But sadly, there’s no need to turn to a crack team of comedy writers to gin up examples of ridiculous government spending. Instead, one need only look to the shenanigans on Capitol Hill to find a list of absurd expenditures of taxpayer dollars. As Heritage has reported, in addition to long-term, substantive reforms, $343 billion of wasteful government spending could be cut immediately. And while Conan’s list is populated by a number of outlandish (but fake) programs, there are plenty of REAL government programs that are just as ridiculous. Conan, try these on for size:

  • Washington will spend $2.6 million training Chinese prostitutes to drink more responsibly on the job.
  • Because of overstaffing, the U.S. Postal Service selects 1,125 employees per day to sit in empty rooms. They are not allowed to work, read, play cards, watch television, or do anything. This costs $50 million annually.
  • Stimulus dollars have been spent on mascot costumes, electric golf carts, and a university study examining how much alcohol college freshmen women require before agreeing to casual sex.
  • Washington will spend $615,175 on an archive honoring the Grateful Dead.
  • The Securities and Exchange Commission spent $3.9 million rearranging desks and offices at its Washington, D.C., headquarters.
  • Congress recently gave Alaska Airlines $500,000 to paint a Chinook salmon on a Boeing 737.
  • Washington spends $25 billion annually maintaining unused or vacant federal properties.
  • The Federal Communications Commission spent $350,000 to sponsor NASCAR driver David Gilliland.
  • Washington has spent $3 billion re-sanding beaches—even as this new sand washes back into the ocean.
  • Taxpayers are funding paintings of high-ranking government officials at a cost of up to $50,000 apiece.
  • The Conservation Reserve program pays farmers $2 billion annually not to farm their land.

And the list goes on and on. When it comes to government spending, the truth is often stranger than fiction.

Economic Freedom: Where We Rank

Everybody: "We’re number 9! We’re number 9!"

The Heritage Foundation released a list of the best and worst countries on the economic freedom scale. For more on the actual criteria, see the full post. But here are the top 10 lists:

Most Free

  1. Hong Kong (1st)
  2. Singapore (2nd)
  3. Australia (3rd)
  4. New Zealand (4th)
  5. Switzerland (5th)
  6. Canada (6th)
  7. Ireland (7th)
  8. Denmark (8th)
  9. United States (9th)
  10. Bahrain (10th)

Least Free

  1. Timor-Leste (170th)
  2. Iran (171st)
  3. D.R. of Congo (172nd)
  4. Libya (173rd)
  5. Burma (174th)
  6. Venezuela (175th)
  7. Eritrea (176th)
  8. Cuba (177th)
  9. Zimbabwe (178th)
  10. North Korea (179th)

Woman Files Lawsuit, Claims McDonald’s Makes Parenting Hard

I don’t know what I can add to this. The Foundry reports:

Monet Parham, an employee of the California Department of Public Health, has lent her name—and that of her daughter Maya, age 6—to a preposterous class-action lawsuit alleging that McDonald’s is “unfair” to parents. The lure of a Happy Meal toy, Parham claims, so provokes Maya’s “pester power” that familial conflict ensues.

We’re not making this up.

The real tragedy here is that Parham is free to file a wholly frivolous lawsuit, while there’s no recourse for McDonald’s to recoup its legal costs. Nor can Maya hold her mother responsible for thrusting her into the national spotlight as a “pest” when, in reality, there’s nothing the least bit untoward about the little girl’s attraction to toys.

Perpetrating this scam is the (so-called) Center for Science in the Public Interest (CSPI), whose bread and butter is filing baseless lawsuits against major food manufacturers and restaurants, including Denny’s, Burger King, Coca Cola, and Kentucky Fried Chicken. All of which generates loads of front-page headlines and major bucks from liberal foundations. But were it not for the capitulation of some gutless corporations, the CSPI would likely have been rendered powerless a long time ago.

To their credit, McDonald’s executives have pledged to “vigorously defend” the Happy Meal against the CSPI suit, the particulars of which ought to make every responsible parent wince. To wit:

  • “Maya has requested Happy Meals from Parham because of McDonald’s marketing practices, and sometimes Parham, not wishing to cause family rancor, purchases such meals.”
  • “Because of McDonald’s marketing, Maya has frequently pestered Parham into purchasing Happy Meals, thereby spending money on a product she would not have otherwise purchased.”
  • “Maya, age six, continually clamors to be taken to McDonald’s ‘for the toys.’ Maya learns of Happy Meal toys from other children in her playgroup, despite Parham’s efforts to restrict Maya’s exposure to McDonald’s advertising and access to Happy Meal toys.”

It’s rather perverse for Parham to claim that McDonald’s is “interfering” in her family while, at the same time, she’s inviting judicial intervention into parenting decisions. As an employee with the nutrition section of California’s health department, Parham can already nag her fellow citizens about their eating habits. But asking the court to strip parents of their authority to decide what to feed their children constitutes Nannyism of a different scale.

Unemployment Comp: How Much is Too Much?

Jobs are — or should be — the number one priority as economic recovery (in that sense) remains elusive. For those currently without jobs, however, how much unemployment compensation is too much? It’s a tricky question, but one that is starting to be asked by more than a few people.

The unemployment comp program, created during the Depression as a temporary aid for laid-off workers, is now termed by some as an "expensive entitlement." While those out of work once received six months of payments, that has now surged to as high as 99 weeks in some states. Half of the more than 11 million unemployed have been jobless for longer than six months.

This is a downturn unlike any other since the program was created and many of those jobs will likely not come back. And while the vast majority are very likely doing all they can to find meaningful employment in the effort to return to their previous lifestyle, nearly two years of unemployment benefits has also undoubtedly led some to adopt the option of "let the government pay the tab" for awhile.

Few seemingly agreed with Kentucky Senator Jim Bunning’s recent filibuster that delayed the latest unemployment benefits extension (he wanted Washington to find a way to pay for it), but his logic was accepted in some circles. Colleague Jon Kyle of Arizona commented that the continued benefits are a "disincentive for people to seek new work" and that no one can argue that the current system is a "job enhancer."

Employers pay the bill through taxes in nearly all states (a few require worker contributions). Benefits have been extended before, but rolled back when the unemployment rate declined. That decline is proving difficult to achieve this time around.

A Washington Post article this week included the following:

"It is appropriate and natural for Congress to extend the time limit of unemployment insurance with the job market as bad as it is," said James Sherk, a labor economist at the Heritage Foundation. "But by quadrupling it, it is no longer an unemployment insurance program but a welfare program."

Phillip L. Swagel, a former Treasury Department official who is now a business professor at Georgetown University, said that some people might take longer to find a new job as a result of unemployment insurance extensions, but that right now it’s a needed benefit.

"The reality is that it’s hard to find a job even for people who really want one," he said.

But as the job market improves, Swagel said, unemployment insurance extensions must be pared back quickly, as they have been in previous downturns. "It’s important to let the extensions lapse as the job market recovers — to avoid having disincentives to work once the job market is better," Swagel said.

Part of the question is timing. For a program that is currently costing $10 billion a month, that’s something that needs answered sooner rather than later.

New York City Schools See Benefits of Making Kids Earn Promotion

The Foundry blog of the Heritage Foundation has an interesting post about the gains New York City schools have made by not allowing undeserving students to move forward. They write:

New evidence shows that ending social promotion – the practice of allowing students to advance a grade level without having mastered the content of their current grade – is having a positive result in student testing. A new study released on October 15th by the RAND corp. shows how New York City seventh graders who were held back as fifth graders have made academic gains.

The study, which looks at the effectiveness of the New York City Department of Education’s 2003 grade promotion policy, finds that fifth-graders who were held back due to low testing scores in math and language arts tested better as seventh-graders than did their peers who also tested low but advanced to grade six anyway. The policy, which put an end to social promotion for fifth-graders in 2003-04, has since been expanded to include grades five through eight.

Students in the Big Apple aren’t the only benefactors of the new policy. New York City Schools’ Chancellor Joel Klein takes notice of the success Florida has also had by ending social promotion. Klein writes about the similarities that exist between the policies Florida has implemented and those New York City is trying to implement in Education Next:

“Like Florida’s schools, New York City’s serve a high-needs population. But we are not allowing demographics to define our outcomes. Since 2002, our students have made steady progress. Today, far more students are meeting and exceeding standards in math and reading. We’ve substantially narrowed the racial and ethnic achievement gap, our students are catching up to students in the rest of the state, and our graduation rate is the highest it has been in decades.”

Your Money Is Being Spent on What!

True or false: Washington will spend $2.6 million to train Chinese prostitutes to drink more responsibly on the job. Or how about a Congressional earmark of $200,000 for a tattoo removal program in Mission Hills, California. Add in $500,000 to Alaska Airlines to paint a Chinook salmon on a Boeing 737.

According to Brian Riedl, a respected veteran of the Heritage Foundation, all of the above are unbelievably true. In fact, his article titled "50 Examples of Government Waste" is an eye-opener. We’ve not hesitated to point out government inefficiency at various levels, but this documented lineup of wasteful and unnecessary spending is something to behold.

Riedl calls government waste the "low-hanging fruit that lawmakers must clean in order to build credibility with the public for larger reforms." He admits, however, that "identifying inefficencies and abuses is much easier than devising a system to fix them."

A few others from the hit list:

  • Washington spends $25 billion annually maintaining unused or vacant federal properties.
  • The Securities and Exchange Commission spent $3.9 million rearranging desks and offices at its Washington, D.C., headquarters.
  • The Pentagon recently spent $998,798 shipping two 19-cent washers from South Carolina to Texas and $293,451 sending an 89-cent washer from South Carolina to Florida.
  • The federal government owns more than 50,000 vacant homes
  • Washington has spent $3 billion re-sanding beaches–even as this new sand washes back into the ocean.
  • The National Institutes of Health spends $1.3 million per month to rent a lab that it cannot use.
  • The Commerce Department has lost 1,137 computers since 2001, many containing Americans’ personal data.

Check out the entire list, but my guess is you will (and should) either be angry or at least frustrated beyond belief.

Next Steps in the Health Care Debate

The health care debate will be in full swing when more than 70 Indiana business representatives converge on Washington (see earlier post) in midweek for the D.C. Fly-in.

Markups (committee review of a proposed bill before it is reported out to the full House or Senate) will occur in both chambers. The Senate Finance Committee takes up chairman Max Baucus’ work that appeared to make no one happy upon its release last week and the House Energy and Commerce Committee takes care of some unfinished business.

The Senate Finance Committee will begin Tuesday, with both parties attempting to make changes to the $774 billion measure. The affordability of health insurance premiums is one of the primary cost concerns.

On the business side, there are a variety of fees and taxes, including a $4 billion annual tax on medical device companies. Senate Health, Education, Labor and Pensions ranking member Michael Enzi prepared more than 20 amendments for the markup, including one on the medical devices tax.

The Heritage Foundation offers a brief but pointed analysis of the Baucus plan, calling it "more of the same" and identifying "seven fatal flaws."

Meanwhile, the House Energy and Commerce Committee will begin a second health reform markup Wednesday, concluding business left unfinished this summer.

The committee reported out its version of the health care overhaul on July 31, but only because members agreed not to offer any more amendments. Energy and Commerce Chairman Henry Waxman assured Republicans and Democrats that the still-pending amendments — 55 in all — would be considered at a second markup this fall.

The changes will form a second, separate bill and will be combined with the overhaul in the Rules Committee.

Confused yet? Join the crowd. The Indiana business attendees and Chamber staff will seek some clarity from the nation’s capital.