As we have noted, the United States Postal Service (USPS) is a perennial loser, always billions in the red, with taxpayers on the hook. On the other hand, whatever the losses, the USPS finds a way to give postal bosses a pay hike. As a visit to any post office will confirm, the regular service is slow. But as Ron Nixon notes in the New York Times, the USPS is an eager beaver when it comes to snooping on Americans.
Last year the USPS approved 50,000 requests to monitor the use of mail in criminal and security investigations, which these days can mean just about anything, such as being less than worshipful of the government. As Nixon notes, the surveillance program is “more extensive than previously disclosed and that oversight protecting Americans from potential abuses is lax.”
Theodore Simon of the National Association of Criminal Defense Lawyers told the Times, “It appears that there has been widespread disregard of the few protections that were supposed to be in place.” The Times found that on Freedom of Information Act requests, the USPS lowballs the numbers. The agency also uses Mail Imaging, a program that photographs the exterior of every piece of mail. This is supposedly for processing, but as Nixon explains, “it is also used as a surveillance system that allows law enforcement agencies to request stored images of mail sent to and received by people they are investigating.”
Postal bosses say not to worry, but as this Bay Area editorial says, “the truth is that we have no way of knowing. The tracking doesn’t have to be reported to anyone, which makes this program ripe for abuse.” Therefore, “Congress needs to act now.” Good luck with that, because Congress has been unable to implement such simple reforms as the end of Saturday delivery. This confirms that, like other federal operations, the USPS is essentially unreformable.
If legislators ever want to get serious, they should lift the USPS monopoly on first-class mail. That will improve efficiency, promote accountability, and help protect taxpayers against excessive government snooping.
There’s a lot not to like about how much money the various agencies and departments of the U.S. federal government waste, but perhaps the most bizarre example from the 2014 Wastebook is the story of how the National Institute of Health (NIH) spent $387,000 over two years to provide Swedish massages to the feet of New Zealand White rabbits four times a day.
That was the choice the agency’s leadership made in setting the NIH’s priorities, where instead of spending the money more practically, say to develop effective protocols to prevent U.S. health care workers from becoming infected with the Ebola Virus Disease before it arrived in the U.S., chose instead to use the money to study whether Swedish massage techniques might be beneficial for helping the feet of human athletes recover more quickly after exercise. Something that human athletes have been doing for some time because the benefits of the practice have already been well established.
The 2014 Wastebook, which is produced by the office of Senator Tom Coburn of Oklahoma, who is also a medical doctor, critiqued the rationale for the NIH’s research.
“We tried to mimic Swedish massage because anecdotally, it’s the most popular technique used by athletes,” said Thomas Best, the project leader and co-medical director of the Ohio State University Sports Medicine Center.
The researchers “acknowledged that the injury created in our animal model may not be completely analogous to the injury produced in humans with eccentric exercise.” They do note, however, that studies do exist to support the use of massage to treat human muscle aches and pains.
If the researchers were seeking to learn how to indentify the most optimal application of massage therapy to treat human muscle aches and injuries, then perhaps they should have observed human subjects. Instead, this study seems to have chased tax dollars down a rabbit hole. Taxpayer dollars that could have supported potentially more transformative research were instead spend on exercise and massage equipment for rabbits.
But that’s not all. The Chicago Tribune‘s John Kass went the extra mile to find out if there might be another, more practical reason why anyone would want to massage the feet of rabbits as part of a “scientific” study.
But I wasn’t through with my own scientific inquiry, so I called the famed Slagel Family Farm, about 100 miles south of Chicago, which provides rabbit, pork and beef to Chicago’s top gourmet restaurants.
LouisJohn Slagel, a fifth-generation farmer, answered the phone and was struck dumb by the news. “They’re taking my tax dollars and using them to massage rabbits’ feet?”
Yes, Mr. Slagel.
I’ve never really been embarrassed for my country before this. But outlining the program and the cost to a rabbit man made me realize that we’ll never get our deficit and debt under control.
Mr. Slagel? Any reaction to the federal rabbit foot massage?
He was silent for some time, then answered: “Well I certainly don’t think that’s a good use of the public funds, but that’s Washington for you.”
By an amazing coincidence, Slagel raises New Zealand rabbits, which is the same breed rubbed Swedishly by the NIH.
“They’re a gentle rabbit,” he said. “But I still can’t believe it. When you first mentioned it, I thought perhaps it was something like Kobe beef, where they massage cattle. But you wouldn’t massage a rabbit.”
“They’re only about 3 pounds,” he said. “They’re tender enough.”
The 2014 Wastebook indicates that the rabbits in the NIH’s Swedish massage study were eventually euthanized, but it doesn’t reveal how the researchers finally disposed of its animal research subjects.
As we have noted, the Internal Revenue Service has been targeting those who advocate limited government and lower taxes, and calls this harassment “horrible customer service.” The IRS also sends billions to identity thieves and wastes more billions in improper payments. The federal agency generally fails in the fight against tax fraud. Now, as Shaila Dewan notes in the New York Times, the IRS is grabbing the money of Americans who have done nothing improper.
Dewan cites the case of Iowa restauranteur Carole Hinders, who had $33,000 from her checking account seized by the IRS. Hinders was not charged with any crime. The federal agency’s pillage people grabbed the money because she deposited less than $10,000 at a time. Without any investigation whatsoever, the IRS charged that Hinders did so to avoid triggering a government report for deposits of $10,000 or more, a measure designed to catch drug traffickers, terrorists, and such. Hinders had been told by her mother that deposits of less than $10,000 help the bank avoid paperwork. Here’s another example: A Michigan grocery store owner found his insurance company would cover only up to $10,000 in cash. So when he approached that limit, he made a deposit. These are hardly the only cases.
Dewan notes that the IRS seized $447,000 from the accounts of the Hirsch brothers, owners of Bi-County Distributors in New York State. The Hirsches had kept their deposits low because three of their bank accounts had been closed by the paperwork of the frequent cash deposits. As Dewan observes, “the government has gone after run-of-the-mill business owners and wage earners without so much as an allegation that they have committed serious crimes. The government can take the money without ever filing a criminal complaint, and the owners are left to prove they are innocent. Many give up.” Former federal prosecutor David Smith told the Times, “They’re going after people who are really not criminals. They’re middle-class citizens who have never had any trouble with the law.” And as Hirsch lawyer Joe Potashnik told Dewan, “I don’t think they’re really interested in anything. They just want the money.”
IRS officials claim they will curtail these practices and focus on cases with “exceptional circumstances.” Based on their record, one doubts it. Accountability simply does not exist at this agency, and their ultimate boss, President Obama, finds not a smidgeon of corruption in their worst actions. They want the money and will go after it by any means necessary.
On Election Day 2014, many voters in California will likely see at least one of 118 local bond measures on their ballots, with local government entities seeking permission to borrow a collective total $12.6 billion dollars as they also increase local property taxes to pay back the money being borrowed over the term of the loans, which is how school bonds work.
Of these 118 measures, 112 are purportedly for the benefit of the state’s public schools, where the authors of the ballot measures claim the money being borrowed will go to things like repairing facilities or otherwise improving the government-run schools. For the children.
But there is no law in California that requires government school officials to spend the money they borrow for those stated purposes. Ed Ring explains where money claimed to be “for the children” will really be going:
“As the result of California Courts refusing to uphold the language of the High Speed Rail bonds, the opponents of any bond proposal, at either the state or local level, need only point to High-Speed Rail to remind voters that promises in a voter approved bond proposal are meaningless and unenforceable.”
- Jon Coupal, October 26, 2014, HJTA California Commentary
If that isn’t plain enough—here’s a restatement: California’s politicians can ask voters to approve bonds, announcing the funds will be used for a specific purpose, then they can turn around and do anything they want with the money. And while there’s been a lot of coverage and debate over big statewide bond votes, the real money is in the countless local bond issues that collectively now encumber California’s taxpayers with well over $250 billion in debt.
Over the past few weeks we’ve tried to point out that local tax increases—166 of them on the November 4th ballot at last count, tend to be calibrated to raise an amount of new tax revenue that, in too many cases, are suspiciously equal to the amount that pension contributions are going to be raised over the next few years. For three detailed examples of how local tax increases will roughly equal the impending increases to required pension contributions, read about Stanton, Palo Alto, and Watsonville’s local tax proposals.
It’s a long way to go from borrowing money to fix up public schools that are falling apart to instead borrowing money to ensure that public employees never get anything less than the full amount of their very generous public pensions that they claim they deserve after their careers of making sure the public schools don’t fall apart. But at least after the debt has all been paid, California voters can rest assured that the public schools will be in even greater need of repair because the money to fix them went somewhere else.
So we guess that these 118 local bond measures for fixing up poorly maintained public schools won’t be the last that Californians will be seeing on their ballots.
If only the money that local governments are borrowing were really going to things that would actually address the education needs of California’s children, rather than crushing their future with enormous debt bills.
This week voters in California will make the call on, count ‘em, 140 tax increases, from sales taxes to levies on soda and marijuana. If voters should wonder what is driving these tax increases, Mark Bucher of the California Policy Center has a few suggestions in his October 26 Sacramento Bee article headlined “Big Pensions drive proposed tax increases on Nov. 4 ballots.” And “big” is no exaggeration.
Bucher cites the case of Bruce Malkenhorst, a former city official in Vernon, who last year received a pension of $552,000, more than the salary of the President of the United States. The year before, Malkenhorst was busted for misappropriate use of public funds, as Bucher notes, “causing his pension to be cut to a mere $115,000.” However, Malkenhorst mounted a legal challenge and duly bagged the $552,000. And he says to himself, what a wonderful world. In fact, as Bucher notes, in 2013, a full 99 California retirees received at least half-million-dollar government pension payouts of $500,000, a notable surge from only four in 2012, though four was still too many. A good ballpark figure would be zero.
Bucher also flags, as the major drivers of profligacy and tax increases, the 40,000 California retirees who in 2013 took home pensions greater than $100,000. These include an L.A. librarian bagging $137,000 and a court reporter with $105,000. By Bucher’s count, these pensions mean that California now spends one out of every nine state and local tax dollars on pensions, up from one in 16 tax dollars in 1994. This means that current tax increases “do not increase government services, but simply service government pensions.” Further, “in 2014, California will spend approximately $45 billion on pensions, equaling total state and local welfare spending for the first time. And in the zero-sum game of government spending, an extra dollar spent on pensions means one less spent on welfare, infrastructure or safety—or returned to the taxpayer.”
Bucher calls for proactive pension reform and finds hope in a recent ruling that CalPERS is not above bankruptcy protection, forcing Stockton retirees “to take pension haircuts.” How should other legislators proceed? Says Bucher, “start with Malkenhorst and six-figure pensions for mid-level civil servants.” But don’t stop there. Give every government employee a long-overdue pension haircut. And when they retire, don’t replace them.
Oh, to be a bureaucrat in the U.S. federal government! What other jobs pay just as much or more than similar work done in the private sector, but with much, much more generous benefits? Which would appear to be even more generous than we previously knew, thanks to the discovery of a surprising new perk by Scott McFarlane of Washington, D.C.’s NBC affiliate, News4 I-Team: taxpayer-funded purchase cards with no accountability!
The federal government has spent at least $20 billion in taxpayer money this year on items and services that it is permitted to keep secret from the public, according to an investigation by the News4 I-Team.
The purchases, known among federal employees as “micropurchases,” are made by some of the thousands of agency employees who are issued taxpayer-funded purchase cards. The purchases, in most cases, remain confidential and are not publicly disclosed by the agencies. A sampling of those purchases, obtained by the I-Team via the Freedom of Information Act, reveals at least one agency used those cards to buy $30,000 in Starbucks Coffee drinks and products in one year without having to disclose or detail the purchases to the public....
The I-Team, using the Freedom of Information Act, received a list of “micropurchases” made by the Dept. of Homeland Security at Starbucks vendors nationwide in 2013. The list includes dozens of transactions, including in Washington, D.C., and Maryland. Several of the purchases were made at an Alameda, California, Starbucks vendor and cost more than $2,400 each, just below the $3,000 threshold for which purchases need not be publicly disclosed. After reviewing the I-Team’s findings, Rep. John Mica (R-FL), chair of a U.S House Oversight subcommittee said, “When you have $10,000 being spent at one Starbucks by DHS employees in one city in six months, someone is abusing the purchasing permission that we have given them.”
“DHS” refers to the Department of Homeland Security. From the information provided above, it would appear that DHS employees sought to conceal a very large purchase from Starbucks in Alameda, California, by breaking the purchase into smaller transactions to avoid having to disclose the true scale of the expenditure, much like drug traffickers do with their bank deposits in order to avoid the scrutiny of the authorities.
In this case, the DHS facility nearest to Alameda’s Starbucks locations is the U.S. Coast Guard Base at Alameda, whose personnel would appear to know quite a lot about how drug traffickers operate, which perhaps explains how a DHS employee could come up with that particular purchasing strategy.
Now, multiply that single abuse by a single federal government bureaucrat for spending $10,000 at a single Starbucks location by the federal government’s two million civilian employees, and that goes a very long way to explaining how the bureaucrats’ secret buying spree can add up to a bill that totals $20 billion dollars.
We 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.
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.
David 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.
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:
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.