MyGovCost News & Blog

Bay Bridge Escapes Criminal Investigation

Wednesday October 29th, 2014   •   Posted by K. Lloyd Billingsley at 5:26am PDT   •  

ct_logo_200We have been following the story of the new eastern span of the San Francisco-Oakland Bay Bridge, which came in ten years late, $5 billion over budget, and with lingering safety concerns. As we noted, UC Berkeley structural engineering professor Abolhassan Astaneh-Asi believes the bridge is unsafe and declines to use it. Governor Jerry Brown, a former candidate for president, responded to the safety issues with: “I mean, look, shit happens.” Some whistleblowers also thought so, and in a Sacramento hearing last January they called for a “criminal investigation.” That did not happen, but Caltrans boss Brian Kelly ordered an administrative investigation by the California Highway Patrol. The CHP deals with crimes committed on state property, but it’s a strange choice to investigate malfeasance on the bridge.

According to the Sacramento Bee, whose reporting brought the safety concerns to light, the CHP probe found “no illegality or retaliation against engineers who complained about construction defects.” The 33-page CHP report, however, cost some $823,000, with 13 officers working nearly 13,000 hours, including 1,500 hours of overtime. So taxpayers may be forgiven for seeing the CHP investigation not only as a cover-up but also as an excuse to waste even more money. But the story does not end there.

In the January hearing, Sen. Mark DeSaulnier complained that the cost overruns, 10-year delay, and lingering safety issues had eroded public confidence and made Californians “adverse to taxes.” These taxes were needed for other “infrastructure” projects that DeSaulnier claimed would promote economic growth. He gave no examples, but the prime candidate is surely the state’s $68 billion high-speed rail project.

DeSaulnier, who is running for Congress, is passing on an earlier Senate bridge report to state Attorney General Kamala Harris, with recommendations for a criminal investigation. Harris has shown not the slightest interest in challenging government bureaucracy, so taxpayers should not be surprised if the criminal investigation never comes off. That is good news for bureaucrats but bad news for taxpayers. If they believe massive state agencies are essentially unreformable, one can hardly blame them.

The Hidden Deficit

Tuesday October 28th, 2014   •   Posted by Craig Eyermann at 6:58am PDT   •  

In the U.S. government’s just-completed fiscal year for 2014, there is a very large discrepancy between the “official” size of the budget deficit, $483 billion, and the amount by which the U.S. national debt increased, $1,086 billion (or $1.086 trillion, if you prefer). We’ve been digging through the Monthly Treasury Statements issued by the U.S. Treasury Department to get a better understanding of how that large of a discrepancy could possibly happen.

We estimate that the discrepancy really works out to be $244 billion, which is the figure we obtain when we subtract the $277 billion that the federal government borrowed from “itself” (primarily from Social Security’s Old Age and Survivors Insurance Trust Fund), the nearly $70 billion increase in the federal government’s Operating Cash (because Uncle Sam likes to have “walking around” money), $11 billion in “Miscellaneous Adjustments, and the $483 billion represented by the “official” budget deficit of the U.S. government from the $1,086 billion year-over-year increase in the nation’s total public debt outstanding.

In going through the Monthly Treasury Statements, we found two primary contributors to the hidden deficit: Deposit Funds, which represents money the U.S. government accumulates but does not own, and Federal Direct Student Loans, which represents money that the U.S. government borrows for the purpose of loaning out to college students.

The contribution of the U.S. government’s Deposit Funds liability, which accounts for just under half of the $244 billion discrepancy, is the result of the shell game that U.S. Treasury Secretary Jack Lew was playing during the debt-ceiling debate of the federal government’s 2013 fiscal year, when Treasury officials redirected money that should have gone to things like the Civil Service Retirement Trust Fund for government employees to avoid having to borrow more money from the public than the U.S. Treasury was authorized to do under the law. The chart below shows how the account balance for the U.S. Treasury’s Deposit Funds changed from month to month during the last few fiscal years.


When the debt-ceiling crisis was resolved in October 2013, the first month of the federal government’s 2014 fiscal year, the U.S. Treasury immediately rushed out to borrow over $119 billion to replace the I.O.U.s it had borrowed from “itself” during that shell game.

And then, on top of that, the U.S. government borrowed an additional $123 billion so it could loan the money directly to college students, accounting for the remainder of the U.S. government’s hidden deficit.

The chart below shows how much debt the U.S. government has accumulated for the purpose of loaning money directly to students since 2004.


Nearly all of the increase occurs after 2008, which corresponds to President Barack Obama’s tenure in office, which saw the federal government take over the student loan industry from the private sector. The U.S. government’s cumulative borrowing of $707 billion U.S. dollars to issue student loans accounts for nearly $1 out of every $10 that the U.S. government has borrowed since President Obama was sworn into office.

That makes Federal Direct Student Loans the largest single contributor to the hidden deficit of the U.S. government.

Social Security for Nazis

Monday October 27th, 2014   •   Posted by K. Lloyd Billingsley at 5:18am PDT   •  

socialsecurityadmin-seal_200David Rising, Randy Herchaft, and Richard Lardner of the Associated Press have discovered that a small group of ex-Nazis, including death-camp guards and SS soldiers, are drawing America Social Security payments to the tune of more than $1.5 million. According to the AP, the U.S. government allowed the suspected war criminals to continue collecting Social Security if they agreed to leave the country to face prosecution abroad. The AP reporters found that at least 38 of 66 Nazi guards removed from the United States were allowed to keep their Social Security benefits and only 10 were prosecuted for war crimes in Europe. The federal U.S. Department of Justice denies it used Social Security as an incentive to persuade Nazi suspects to leave the country voluntarily, but American taxpayers have good reason to remain skeptical. And they might contrast the Social Security payments to Nazi war criminals with the restrictions American workers face.

As we noted two years ago, if an American worker is unable to find employment and chooses to take Social Security at age 62, the payout is substantially less than at age 65 or 67. In many cases, the payout would be inadequate to pay a mortgage and household expenses. Retirees at 62 can still work, but Social Security imposes an income limit in the neighborhood of $15,000. Beyond that, the government docks $1 for every $2 the worker earns. The limit increases at full retirement age but does not go away until 67, when the worker is obviously less able to work. This all amounts to enforced poverty and makes no sense on any level. The system that enforces these oppressive rules manages to keep the money flowing to Nazi war criminals.

Workers who find that disturbing should also consider the double standard for federal government employees. Under the Federal Employees Retirement System they are able to retire seven years earlier at 55, with no income restrictions and even with a Special Retirement Supplement (SRS) “designed to help bridge the money gap,” and which kicks in “your missing Social Security income until you reach age 62.” The American ruling class always gets the best deal.

The 2014 Wastebook Is Here!

Thursday October 23rd, 2014   •   Posted by Craig Eyermann at 8:56am PDT   •  

wb14 cover_Display It’s back! Senator Tom Coburn’s annual compendium of some of the zaniest ways that the U.S. federal government burns through all the money it taxes and borrows in the name of spending: the 2014 Wastebook!

This year’s edition features over $25 billion worth of examples of bad decisions made by U.S. politicians and bureaucrats. Here are some highlights that caught our attention as we reviewed the 2014 Wastebook’s table of contents (and their cost), which we may explore more in upcoming articles:

  • Swedish Massages for Rascally Rabbits. ($387,000).
  • Scientists Hope Gambling Monkeys Unlock Secrets of Free Will. ($171,000).
  • Synchronized Swimming for Sea Monkeys. ($307,524).
  • New Bridge Demolished for Using $3,271 Worth of Canadian Steel. ($45,000).
  • FEMA Overlooks Flood Victims, Rebuilds Golf Course Instead. ($202,291).
  • Corporate Welfare for Mega Farmers. ($8,536,052).
  • Airport Tree-Trimming Project Turns into 27-Hole Golf Course Renovation. ($5,000,000).
  • Farmers Get Grant to Produce “Worm Power” Compost. ($199,000).
  • Taxpayers Charged to Promote Hillary Clinton’s $14 Million Book in Europe. ($55,000).
  • Medicaid Provider Taxes. ($4,000,000,000).

Until then, we encourage you to go through the 2014 Wastebook’s very well researched examples of where Uncle Sam’s team of politicians and bureaucrats makes bad decisions and spent money as if in a drunken stupor. If only there were a federally funded program to send them texts to convince them to not drink ($194,090) so much from the fountain of government spending in the first place!

And in the meantime, here’s the trailer:

Coburn, Tom. 2014 Wastebook: What Washington Doesn’t Want You to Read. 2014 Wastebook. 21 October 2014.

Ruling Class Rail Rolls On

Wednesday October 22nd, 2014   •   Posted by K. Lloyd Billingsley at 5:08am PDT   •  

HiSpeedCATrain_200Opponents of California’s so-called “bullet train” went to court contending that the funding plan for $68 billion high-speed rail project violated the ballot measure voters approved in 2008. A Sacramento court agreed, but the Third District Court of Appeal overturned the ruling. Now, as the Sacramento Bee recently reported, the California Supreme Court let the appeal stand, and that has high-speed rail bosses feeling good about themselves. Dan Richard, chairman of the board of the California High-Speed Rail Authority, said they would move “aggressively” to build “a modern high-speed rail system that connects the state, creates jobs and complies with the law.” Stuart Flashman, attorney for opponents of the project, told reporters the decision was “bad news for California’s voters and for the state’s financial future.” He’s right about that.

Dan Richard said the train is supposed to “connect the state,” specifically Los Angeles and the San Francisco Bay Area. The first section of the project, however, is out near Fresno. This confirms that a primary purpose is to connect California congressmen with money, so they can show that they are bringing home the bacon for their districts. As we noted, the project is also a soft landing spot for washed-up politicians such as board member Lynn Schenck, a former congresswoman and chief of staff for California governor Gray Davis. And of course Governor Jerry Brown sees the bullet train as one of his legacy projects.

Suppose the bullet train did connect Los Angeles and San Francisco. It remains dubious whether it could make that trip in two hours and 40 minutes, as ballot measure 1A stipulated. In the style of Obamacare, you have to spend the money and build it before you find out how fast it goes. As it happens, two hours and 40 minutes is more than twice as long as it takes to fly between the two cities, but by all indications the bullet train will be more expensive than air travel as well. And if anybody thinks the final cost of construction will be $68 billion, the state has a bridge to sell you.

Fiscal Year 2014 National Debt Wrap-up

Tuesday October 21st, 2014   •   Posted by Craig Eyermann at 9:34pm PDT   •  

Who were the major holders of debt issued by the U.S. federal government as of the end of its 2014 fiscal year?

The preliminary answer of who owns the $17.860 trillion in debt as of 30 September 2014 is presented graphically below:


The data for foreign holdings will be revised over the next six months. We anticipate that the holdings indicated for Belgium will be shifted to other foreign entities, given that nation’s role as an international banking center.

Since FY2013

Since the end of the U.S. government’s 2013 fiscal year on 30 September 2013, the total public debt outstanding for the U.S. government has increased by $1.086 trillion (or to agree with the units shown on our chart, $1,086 billion). That would mark the sixth time in the past seven years that the national debt of the United States has expanded by more than $1 trillion dollars per year—double the typical half trillion a year increases that were viewed as a major problem prior to Barack Obama’s presidency.

year-over-year-changes in-us-national-debt-fy2000-fy2014

The $1.086 trillion increase in the total national debt for Fiscal Year 2014 is all the more remarkable because the U.S. Treasury Department just bragged that the federal government’s budget deficit for FY2014 was $483 billion.

Oct 15 (Reuters) — The U.S. budget deficit fell by nearly a third to $483 billion in fiscal 2014, the lowest level since 2008, as a quickening economic recovery boosted tax collections and spending grew only modestly, the Treasury Department said.

The deficit, down from $680 billion last year, was the lowest since a $459 billion budget gap in fiscal 2008, which was followed by four straight years of $1 trillion-plus deficits in the wake of the financial crisis.

U.S. Treasury Secretary Jack Lew and White House Budget Director Shaun Donovan hailed the data on Wednesday as a “return to fiscal normalcy” as the 2014 deficit fell to 2.8 percent of gross domestic product. That was the lowest since 2007 and a smaller share of the economy than the annual average for the last 40 years.

Somehow, the U.S. federal government managed to borrow and spend an additional $603 billion, above and beyond the official budget deficit of $483 billion claimed by the Obama administration, in order to cause the national debt to increase by more than one trillion dollars in one year.

How Could That Happen?

Part of the answer lies in the debt-ceiling debate during 2013, which ultimately led to the partial federal government shutdown for the first 17 days of the 2014 fiscal year, from 1 October 2014 through 17 October 2014.

Here, U.S. Treasury Secretary Jack Lew artificially kept the U.S.’s total public debt outstanding from increasing above the statutory debt ceiling by shifting around the portion of debt held by U.S. government entities, such as Social Security’s Trust Fund and the U.S. Civil Service Retirement Fund—giving them I.O.U.s as he redirected funds intended for them to instead allow the U.S. Treasury to continue rolling over the debt it owes to the public.

The reason the U.S. government had to go through a partial shutdown is because those trust funds didn’t have enough money to keep the shell game going until the debt ceiling was increased. When it finally was, the U.S. government “owed” some $328 billion to “itself”. Which it promptly rushed out to borrow in Fiscal Year 2014.

That’s also why the increase in the national debt for FY2013 seems so low. $328 billion of the debt that should have been recorded in that year was actually recorded in FY2014.

That means that the U.S. national debt increased by $758 billion in FY2014, $275 billion more than the official amount of the U.S. Treasury’s claimed $483 billion budget deficit.

We’re still waiting for the official explanation of that fiscal discrepancy.

Data Sources

Federal Reserve Statistical Release. H.4.1. Factors Affecting Reserve Balances. 1 October 2014. [Online Document]. Accessed 17 October 2014.

U.S. Treasury. Major Foreign Holders of Treasury Securities. Accessed 17 October 2014.

U.S. Treasury. Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 2014 Through September 30, 2014. [PDF Document].

[Cross-posted at Political Calculations]

California Covered in Cronyism

Monday October 20th, 2014   •   Posted by K. Lloyd Billingsley at 5:31am PDT   •  

CoveredCA_200As we have noted, Covered California, the Golden State’s wholly owned subsidiary of Obamacare, is massively dysfunctional and wasted $1.3 million on an absurd promotional video featuring flabby exercise guru Richard Simmons. The California health exchange also stonewalls consumers and serves as a lucrative landing spot for washed-up government officials such as former state finance director Ana Matosantos. But the problems don’t stop there.

As Jim Miller notes in the Sacramento Bee, consumer groups are pressing Attorney General Kamala Harris to investigate $184 million in Covered California contracts without competitive bidding. These reportedly include “millions of dollars in contracts to firms or people that had professional ties to Covered California executive director Peter Lee.” A reported $4.2 million in contracts went to The Tori Group, “a consulting firm whose founder had once worked with Lee. Other contracts went to the subsidiary of a firm Lee once led,” according to a report from Consumer Watchdog. Covered California bosses claimed they needed no-bid contracts to meet tight deadlines, but Watchdog president Jamie Court said, “This isn’t about speed. This is about being opaque,” and the no-bid deal was “the antithesis of open government and good government.” That is true, but not the end of it.

Covered California and Obamacare are the antithesis of good health care. The cardinal rule of anything medical is: first, do no harm. Obamacare violated that rule by taking away the health plans people wanted, and by taking away the people’s right to choose the care they believe best meets their needs. Now they get only the care government bosses want the people to have, administered by a system that is dysfunctional, wasteful, and unaccountable. That may be good for ruling-class insiders, but for everybody else it remains a highly unhealthy situation.

So Much Explained...

Saturday October 18th, 2014   •   Posted by Craig Eyermann at 10:39am PDT   •  

We couldn’t let the ultimate metaphor of our time pass without notice....

Although having his personal credit card rejected in an attempted transaction is just a single embarrassing event for the President, it is not unexpected. Barack Obama has never been a smart man when it comes to money, which is something that has been known since before he was elected to be the President of the United States of America, thanks to the information we have about how he came to buy his home in Chicago:

There is no question that Barack Obama knew the property was overvalued. We recognize this in that his first bid for the house was for just $1.3 million, which as we saw yesterday, would put it right in line with the other properties that have recently sold that are very comparable to the house on paper!

His second bid, $1.5 million, as compared to the true value of $1.43 million, was high, but not outrageously so. His third, “successful” bid of $1.65 million more than vaults over that line.

More disturbing, if we accept that the only thing keeping him from spending the $1.95 million the previous owners were originally asking was his inability to get that much money, what could the United States be in for should Senator Obama become President Obama? Remember, the amount of money he could get was the only constraint he had in the transaction! Ethical constraints, as recognized by his reliance upon favors done for him by shady political associates, were absent from the beginning.

Discounting that apparent reliance upon receiving favors from political associates for his personal benefit, we find that the price that Barack Obama paid for his house reveals a serious lack of fiscal discipline, all the more remarkable for it being on display in the largest single financial transaction of his life to that date. Rather than carefully steward his own money, he instead sought to fulfill his vision of “a fitting home for a new senator.”

He might be President. What price will America be compelled to pay to fulfill his grandiose ambitions? And how much will it cost to fix the certain damage?

With a little more than two years left to go in his presidency, we know one thing for sure: the costs of repairing the damage will be massive. The nation is still totaling up the price.

France on Debt Row

Friday October 17th, 2014   •   Posted by Craig Eyermann at 10:44am PDT   •  

29934314_S What waits at the end of the line for a nation that has borrowed and spent its way into a hole that it can no longer climb out? Not even after imposing extremely high income taxes on its most successful people?

France is about to find out. Bloomberg‘s Helene Fouquet and Mark Deen report:

The glory days of France’s welfare model may be behind it.

The country’s Socialist government led by Prime Minister Manuel Valls is chipping away at a system that dispenses 52 billion euros ($66 billion) annually just in family benefits, and is among the most generous in the world. A hemorrhaging public deficit and debt on track to reach about 100 percent of gross domestic product within two years have left the government with little choice but to attack what in France has been a way of life for almost a century.

In fact, France has not balanced its budget since 1974. And even with the cuts it is now being forced to consider to remain solvent, it won’t this year or the next either. Here’s CNBC’s brief description of what France’s Socialist government has put on the table:

The French government presented its 2015 budget on Wednesday, unveiling a 50 billion euro ($63 billion) savings program cutting deep into the country’s beloved welfare system.


The cuts unveiled on Monday by Marisol Touraine, minister of social affairs, health and women’s rights, include a decrease in childcare benefit for higher earners, less parental leave and a cut to the existing child birth benefit.

Previously, families could receive up to 923.08 euros ($1,164) at the birth of every child but will now receive up to 308 euros ($388.5) for the second and following children.

These particular cuts are aimed at an 84-year-old French Social Security program that has helped France sustain one of the highest fertility rates in Europe by providing incentives to have children, which have been very successful in that France is one of the very few European nations with a fertility rate high enough to sustain its current population level. In a very real sense, the cumulative debt run up by all French politicians and bureaucrats over the last 40 years is now forcing them to directly steal the future from French children before they are even born.

Here’s how one spokesman from France’s Socialist government justified doing that:

“It’s not the end of a generous system,” government spokesman Stephane Le Foll said yesterday. “It’s the end of spending that wasn’t useful—and that’s in order to preserve a system that is a costly one.”

To translate: “The needs of the state in France outweighs the needs of the French people.” And apparently, even the state’s need for French people, who are clearly getting the message.

Like death row, being on debt row is not a pleasant place to be.

Parcel Tax Rip-off

Thursday October 16th, 2014   •   Posted by K. Lloyd Billingsley at 5:00am PDT   •  

CA_DOF_200TAX BILL: OPEN IMMEDIATELY. Thus reads the envelope of the property tax bills now showing up in mailboxes. Note the imperative mood, the tone of “let’s hand over the wallet, Jack.” While embattled taxpayers deal with this bill, Robert Gutierrez of the California Taxpayers Association offers a few points to ponder.

“Californians are paying more than $1.9 billion per year in parcel taxes,” he explains, “yet this form of property taxation continues to fly under the radar, with little transparency or accountability for how the money is spent.” The California Taxpayers Association wanted to know how many local governments impose parcel taxes, a form of property tax based on characteristics of a “parcel,” rather than on actual assessed value of property. Politicians use it to get around the voter-approved Proposition 13, which limits property tax increases.

“We quickly discovered that local governments are not eager to share information about the parcel taxes they impose,” Gutierrez writes. Government stonewalling forced the association to file hundreds of public records requests. Some local governments never responded at all and others “gave only partial information,” claiming that documents the association wanted were “unavailable.” Even so, the association learned that the rates vary dramatically, that the formulas are hard to understand, and that “about 26 percent of the parcel taxes in California do not have a sunset date, so they will be imposed indefinitely—and many of these are increased annually for inflation, so they keep going up, up, up.”

In their report, Piecing Together California’s Parcel Taxes, the California Taxpayers Association calls for more transparency, consistency, and fairness. With an election at hand, taxpayers might want to grill their candidates on the parcel tax issue. Would they perhaps favor a measure that eliminates parcel taxes? For taxpayers, the overall lesson should be clear. No ruse is off limits to a parasitic ruling class, which wants your money by any means necessary. Taxpayers should expect continued assaults on Proposition 13, one of the few measures that limit how much government can take. Meanwhile, property taxes are higher this year, without any increase in government services. And don’t forget, the tax is due on December 10. Happy Holidays, everybody!

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