MyGovCost News & Blog

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.

FATCA: A Surge of Seizure Fever

Monday July 7th, 2014   •   Posted by K. Lloyd Billingsley at 7:08am PDT   •  

BW-IRS-Logo_200As we recently noted, Americans are still paying a heavy price for mistakes by the Internal Revenue Service. These include a “Seizure Fever” campaign that rewarded IRS employees based on how much money they had confiscated. The IRS also handed out billions in improper payments and fraudulent tax returns, paid millions in bonuses to IRS employees who were under disciplinary action, and targeted groups that advance the cause of lower taxes and limited government. All this, and more, would seem to be grounds to cut back a powerful agency that is clearly out of control. The response is more mission creep.

As Richard Rubin explains, “the Internal Revenue Service is about to get an unprecedented look at bank accounts and investments U.S. citizens hold abroad, through a law that is making it harder to hide assets from the tax collector.” The new law is the Foreign Account Tax Compliance Act (FATCA), which supposedly addresses “the inability of federal tax authorities to obtain clear information about financial accounts that U.S. citizens have outside the country.” This is important for American taxpayers, Rubin explains, “because unlike many other countries, it taxes citizens on their worldwide income regardless of where they actually live.”

FATCA allows the IRS to grab data from more than 77,000 financial institutions and 80 governments. Failure to report Americans’ accounts of more than $50,000 will slap the financial institution with a tax penalty of 30 percent. Nigel Green, founder of an institution with 80,000 expatriate clients, told MainStreet that FATCA brands Americans overseas as “financial pariahs” and that “FATCA’s costly and onerous regulations mean Americans are now typically deemed more trouble than they are worth.” And branding American businesses in international markets with “leprosy-like status” could hurt their global competitiveness and the U.S. economy.

So whatever the consequences, seizure fever is back on a wider scale than ever before. On the other hand, it never really left and was never restricted to big corporations. For more than 70 years the IRS has been getting workers’ money before the workers themselves, courtesy of paycheck withholding. The government’s needs remain number one. Workers aren’t even number two.

Obamacare’s Secret Taxpayer Bailout of Health Insurers

Sunday July 6th, 2014   •   Posted by Craig Eyermann at 7:35am PDT   •  

obamacare-taxpayer-bailout-word-cloud-wordle The Patient Protection and Affordable Care Act, which is often abbreviated as either PPACA or ACA, but which is most popularly known as “Obamacare,” is a very complicated law that stands as an prime example of how politicians will put the interests of their crony corporate contributors ahead of those of the American people.

As a case in point, one example of that may be found in the law’s provisions for a “risk corridor” program for health insurance companies that the Department of Health and Human Services approves to sell subsidized health insurance policies on state- or federal-government run “marketplaces.” What this provision in the law does for health insurers is to make up a large portion of any losses they have and to put a cap on their losses if the amount of money they have to pay out for their policyholders’ health care expenses is greater than the amount they collect in premiums. Those premiums are paid by both the policyholders and by the federal government, which directly pays Obamacare’s health insurers in the amount of the income tax credit subsidies for which the policyholders may be eligible.

The Wall Street Journal explains how Obamacare’s risk corridor program is intended to work in 2014:

The idea of risk corridors is to compensate insurance companies that end up with bigger costs than they expected. Under the law, they must sell policies equally to everyone, regardless of their medical history, so it’s possible some insurers could end up with an especially unhealthy pool of customers.

If an insurer’s actual claims in 2014 are at least 3% greater than the claims projected when the insurer set 2014 rates, the government must reimburse the insurer for half of the excess. If actual claims jump 8% beyond projected claims, the government covers 80% of the excess.

The money for the ACA’s risk corridor program is supposed to come from fees that are assessed by the federal government on all health insurance policies, which back in February 2014, the Congressional Budget Office projected would actually be a net positive for the U.S. Treasury, collecting $8 billion in fees more than would have to be paid out to bail out Obamacare health insurers from 2014 through 2016.

But things have changed. The implementation of the Affordable Care Act has gone badly enough where instead of reducing the federal government’s budget deficit, the U.S. Treasury will instead have to borrow money to bail out Obamacare’s health insurers.

The Orange County Register reveals how U.S. taxpayers were suddenly put on the hook for bailing out unprofitable health insurance companies because of the series of executive actions by President Obama to avoid the political consequences of implementing the Affordable Care Act as written. The latest was to arbitrarily rewrite the rules for the risk corridor program so that taxpayers would directly cover a portion of the much larger than expected losses at Obamacare’s crony health insurance companies — above and beyond the fees collected on each health insurance policy sold that were specifically established for that purpose under the PPACA:

President Obama, however, changed the equation for those companies with his repeated rewriting of Obamacare rules, such as his decision to extend the period in which consumers could keep insurance plans that would otherwise have been canceled under Obamacare’s requirements. That shifted the risk pool on the exchanges, putting fewer insurers on the profit side and more on the loss side.

Because of the ACA’s corporatist construction – wherein the government has made an implicit deal with the insurers that it will dictate their behavior but still preserve their bottom lines – the president had to atone for the increased burden, which he did by easing the risk corridor rules to provide insurers with an extra $8 billion in compensation.

Because there are no offsetting spending cuts to make up for that unplanned expenditure, taxpayers are essentially on the hook for an insurer bailout.

Don’t expect this to be a one-time-only affair. A recent survey of insurers by the House Oversight and Government Reform Committee indicates that payouts from the risk corridor program could exceed the available funds by $725 million to $900 million in the next year. The people footing that bill? We the taxpayers.

In essence, the rule change would allow the Department of Health and Human Services to reallocate money collected from other sources to bail out Obamacare’s money-losing health insurers. But since that other money has been authorized to support other things, in order to make good on those spending obligations, the federal government will have to borrow money to make up the difference, which is what puts U.S. taxpayers on the hook for the worst kind of corporate welfare.

The kind that endures for generations.

Grievances Against the King

Friday July 4th, 2014   •   Posted by Craig Eyermann at 4:11am PDT   •  

fig1 In celebration of the 237th anniversary of the signing of the United States’ Declaration of Independence from Great Britain, we thought it might be a good time to reflect on the portion of the Declaration that indicts King George III, whose policies ultimately led to the successful War of Independence for Britain’s 13 colonies in North America.

... The history of the present King of Great Britain [George III] is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

He has refused his Assent to Laws, the most wholesome and necessary for the public good.

He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.

He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.

He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their public Records, for the sole purpose of fatiguing them into compliance with his measures.

He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.

He has refused for a long time, after such dissolutions, to cause others to be elected; whereby the Legislative powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.

He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.

He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.

He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.

He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance.

He has kept among us, in times of peace, Standing Armies without the consent of our legislatures.

He has affected to render the Military independent of and superior to the Civil power.

He has combined with others to subject us to a jurisdiction foreign to our constitution and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:

For Quartering large bodies of armed troops among us:

For protecting them, by a mock Trial, from punishment for any Murders which they should commit on the Inhabitants of these States:

For cutting off our Trade with all parts of the world:

For imposing Taxes on us without our Consent:

For depriving us, in many cases, of the benefits of Trial by Jury:

For transporting us beyond Seas to be tried for pretended offences:

For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies:

For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments:

For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.

He has abdicated Government here, by declaring us out of his Protection and waging War against us.

He has plundered our seas, ravaged our Coasts, burnt our towns, and destroyed the lives of our people.

He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty and perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.

He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.

He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.

In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people....

Did you ever get the feeling that today’s politicians use this list of grievances against tyranny as the checklist they should follow for defining their accomplishments?

Withhold Applause for Unhappy Anniversary

Wednesday July 2nd, 2014   •   Posted by K. Lloyd Billingsley at 8:28am PDT   •  

withholding_200Seventy-one years ago, on July 1, 1943, the federal government first started withholding income tax from workers’ paychecks. For the first time, the government would get workers’ money even before the workers did. As a freerepublic blogger noted on the 60th anniversary, that’s not exactly an occasion for celebration.

“Why is withholding so bad? Because it effectively masks the amount of income taxes American workers pay. Tax withholding introduced a new phrase into the American lexicon: ‘Take home pay.’ Today the average American has no idea how much they actually make, let alone how much they pay in income taxes.” But it was wonderful for the political class. “They manage to plunder your paycheck to fund their grand vote-buying schemes, and you barely notice.”

As Jonah Goldberg observed, “the unspoken assumption is that the government’s needs are more important than yours. Withholding means we are, in effect, working for the government before we are working for ourselves. Worse, since taxpayers are anesthetized to the pain of paying taxes, we’re becoming ever more disconnected from the product we are buying.”

When this all started in 1943 it was wartime and the government needed money. A “team of experts” that included economist Milton Friedman came up with the idea of withholding money from worker’s paychecks. This was supposed to be temporary but it didn’t turn out that way. It later occurred to Friedman that he was helping to make government too big, too intrusive and too destructive of freedom. Government is still that way in 2014 on the 71th anniversary of withholding, with no meaningful reform in sight. As Friedman also lamented, nothing is more permanent than a temporary government program.

Berkeley Professor Warns of Bay Bridge Crack-up

Wednesday July 2nd, 2014   •   Posted by K. Lloyd Billingsley at 7:02am PDT   •  

bay-bridge_200On July 4 many motorists will be heading over the new span of the San Francisco–Oakland Bay Bridge for destinations across the state and beyond. One who won’t be joining them is Abolhassan Astaneh-Asi, professor of structural engineering, mechanics and materials at the University of California at Berkeley. The professor does not believe the structure is safe and therefore will not be using the bridge. The reasons emerged in an investigative article by Charles Pillar of the Sacramento Bee, the latest of many on the structure.

“Facing rising costs and increasing delays on a $6.5 billion bridge that was already years behind schedule and billions over budget,” Pillar wrote, “Caltrans sought advice about its options from a highly regarded expert in how metal fractures. He said some cracks can remain without compromising safety. Caltrans then changed its contract and decided to put aside the welding code. Its fracture-critical bridge could now have cracks.” If those cracks grow larger “all or part of the roadway could collapse.” In a seismically unstable area, Astaneh told Pillar, the cracks “present a looming threat to public safety.” And the cracked welds are just the latest in an expanding “litany of errors” that includes suspect foundation concrete, rusted tendons, broken anchor rods, and corrosion on cables.

As we noted in “The $6.4 Billion Bridge to No Accountability,” these problems were the subject of hearings by state senator Mark DeSaulnier. He charged that cost overruns and lingering safety issues had eroded public confidence and made Californians “adverse to taxes.” A Caltrans geologist called for a criminal investigation, but no such investigation took place. Instead the California Highway Patrol was to conduct an “administrative inquiry.” Caltrans bosses remain comfortably in place, but so do the safety issues.

Pillar asked Keith Devonport, a box-girder consultant who helped manage the project in China, if he would feel safe driving over the bridge. Devonport declined to answer, but Astaneh, the UC Berkeley structural engineering professor, “said he won’t use the new bridge.” Many older bridges nationwide are now considered unsafe, but the new span of the Bay Bridge was actually built that way, despite $5 billion in cost overruns. That’s what passes for “progress” in a state that remains adverse to accountability.

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