MyGovCost News & Blog

Federal $25 Billion Drug Bust

Monday July 21st, 2014   •   Posted by K. Lloyd Billingsley at 7:07am PDT   •  

Drug-bust_200Michael Botticelli, the federal “drug czar” and adviser to Barack Obama, wants to spend $25 billion next year to fight drugs. A report to Congress from the drug czar’s office said, “we must seek to avoid oversimplified debates between the idea of a war on drugs and the notion of legalization as a panacea.” The proposal to spend $25 billion came a day after Washington state allowed the sale of marijuana in the style of Colorado. California voters authorized medical marijuana in 1996.

As for oversimplification, how about the idea that a “war on drugs” declared by Richard Nixon in 1971 can solve the problem by spending $1 trillion? “What do we have to show for it?” asked Richard Branson on CNN. “The U.S. has the largest prison population in the world, with about 2.3 million behind bars. More than half a million of those people are incarcerated for a drug law violation. What a waste of young lives.”

Likewise, Allison Schrager notes in the Huffington Post that the United States spends more than $40 billion each year on drug prohibition, and that is only the explicit cost. Implicit costs include “increased violence, otherwise productive citizens in prison, and perpetual poverty, both at home and, especially, abroad.”

The federal Drug Enforcement Administration, launched by Richard Nixon, started with a budget of $65 million in 1972. In 2014 the budget approaches $3 billion, and DEA bosses want to keep the money coming. In Washington more money is the answer to everything. That’s why the war on drugs continues, despite massive costs, casualties, and collateral damage.

Who Own’s America’s Debt?

Monday July 21st, 2014   •   Posted by Craig Eyermann at 7:03am PDT   •  

Who are the major holders of debt issued by the U.S. federal government going into the summer of 2014?

The answers are revealed in the chart below!


Political Calculations observes:

On the whole, there haven’t been many changes since our previous edition. We see that the debt reported to be held by Belgium is still considerably inflated over historic levels, as this nation’s banks would appear to have acted on behalf of Russian interests seeking to place their U.S. government-issued debt holdings in non-Russian financial institutions ahead of and in the months following Russia’s actions to seize control of Crimea from Ukraine.

The direct holdings of U.S. Treasuries by Russian and Russian-based interests peaked in October 2013 at $149.9 billion and began moving out of Russia in the following months, well ahead of when Russian actions in support of separatists in Crimea and the eastern regions of Ukraine became overt.

They fell to a level of $100.4 billion in March 2014, before rebounding to $116.4 billion in April 2014 as Russia appeared to back off its direct support of the ethnic-Russian separatists in Ukraine.

In May 2014, however, the direct holdings of U.S. government-issued debt by Russian-based interests began declining again, to $111.4 billion, suggesting the anticipation of actions that would expand the conflict.

With that being the case, in addition to seeing to whom the U.S. government is beholden in sustaining its desired level of spending, monitoring the transfers of these holdings among international institutions may provide an early warning of impending overt actions by foreign interests intent on pursuing policies of aggression on the world stage.

Long-Term Budget Outlook Deteriorates

Thursday July 17th, 2014   •   Posted by Craig Eyermann at 6:37am PDT   •  

The Congressional Budget Office (CBO) has issued its Long-Term Budget Outlook for 2014. Compared to previous reports, it projects a slightly worse outlook for the nation’s fiscal situation, which results from the CBO’s new assessment that the U.S. economy’s potential for stronger economic growth in the future is lacking.

The Washington Examiner‘s Joseph Lawler explains:

The CBO, Congress’ nonpartisan budget scorekeeper, estimated that the budget outlook has deteriorated slightly since its 2013 projections: The federal debt is now projected to be 106 percent of the country’s economic output in 2039, up from 102 percent previously, if current law is maintained. In a more realistic scenario, allowing for likely fixes to the budget, that total will be 180 percent. Both scenarios involve the nation’s obligations on an “upward path relative to the size of the economy, a trend that could not be sustained indefinitely.”

Lawler hones in on the cause of the deterioration in the CBO’s long-term projections:

... the worsening debt-to-GDP ratio is not due to greater debt accumulation, according to the CBO. Instead, it’s a function of slower anticipated economic growth. The CBO had previously downgraded its estimates of economic growth to reflect the economy’s weak performance in recent years and its projections for slower labor force and productivity growth.

The chart below shows how the national debt held by the public, which does not include the debt held by government entities (such as Social Security’s trust fund), is expected to change as part of the CBO’s alternative fiscal scenario.


The CBO projects this value only up through 2050, because after that point, the portion of the U.S. national debt held by the public will exceed 250% of GDP and the CBO is not confident of its ability to forecast GDP in that kind of economic environment. The CBO lacks confidence in its ability to anticipate how much productive economic activity would be “crowded out” by the kind of chronic budget deficits that the U.S. federal government would be running at that point. Although they expect that the growth rate of GDP would be progressively forced lower over time as a result, they do not know by how much.


Congressional Budget Office. The 2014 Long-Term Budget Outlook. [PDF Document]. Data and Technical Information [Excel Spreadsheet]. 15 July 2014.

Coastal Commission Carries On Fine Tradition of Bad Government

Wednesday July 16th, 2014   •   Posted by K. Lloyd Billingsley at 7:01am PDT   •  

CCC_200The California Coastal Commission (CCC) is an unelected body that overrides the elected governments of coastal counties and cities on land use and property rights issues. The Commission wields enormous clout, but for more than 30 years it has lobbied for the power to levy fines directly, instead of going through the courts. As Josh Richman noted in the San Jose Mercury News, the state has now given the Commission this power.

Thanks to a budget trailer bill by Assembly Speaker Toni Atkins, San Diego Democrat, the CCC can now avoid the courts and fine property owners they believe are illegally blocking public access to beaches. But, “the commission’s new power could affect landowners all up and down the coast.”

Atkins’s bill was not the subject of debate or hearings, but she told reporters, “I feel pretty comfortable that I haven’t gone out on a limb.” Property rights advocates didn’t see it that way. Damien Schiff of the Pacific Legal Foundation called it a “game changer” that would force property owners into costly litigation if they believe a fine is improper. Schiff expects the Commission to ask for an expansion of its new power. Atkins said that was unfounded and unreasonable and that the Commission would not “overreach.”

It certainly has in the past, violating property rights, quashing development, evicting families, and making the coast an enclave for the wealthy.

Bruce Johnson, founding research director of the Independent Institute, was one of the original appointees to the California Coastal Commission in 1973. He resigned after six months as he witnessed the rampant corruption, ignorance, and injustice underlying the Commission’s operations. In the 1990s, Commissioner Mark Nathanson served prison time for shaking down celebrities. The new power to levy fines will make that kind of corruption much more likely. And even more power is surely on the way.

Speaker Atkins claimed that the power to levy fines “is a small piece of what they should be allowed to do in order to protect the coast.” So the expansion of Commission power is indeed on Atkins’s agenda, and to get more power the Commissioners never need to face the voters. In California, regulatory zealots are number one. Taxpayers aren’t even number two.

Overclassified Waste

Tuesday July 15th, 2014   •   Posted by Craig Eyermann at 6:41am PDT   •  

20935045_S The problems plaguing the Department of Veterans Affairs are deep and systemic. New evidence has come to light indicating that the cancer of corruption and incompetence permeating the VA is even deeper than we knew. The Huffington Post reports:

The scandal-plagued Department of Veterans Affairs is systematically overpaying clerks, administrators and other support staff, according to internal audits, draining tens of millions of dollars that could be used instead to ease the VA’s acute shortage of doctors and nurses.

The jobs of some 13,000 VA support staff have been flagged by auditors as potentially misclassified, in many cases resulting in inflated salaries that have gone uncorrected for as long as 14 years.

And because the bonuses earned by the VA’s “overclassified” employees are often set as a percentage of their base annual salary as per their union contracts, these thousands of excessively paid VA employees doubly benefit from their administrators’ and managers’ deliberate failure to correct these errors. They triply benefit when you realize that their excessive wages and salaries also inflate their already overly generous pension benefits.

We say “deliberate failure” because the Department of Veterans Affairs managers and senior leadership acted to derail and obstruct the efforts to impose fiscal discipline upon them:

Rather than moving quickly to correct these costly errors, VA officials two years ago halted a broad internal review mandated by federal law. As a result, the overpayments continue.

Moreover, in the two years since thousands of misclassified jobs were identified, hundreds of additional positions have been filled at improperly high salaries. Internal VA documents obtained by The Huffington Post show that between September 2013 and May 2014, for instance, overpayments in annual salaries for the latter jobs alone came to $24.4 million, not counting benefits.

The federal government’s contracts with the American Federation of Government Employees (AFGE) prevents the pay of these employees who have been misclassified into higher pay brackets from having their salaries reduced to the levels that would apply if they were correctly classified.

We should note that placing employees into higher paying classifications than their actual skills and experience warrant is one way in which the government department’s administrators could get around the pay freeze that was passed into law in 2010. While pay raises for federal government workers were restricted, placing employees into open positions with higher paying job classifications was not. This “pay grade creep” became the bureaucrats’ preferred method to get around the pay freeze.

As for what might explain why the VA’s senior leadership would terminate efforts to bring fiscal discipline to the VA’s employment practices, we should note that in 2008, 96% of the AFGE’s political donations in that election year, totaling hundreds of thousands of dollars, went to Democratic Party candidates, including Barack Obama, who was elected president. In 2011, the AFGE cranked up its donations to “vulnerable” members of President Obama’s political party in the U.S. Congress, which coincides with when the VA’s senior administrators terminated the effort to correct the problem.

Looking the other way where the interests of the very deep-pocketed AFGE then would be an easy way that the political appointees running the VA could return the union’s ongoing political favors.

There is an obvious solution for this situation. Given what we’re still learning about the scandal, we’re afraid that it will not be achievable while the current management remains in place.

Until they’re replaced, we can expect that the waste will both continue and grow.

The $3.7 Billion Child Trafficking Tab

Monday July 14th, 2014   •   Posted by K. Lloyd Billingsley at 7:05am PDT   •  

border_200Already at stratospheric levels, your federal government costs have gone up $3.7 billion, the amount U.S. President Barack Obama wants to address the massive influx of more than 50,000 unaccompanied minors. This new imposition on embattled American taxpayers flows from the ruling-class notion that the United States must be wet-nurse to the world.

If anybody in Honduras, Guatemala, and El Salvador happens to be poor and living in fear of crime, that is unfortunate. It does not follow, however, that those persons should leave their native countries and come to the United States. Better choices include the Central American nations of Costa Rica, and Panama, and South American nations such as Venezuela, Ecuador, and Bolivia. Or consider Cuba, which in 2011 Newsweek proclaimed as one of the best countries in the world to live. In similar style, CNN has hailed Cuban health care as a model for the United States, so the kids would get better care. There would be no language barrier in any of those countries or in Mexico, but Mexico simply abets the trafficking of minors to the United States. The USA remains the default destination because of the welfare state and the prospect of jobs.

Hondurans, Guatemalans, and Salvadorans could have more jobs at home if their own countries would strengthen property rights and adopt free-market reforms. Those nations have no incentive to reform as long as they can ship their troubles to the United States, the welfare wet-nurse to the world. But will the $3.7 billion really help the kids?

As Steven Dennis notes in Roll Call, about half the money goes toward “beefed-up enforcement and court proceedings aimed at accelerating the deportations of the children and adults.” A full $1.8 billion goes to “the Department of Health and Human Services to pay for the care of children and families while they await proceedings.” The State Department gets $300 million “used in part to advertise in Central American countries to tell parents not to send the children to the United States and that they will not be allowed to stay if they arrive.” That should do the trick, all right.

So listen up, you 50,000 unaccompanied minors, here’s the way it works in the USA: Despite the humanitarian rhetoric, bureaucrats get first dibs on the dough. They are number one, and like American taxpayers, you ain’t even number two.

A Lack of Control

Friday July 11th, 2014   •   Posted by Craig Eyermann at 8:54am PDT   •  

The Associated Press reports that for the fifth year in a row, the amount of checks that the U.S. federal government has acknowledged that it has improperly paid out has exceeded $100 billion:

WASHINGTON (AP) — By its own estimate, the government made about $100 billion in payments last year to people who may not have been entitled to receive them — tax credits to families that didn’t qualify, unemployment benefits to people who had jobs and medical payments for treatments that might not have been necessary.

Congressional investigators say the figure could be even higher.

The following chart shows where the federal government recognizes that it has improperly spent billions of dollars:


Digging into the data behind the observed massive increase in improper payments since 2007, we find that payments for Medicare and especially for Medicaid account for the sustained increase. For Medicare, that coincides with the period in which the Baby Boom generation began reaching Age 65, the age at which these Americans could begin receiving Medicare benefits.

Medicaid is a very different story, since these payments began increasing in 2008 as the federal government bailed out many state governments that were unable to contribute their portion of payments to these programs during the worst years of the recession. Those figures have remained elevated because the Patient Protection and Affordable Care Act, more popularly known as “Obamacare,” sought to greatly expand eligibility for the Medicaid program.

In both cases, however, the improper payments that the federal government has made are due to the absence of adequate controls over its spending. That the amount of improper payments has exceeded $100 billion for the fifth year in a row suggests that bringing this excessive spending under control is not currently a meaningful priority for the federal government’s bureaucrats.

$100 Billion in Improper Payments

Friday July 11th, 2014   •   Posted by K. Lloyd Billingsley at 8:30am PDT   •  

waste-money_200Readers of this column know that the federal government wastes a lot of taxpayers’ money. How much? Last year, by its own estimate, the government sent out $100 billion in improper payments. In fact, as Rep. John Mica explained, “It’s over $100 billion each of the last five years. That’s a staggering half a trillion dollars in improper payments.”

The improper payments peaked at $121 billion in 2010. Last year Medicare topped the charts with $50 billion in improper payments. Medicaid was responsible for $14.4 billion in improper payments, and unemployment insurance $6.2 billion. Improper payments under the earned income tax credit came to $14 billion alone, a full 24 percent of all the payments. And so on, with major federal agencies and programs all contributing. But as it turns out, the $100 billion likely understates the problem, subject of hearings this week before the subcommittee on government operations of the House Oversight and Government Reform Committee.

IRS boss John Koskinen told the subcommittee that the rate of improper payments was unacceptable and that the government needed to do “whatever we can,” to fix it. Thus spake the powerful man who is unable to find the missing emails of Lois Lerner and six of her IRS associates.

White House deputy budget director Beth Cobert told the committee “We have taken an aggressive approach to attacking waste, fraud and abuse within federal agencies, and we will continue to seek out new and innovative tools to help us in this fight.” Actually, they haven’t and won’t, according to Beryl H. Davis, financial management boss at the General Accounting Office. Davis told the subcommittee that “the federal government is unable to determine the full extent to which improper payments occur and reasonably assure that appropriate actions are taken to reduce them.”

So here’s the real deal for embattled American taxpayers. The federal government remains an engine of waste, fraud and abuse on a colossal scale. The $100 billion in improper payments is the latest evidence that federal government agencies remain essentially unreformable.

Covered California Privatizes Email Stonewalling

Wednesday July 9th, 2014   •   Posted by K. Lloyd Billingsley at 7:16am PDT   •  

CoveredCalifornia_200IRS bosses claim to have lost two years of emails with direct bearing on the targeting scandal. Federal and state government agencies could respond to these mysterious losses by expanding efforts to preserve all public records. But as Christopher Cadelago explains in the Sacramento Bee, Covered California is taking a different approach.

California’s health insurance exchange, a wholly owned subsidiary of Obamacare, “does not provide official email addresses to members of its governing board.” When the Consumer Watchdog group sought public records, they were “told that because board members do not have email accounts with Covered California, their communications are private.” A government attorney told Consumer Watchdog, “We have no legal obligation to search private emails for records that are not within the definition of public records under the California Public Records Act.” Consumer Watchdog president Jamie Court told Cadelago that the state health agency wants “to keep their communications from public scrutiny.” That is not exactly a model of transparency, but Covered California is not exactly a model of accountability or efficiency.

Like its federal counterpart, the website has been dysfunctional and insecure. Covered California paid Accenture $359 million to set up a “consumer-friendly” web portal that didn’t turn out that way. IT people took hours, days or weeks to resolve issues. Covered California managed to waste $1.3 million on an absurd promotional video featuring Richard Simmons. The state health exchange also serves as a lucrative landing spot for washed-up government officials such as former state finance director Ana Matosantos, California’s former director of finance, who bagged a deal of $20,000 a month to advise the state exchange on “financial sustainability and budgeting issues, and evaluation analytics.”

All that and more has happened in public. Other problems doubtless exist behind the scenes. Journalists and groups such as Consumer Watchdog want to investigate, but the exchange won’t release records. As long as state attorneys can stonewall with the private email ruse, Covered California will remain just that. For their part, Californians will remain less informed and less able to evaluate the health exchange their tax dollars support.

The Mispriorities of Bureaucrats

Tuesday July 8th, 2014   •   Posted by Craig Eyermann at 9:15pm PDT   •  

ii-whistleblower-protectionWe’ve been following the VA waitlist/rationed health care scandal since it provides such a clear window into the priorities of so many the federal government’s bureaucrats, who we’ve argued chronically put their own interests above those they are intended to serve.

But the scale of those mispriorities is only just now becoming known. That is perhaps nowhere more clear than in the Congressional testimony prepared by a VA whistleblower from Atlanta, Scott Davis, who has put a number to how many applications for VA health care access that have been stalled for no good reason for years at the department’s national Health Eligibility Center in DeKalb County, Georgia. The Atlanta Journal-Constitution reports:

Whistleblower Scott Davis will tell the House Committee on Veterans’ Affairs that as many as 40,000 unprocessed health applications were discovered by HEC last year, primarily from veterans returning from Iraq and Afghanistan. His testimony is part of a Congressional hearing focused on VA whistleblower complaints and retaliation they’ve faced within the agency.

The HEC oversees enrollment and eligibility for veterans seeking to enter the VA health system nationwide. Last month, Davis told investigators with the VA inspector general’s office about mismanagement within the agency. Investigators are looking into allegations that more than 10,000 health applications from veterans may have been improperly purged from the HEC data system.

The AJC reported Davis’ story in an exclusive June 29. Just days after the article, he was contacted by the committee about testifying at tonight’s hearing. Other VA whistleblowers in the HEC office and in the Atlanta area have also contacted Davis since the AJC’s article ran.

Davis said one of those tipsters alerted him to the 40,000 unprocessed applications discovered in January 2013. He said the center is supposed to process applications within five days after they are received, but some of the 40,000 had been sitting for three years.

In the AJC’s original report, Davis previously described the VA’s priorities for processing these incoming applications to receive access to the VA’s health care services:

“We don’t discuss veterans,” Davis told the newspaper. “We do not work for veterans. That is something that I learned after working there. Our customer is the VA central office, the White House and the Congress. The veterans are not our priority. So whatever the initiatives are or the big ticket items that is what we focus on.”

As for what the VA’s bureaucrats at its Health Eligibility Center were doing instead of processing applications from veterans seeking medical care, Davis opened a window into the directions the Center received from the VA’s higher-ups in Washington D.C. in an interview with Fox News’ Neil Cavuto. TruthRevolt provides a partial transcript:

For example, I shared with your producer that we actually put incoming applications aside so we could focus on the ACA related applications that came in over last summer. That’s wrong. We should treat each veteran equally and focus on applications, as they come in, not because of special campaigns coming out of D.C.

“ACA related applications” refers to applications for individuals enrolling in the state or federal-government run “marketplaces” for health insurance established under the Patient Protection and Affordable Care Act (PPACA), which is popularly known as “ObamaCare”.

With such a large backlog of applications from veterans with recent service in Iraq or Afghanistan seeking medical care, there was no legitimate reason for diverting the staff of the Department of Veterans Affairs’ Health Eligibility Center away from processing those applications in favor of processing the applications of civilians buying health insurance through the “marketplace” or any of the state government-run exchanges.

We should also note that this alleged diversion of resources is something that could only have been ordered by individuals at the highest levels of the Obama administration – it’s not something that the VA’s bureaucrats would just go out and do on their own. As such, the unlawful misprioritization and waitlisting of 40,000 veterans’ applications for access to the VA’s health care services for over three years certainly didn’t happen by accident.

Something like that takes planning and coordination. A lot of it. And most importantly, the specific direction by individuals in authority to do it.

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