MyGovCost News & Blog

As we noted, even with a single tunnel, Jerry Brown’s massive $16 billion “WaterFix” for the delta is a financial bust. According to Benefit-Cost Analysis of The California WaterFix, by Jeffrey Michael of the Center for Business and Policy Research at the University of the Pacific, construction costs, estimated at $16 billion, are still more than 2.5 times larger than benefits. So the governor’s tunnel vision is not economically justified under both the base and optimistic scenarios. The digging has yet to begin but the project has already struck corruption.

The Unexpected Complexity of the California WaterFix Project Has Resulted in Signicant Cost Increases, a new report from California’s State Auditor, pegs the planning costs alone at $280 million as of June, 2017. In addition, the audit found that the state Department of Water Resources, “did not follow state law when it replaced the program manager for the conservation and conveyance program.” The DWR selected the Hallmark Group “without advertising a request for qualifications,” and “the cost of DWR’s current contract with Hallmark has tripled from $4.1 million to $13.8 million.”

This amounts to a no-bid multimillion-dollar contract and as whistleblowers told reporters the DWR is handing out no-bid deals to contractors without vetting them. The auditor’s report, anti-tunnel groups charge, confirms that the state is trying to get water customers to pay for the project before they complete their financial analysis. Others oppose the tunnels on environmental grounds, which never seem to be an obstacle when the ruling class wants to spend money. The tunnels are essentially a legacy project for a hereditary, recurring governor who loves to tax, spend and let future generations suffer the consequences. Based on the new span of the Bay Bridge, which came in $5 billion over budget, the costs of governor Brown’s tunnel vision would run some five times higher than current estimates of $17.1 billion.

With 59 dead and more than 500 injured, the Las Vegas massacre is beyond horrific. Even so, it could have been worse in several ways. Suppose gunman Stephen Paddock had been giving off clear warnings of his deadly intentions, which police ignored. Suppose police had intercepted communications of his mass-murder plan, then did nothing to stop it. Suppose the President of the United States had denied that the attack was gun violence. Suppose that the president declined to meet with victims of the shooting, and made it more difficult for them to get the medical treatment they needed. All that happened with the massacre at Ford Hood, Texas, on November 5, 2009.

Gunman Nidal Malik Hasan, an Army psychiatrist, billed himself as a “Soldier of Allah,” a red flag that authorities ignored. Major Hasan was in communication with Anwar al-Awliki, a jihadist who tutored three of the 9/11 attackers, about ways to kill Americans. The FBI had Hasan’s emails to the terrorist but did absolutely nothing to stop Hasan from killing 13 unarmed soldiers, including Private Francheska Velez, 21, who was pregnant. The attack claimed more than twice as many deaths as the first attack on the World Trade Center.

Hasan fired with legally purchased handguns and wounded more than 30. The White House did not call this mass murder, terrorism, or even gun violence, all of which were true. The White House called it “workplace violence” but it was more than an absurdity. The workplace violence designation kept the victims from getting the medals they deserved and the medical treatment they needed. And the 44th president declined to meet with Sgt. Alonzo Lunsford, an African American severely wounded in the attack. Major Hasan got better treatment and in the early going he kept his rank and the Army continued to pay his full salary.

Supposed the Trump administration had done all that with the Las Vegas massacre. That would have rubbed salt in the wounds, and nobody would have stood for it. So the gravity of a massacre is not always a matter of numbers. Government is supposed to protect the public from mass murderers, not ignore and enable them. President Trump should track down all government agents who failed to stop Nidal Hasan and tell them “your fired.”

Government bureaucrats like to set up special rules to benefit themselves, and nowhere has that been more evident in the past week than in the reaction to the reports of Department of Health and Human Services Secretary Tom Price’s use of taxpayer funding to charter private jets for highly questionable “business” travel. Dan Diamond and Rachana Pradhan of Politico describe the cabinet secretary’s various flights of fancy last Tuesday, September 26, 2017:

Health and Human Services Secretary Tom Price took a government-funded private jet in August to get to St. Simons Island, an exclusive Georgia resort where he and his wife own land, a day and a half before he addressed a group of local doctors at a medical conference that he and his wife have long attended.

The St. Simons Island trip was one of two taxpayer-funded flights on private jets in which Price traveled to places where he owns property, and paired official visits with meetings with longtime colleagues and family members. On June 6, HHS chartered a jet to fly Price to Nashville, Tennessee, where he owns a condominium and where his son resides. Price toured a medicine dispensary and spoke to a local health summit organized by a longtime friend. He also had lunch with his son, an HHS official confirmed.

An HHS official said both the Georgia and Tennessee trips were for official government business and were paid for by the department.

Richard Painter, who served as the top ethics official for President George W. Bush, said Price’s trips may have been legal but were ethically dubious.

“To use a charter flight on something that combines personal and government business, I think it’s highly unprofessional and really inappropriate,” Painter said — especially if personal business represented a disproportionate part of the trip.

We should say “former Department of Health and Human Services Secretary Tom Price”, because the Secretary resigned on Friday, September 29, 2017.

In between, Price attempted to defuse the controversy by pledging to reimburse the federal government nearly $52,000 toward the cost of the chartered flights, as would be required by a policy that says that when a bureaucrat travels on a military or privately chartered flight paid for by the U.S. government, they are responsible for paying the equivalent of the cost of what a plane ticket on a regular commercial flight would have cost them.

The only problem is that pledged reimbursement doesn’t come anywhere near the full cost to U.S. taxpayers. In Price’s case, the full cost to the U.S. government for his multiple flights combining business and pleasure travel on privately chartered flights exceeded $400,000, which includes the cost of the seats occupied by the department staffers who accompanied him on his jaunts since becoming the HHS secretary, which would not have been incurred if not for Price’s jet-fueled travel ambitions.

For their part, the U.S. Congress is belatedly beginning some oversight of the travel practices of the federal government’s bureaucrats, as Juliet Eiperin of the Washington Post reports:

Senate Judiciary Committee Chairman Charles E. Grassley (R-Iowa) asked Trump on Thursday to impose a governmentwide ban on the use of charter flights by administration officials and to detail “what steps the administration has taken to ensure that Cabinet secretaries use the most fiscally responsible travel in accordance with the public trust they hold and the spirit and the letter of all laws, regulations, and policies that apply.”

That followed a request Tuesday by the chairman and ranking member of the House Oversight Committee that Price and more than 20 other agency heads list all use of private, charter aircraft and government-owned aircraft by political employees since the president’s inauguration.

While late, the oversight by the U.S. Congress is a welcome development, although limiting the review to just political appointees will limit the exposure of the full cost of such practices. As we saw with the General Service Administration’s lavish boondoggle in Las Vegas in 2012 for its employees, such abuses are a recurring theme by bureaucrats behaving badly at all levels of government.

On Friday, September 29, 2017, after months of dysfunctional delay, the U.S. Senate finally got around to passing its own version of a budget blueprint for the U.S. government’s 2018 fiscal year, which officially got underway on Sunday, October 1, 2017. Politico‘s Sarah Ferris describes some of the politics that are built into the Senate’s blueprint.

The 89-page plan, which the Senate Budget Committee spent months drafting, sets up the special power of budget reconciliation GOP leaders can use to advance tax reform with just a 50-vote threshold in the Senate….

Under the budget proposal, Republican tax writers can add up to $1.5 trillion to the deficit over 10 years, giving lawmakers more flexibility as they attempt a once-in-a-generation revamp of the U.S. tax code. With more wiggle room to slash revenue, GOP legislators hope they will be able to go even lower on tax rates for individuals and corporations.

The $1.5 trillion figure comes out of a compromise struck this month between deficit hawk Sen. Bob Corker (R-Tenn.) and tax-writer Sen. Pat Toomey (R-Pa.), who both sit on the budget panel. Corker had sought a revenue-neutral tax plan, while Toomey had called for as much as $3 trillion in lost revenue over 10 years.

By comparison, the U.S. House of Representatives has proven much more capable of putting a budget for the U.S. government together, where it grouped 12 separate detailed appropriations bills into one large budget bill and approved it in one fell swoop two weeks earlier. In reporting on the House’s budget bill’s impact on funding for science and research programs, David Malakoff of Science looked forward to what will come next now that the Senate is taking its first steps.

Legislators voted largely along party lines in approving a package of 12 appropriations bills that would provide about $1.23 trillion in 2018 for so-called discretionary programs. That category covers about one-third of the federal budget and includes most research budgets. (The rest pays for mandatory entitlement programs such as Medicare and Social Security and interest on the $20 trillion national debt.)…

The House bills will ultimately have to be reconciled with versions passed by the Senate, which has yet to finish work on any of its 12 spending bills. To give themselves more time, lawmakers have already voted to extend 2017 spending levels for 10 weeks into the new fiscal year. That extension, known as a continuing resolution, expires on 8 December, and it is not clear whether lawmakers and the White House will be able to reach a 2018 spending agreement by then. If they can’t, Congress will have to pass another continuing resolution to avert a government-wide shut down.

At least the politicians lived up to their commitment to not have another episode of federal government shutdown theater during Fiscal Year 2017, which just ended on Saturday, September 30, 2017!

Still, with both the House and the Senate having committed to sharply increase defense spending over the levels mandated by the Budget Control Act of 2011, and tax cuts now being actively debated on Capitol Hill, the question of what kind of impact that both factors might have on the national debt are being asked.

The Committee for a Responsible Federal Budget has analyzed both the House and Senate’s budget blueprints and projects a falling trend for the national debt when compared to continuing on the path set during the Obama administration. The following chart showing the percentage share of the publicly-held portion of the U.S. government’s total public debt outstanding from 2011 through 2017 and their projections from 2017 through 2027, illustrates their expectations.

Here is how they describe how both House and Senate bills achieve that improvement over the next 10 years.

Both budget resolutions would improve the debt outlook, but to different degrees. The House budget assumes savings and increases in economic growth that would reduce debt from its current level of 77 percent of GDP to 63 percent by 2027; ignoring economic effects, debt would fall more gradually to 73 percent in 2027*. Meanwhile, the Senate budget would result in debt increasing to a peak of 79 percent of GDP by 2020 before declining to 75 percent by 2027. This estimate ignores the budget’s claimed economic growth effects; it is difficult to determine what debt would be when counting economic effects based on the information given.

Instead of deficits rising significantly over the next decade as expected in current law, both budgets would reduce deficits as a share of GDP. Under the House budget, the deficit would fall from 3.6 percent of GDP in 2017 to 0.2 percent, or about $40 billion, by 2027. Ignoring economic growth, the deficit would be higher but still relatively modest at 1.4 percent, or about $400 billion. Meanwhile, the Senate would not balance in 2027 since it only aims for on-budget balance, instead leaving a deficit of 1.7 percent of GDP ($485 billion) ignoring economic effects. Again, it is difficult to determine what the deficit would be if economic effects were included.

Even though a new episode of government shutdown theater is now potentially on the calendar, the change in the direction of growth for both annual budget deficits and the national debt represents a positive development.

The California Institute for Regenerative Medicine is about to give $7.9 million to UC Davis, already the recipient of $131 million from CIRM, which David Jensen of the California Stem Cell Report describes as an “Oakland-based stem cell agency.” Near the end of his report, he helpfully notes CIRM was created by the 2004 Proposition 71 “which also provided $3 billion in state bond funding.” He fails to mention that CIRM promoters promised life-saving therapies for Alzheimer’s, Parkinson’s and other diseases, and a steady flow of royalties to the state treasury. That was 13 years ago, but as Jensen notes, “CIRM has yet to finance a therapy that is available for widespread use.”

In other words, a ballpark figure for the number of cures and therapies is zero. On the other hand, CIRM worked well as a sinecure for politicians such as former state senator and Democratic Party boss Art Torres. After hiring the non-scientist, CIRM hired immediately tripled his salary. CIRM paid president C. Randal Mills a salary of $573,000, higher than the President of the United States and more than three times the $173,987 salary of governor Jerry Brown.

CIRM also excels as the California Institute for the Redistribution of Money. Taxpayers should note that CIRM handed 90 percent of its grants to institutions with links to past or present board members. This largesse produced no cure or therapy and no stream of royalties. As Jensen notes “CIRM is expected to run out of cash for new awards in mid-2020.” CIRM bosses now want another $5 billion. A ballpark figure for what they should get is zero, same as the number of promised cures. Taxpayers won’t hear it from David Jensen or Art Torres but CIRM is a $3 billion bust. The best move would be to shut it down completely and let private citizens invest their own money in medical research as they see fit.

Back in 2001, terrorists flew U.S. airliners into the World Trade Center and the Pentagon, killing some 3,000 people and causing countless billions in damage. According to an investigation by Kelly Carr and Jaimi Dowdell of the Boston Globe, the Federal Aviation Administration listed two of those airliners still active four years later in 2005. This was hardly the FAA’s only lapse. A TWA cargo plane crashed in Chicago but the FAA failed to cancel its registration until 2006. This happened because the FAA fails to vet its own records

“The FAA doesn’t see itself as an active policeman of the registry,” Carr told CBS news, “So when information comes in, they make sure information is there, but they don’t vet the information. So they’re really operating on the honor system of people who are registering aircrafts, and also on pilots’ licenses.” And if someone lies and has ill intent, “the FAA says that they’re not going to vet — they’re not checking.”

In 2004, three years after the 9/11 attacks, Congress passed a law requiring a photo ID on a pilot’s license. According to Transportation Secretary Ray LaHood, “The Department of Transportation is committed to keeping the traveling public safe. This is an important safeguard to help make sure individuals can’t pose as pilots, whatever their intentions.” At that time, the only photo on a pilot’s license was of aviation pioneers Orville and Wilbur Wright. In 2010, nine years after 9/11 and six years after the photo ID law was passed, the FAA proposed a rule requiring student pilots to have a photo ID on their pilot’s licence. The FAA did not release the rule until January, 2016.

And so on. So it’s pretty clear that bureaucratic lethargy puts the public at risk but few if any FAA bosses lost their jobs over the security lapses. For further reading on the FAA, see “The Failure of Federal Aviation Administration Regulation,” by Paul Cleveland and Jared Price.

To be fair, the FAA is not the only inept and irresponsible federal bureaucracy. Back in 2009, Chesley Sullenberger landed his stricken airliner in the Hudson River, with no loss of life. Some National Transportation Safety Board bosses charged that Sullenberger should have turned back to La Guardia instead of attempting the water landing.

Several years ago, MyGovCost explored the concept of the national debt as kind of an emergency reservoir, which is an idea that we’re going to revisit today to apply to the unique situation in which the hurricane-devastated U.S. territory of Puerto Rico finds itself.

What if, instead of being some seemingly intangible thing involving numbers with way too many zeroes, the money that governments borrow over time was water that came from an emergency reservoir high up on a mountain, whose main purpose is to help put out big fires that, while infrequent, can cause great damage to the community, if not completely wipe it out in the case of the biggest fires.

Most of the time, there’s not much need to tap into the water supply held in the reservoir. Should it be tapped, say to address smaller fires, it’s understood that the politicians and bureaucrats in the government who are responsible for managing it will take steps to replenish the reservoir, so that it will once again be fully capable of providing sufficient water to put out the big fires for which it is intended.

That view changes over time as the politicians come to see the emergency reservoir as an underutilized resource, where they suggest other ways in which the community can benefit from having access to it. Eventually, they hit on the idea of using it to provide incredibly inexpensive residential and industrial water services to the community, which are very popular with the people who live in it.

In turn, the community’s politicians and bureaucrats who manage the emergency reservoir come to be very well rewarded for their public service. So much so, in fact, that they are willing to allow the level of water up in the reservoir to drop well below the level that would be needed to save the community should it ever be threatened by a large fire. They do this mainly to preserve their popularity and to continue collecting their generous rewards, rather than risk either by cutting back on any of the benefits of the water services they are providing to the public to more sustainable levels so that the reservoir can be replenished.

At the same time, the members of the community become so dependent on having cheap water provided every day from the emergency reservoir that they cannot themselves afford to take the steps that would allow the reservoir to be replenished without serious setbacks to their living standards. Even if that means that the entire community could someday be devastated or completely destroyed by fire. “Someday” being the operative word, because as the politicians might ask, what are the odds that a day of reckoning might come during their lifetimes?

And when that day inevitably does arrive, everyone discovers that for all practical purposes, the emergency reservoir may as well be bone dry. Disaster has struck, and the entire community gets burned because it doesn’t have anywhere near the water it needs in its emergency reservoir to draw upon to put out all the fires when it really needs it to serve that fundamental purpose.

Soon, they ask other communities that have their own emergency reservoirs for help, but discover that they are reluctant to give up their own limited water supplies unless the water-wasting community commits to real reforms that will end its practice of siphoning off emergency reservoir water for uses other than putting out fires. Because why should they provide anything more than the most minimal amounts of aid if it is only going to get diverted away from where it is most genuinely needed?

To paraphrase Herbert Stein, things that cannot go on forever, stop. When the emergency reservoir runs dry, when a government cannot borrow any more because it has borrowed so much that its lenders no longer trust that the government will pay them back because of the practices that the politicians are trying to sustain, it comes to a crashing halt, with the unsustainably inflated living standards of the people in the community becoming the hardest hit casualty. The saddest part is that it could all have been avoided with better stewardship and more restraint in providing both public benefits and rewards for public service in the time before the crisis came.

That’s where we are today with Puerto Rico. And Greece. And Venezuela. And possibly soon, Connecticut, which has taken the lead among troubled U.S. states from Illinois. The specifics of the disasters that have befallen each and led to their various crises are different, but the underlying themes that led to their precarious positions today are all the same.

The tragedy is that none of it happened by accident, as the only element left to chance was the timing of the disaster that eventually came to expose how depleted the emergency reservoir had become.

For the people of Puerto Rico, the beginning of the recovery from the disaster needs to continue its well-received focus on providing humanitarian aid. For the territorial government of Puerto Rico, that aid must be allowed to be delivered without any being diverted to cover the costs of the bad decisions of its previous politicians, where to restore their reservoir of good will, they will need to finish implementing the reforms and reckoning needed to put the fiscal future of Puerto Rico onto a sustainable path.

Last year Senate Democrats launched a crusade against independent think tanks including the Cato Institute, Reason Foundation, Heartland Institute, the Hoover Institution, John Locke Foundation, Manhattan Institute and many others. This “web of climate denial,” charged Sen. Sheldon Whitehouse, Rhode Island Democrat, casts “a grim shadow over democracy” and a “filthy grip on our political process.” That sort of hysteria mounted a surge this June, when President Donald Trump pulled the United States out of the Paris Climate Accord, charging that putting U.S. energy reserves under lock and key constitutes “a massive redistribution of United States wealth to other countries.” The Nation called the withdrawal “a crime against humanity” and for California governor Jerry Brown it was “insane.”

In these conditions, another attack on independent think tanks could well be in the works and Kari Travis of Carolina Journal provides some guidance. In 2016, the groups on the climate “enemies list” fired off a letter to the senators charging threats to their First Amendment rights and a tyrannical campaign of political retribution. In 2015, Sen. Whitehouse demanded that 107 organizations surrender, count ‘em, 10 years of records. One of the organizations was the John Locke Foundation whose CEO Kory Swanson refused to deliver and fired back: “Once again, members of the U.S. Senate have rejected rational debate and have resorted to bullying and intimidation in their attempt to stifle the message of freedom and limited, constitutional government.”

In 2017, with hysteria mounting, independent think tanks should take a stand on their rights, stick to the facts, and recall the roots of climate change dogma. As Lawrence McQuillan notes, climatologist Stephen Schneider said “we have to offer up scary scenarios, make simplified, dramatic statements, and make little mention of any doubts we might have,” and also “decide what the right balance is between being effective and being honest.” Sen. Timothy Worth set out to “ride the global warming issue. Even if the theory of global warming is wrong.” The climate inquisitors are still riding and everybody should get ready for the next charge.

“I think this year’s higher tuition is just the beginning of bailouts by students and their parents. The students had nothing to do with creating this, but they are going to be the piggy bank to solve the problem in the long term.” That is Lawrence McQuillan, author of California Dreaming: Lessons on How to Resolve America’s Public Pension Crisis, speaking to Jack Dolan of the Los Angeles Times. His article, headlined “UC is handing out generous pensions, and students are paying the price with higher tuition,” shows the full dimensions of the problem.

In 2016, more than 5,400 UC retirees received pensions in excess of $100,000 and the number of UC retirees collecting six-figure pensions increased 60 percent since 2012. Nearly three dozen former US bosses received pensions in excess of $300,000 last year, four times as many as in 2012. Those include former UC president Mark Yudof, a man of little if any distinction. As Dolan notes, Yudof held forth at the University of California for only seven years, one on paid sabbatical, during which he bagged his $546,000 salary, and another in which he taught only one class per semester. A two-percent cost of living raise last year brought Yudof’s pension to $357,000, more than some scholars and scientists who spent decades at the UC.

Dolan finds the UC pension problem to be self-inflicted. “In 1990, administrators there stopped making contributions for 20 years, even as their investments foundered, leaving a jaw-dropping bill for the next generation — which has now arrived.” As it does, UC bosses do their best to keep the data secret while jacking up tuition. They denied public information to the non-profit California Policy Center and claimed that a low-level worker lost a spreadsheet. The Los Angeles Times requested pension information in February but the office of UC president Janet Napolitano took until June to deliver. That is typical for Napolitano, a former Arizona governor and federal Department of Homeland boss. On her watch, the UC wasted $504 million on a computer system and Napolitano’s office maintained a secret slush fund of $175 million.

Meanwhile, as Lawrence McQuillan explains, “the current public pension system is unsustainable. Switching to 401(k)s going forward is a better approach to retirement security that will help spare our children and grandchildren from being crushed by future pension costs.”

We’re coming up on the sixtieth anniversary of the old Soviet Union’s launch of its Sputnik satellite next month and the U.S.’ first successful launch of a satellite into Earth orbit in response one failed attempt and three months later.

Since then, the U.S. has been to the Moon, launched dozens of probes across the solar system and hundreds of satellites into orbit, pioneered reusable rocket launch technologies and operated orbital space stations.

But now, the U.S. Congress will be seriously considering whether or not the U.S. should officially add a dedicated “space corps” to the nation’s military.

Why now?

Back in July, the U.S. House of Representatives passed a budget bill for the U.S. Department of Defense, which in addition to increasing defense spending in the U.S. government’s upcoming 2018 fiscal year from $549 billion to $696.6 billion, would also officially create a space corps as a new branch of the U.S. military.

But although that bill passed the House with a 344-81 super majority, the U.S. Senate has different ideas on what the priorities of the U.S. military should be. Last week, the U.S. Senate passed its first budget bill for a government department for the U.S. government’s upcoming 2018 fiscal year: the National Defense Authorization Act, which upped the amount of planned defense spending for 2018 to more than $700 billion, but without adding a space corps branch to the U.S. military. Instead, the U.S. Senate has, with an 89 to 8 super majority, proposed establishing a new chief information warfare officer position to improve the nation’s ability to both conduct and respond to foreign cyber attacks.

With the Senate’s action, the bill will now go to a House-Senate conference committee that will iron out differences between the two bills before the full Congress will vote on a single bill that will spell out how the DoD will spend U.S. taxpayer dollars. Whatever makes it into that final version of the defense budget legislation is what the U.S. will go forward with, so whether the U.S. military adds a space corps branch or a new cyber-warfare bureaucracy to its arsenal of resources will likely get decided in the next several weeks.

Traditionally, the U.S. Congress would act to spend even more and do both things, but with limited resources and political support, lawmakers may have to choose one or the other in the FY2018 defense budget bill. If you were one of those lawmakers, which option would you choose to meet the country’s impending defense needs? Does America’s military need to form a space corps or does it need to set up a cyber-warfare position in the Pentagon in 2018? Should it do both? Or neither?

If you’re an elected member of the U.S. Congress, what is the cost to you for going to all that trouble and still getting the answer wrong? If the answer to that question is “zero”, then Washington D.C. has bigger problems with how it sets its priorities than choosing between a space corps and a information warfare officer for the 2018 defense budget.