First in a three-part series on Fixing America
Don't you feel that if you hear another rant about the deficit, about reckless spending, about the Supersize-me government, without policy ideas to fix this mess, that your head is going to explode?
Don't you feel like you are grinding your teeth into Tic Tacs every time you hear these debates?
Fox Business is changing the debate.
We found $900 billion to $1.5 trillionworth of ways to trim the fat marbled throughout government. And these are items that government officials say should be cut. Government officials whose salaries are paid for with taxpayer dollars are spending their days telling taxpayers how the government can cut waste.
But instead of cutting $1.5 trillion, the government now wants to raise the nation's debt ceiling by $1.9 trillion to pay its bills. If it passes, the national debt would reach $14.3 trillion, equal to the size of the U.S. economy.
The nation's overall debt just soared over the $12 trillion mark for the first time this past November.
Taxpayers are looking towards the President's State of the Union address, and whether he will address reckless spending at the hands of a government that has led to staggering abuses of taxpayer money, with no end in sight.
We found plenty to cut, and we're not talking just about cutting pork, or the annual $60 billion to $200 billion in annual Medicare and Medicaid fraud and waste, which law enforcement is already hunting down, and we're not talking about expensive tax credits to support industry, like those for the solar companies, which have yet to photosynthesize into industry profits.
We found the fat with expert help from the Heritage Foundation—Brian Riedl, Erin Kanoy, Matthew Streit, Alison Fraser, JD Foster, and Steve Keen—along with research help from Fox Business producer Barnini Chakraborty and Fox News analyst James Farrell along with data and analysis from the Congressional Research Service, the Government Accountability Office, the Office of Management and Budget, and Citizens Against Government Waste.
Bureaucracies exist by feeding themselves. When companies fail, they get smaller (usually). When governments fail, they get bigger, as one analyst noted.
“Simply eliminate the wasteful spending, earmarks, and corporate welfare, and..consolidate the duplicative programs,” that will go a long way towards cutting the deficit, says Brian Riedl, senior federal budget analyst at The Heritage Foundation, a conservative think tank in DC.
I grew up in an Irish Catholic household where we were taught the common sense things in life.
Like don't brush your teeth with turpentine, don't put your head in the oven, and don't run with hedge clippers. And don't Krazy Glue your mother's wallet shut. Our house still has the same black rotary phone.
“At home, being stupid was rewarded with a shoe boomeranging at you from around the corner,” says Fox Business's Valerie Alexander.
Like you, we never felt the world owed us anything.
Founding Father of the Entitlement State
The US has hewed dangerously closer to the vision of the Founding Father of the Entitlement State, as economist Ed Yardeni calls him, Franklin D. Roosevelt, who set forth a new economic bill of rights in his 1944 State of the Union Address, that you have the right to a good job, good food, a nice house, and adequate health care.
And the right to let taxpayers pay for all of that for you.
That thinking has caused the Supersize-Me ballooning of the US government.
Annual interest on the U.S. debt, which equals the size of Belgium's economy, would cover the budgets for 18 government agencies, including the legislative and judicial branches, and Homeland Security.
And that doesn't include what the U.S. will owe for Social Security and Medicare, unfunded liabilities which approach the GDP of the entire planet. It also doesn't include the debt owed by Fannie Mae and Freddie Mac.
For other ways to save a potential $140 billion, the Congressional Budget Office publishes its annual “Budget Options.”
Here's What the U.S. Can Cut
Estimated $1.2 trillion unused federal property
The government owns and leases 3.87 billion square feet of property, and 55.7 million acres of land—meaning, one out of every forty acres. Real property asset value for all these holdings is estimated to be $1.2 trillion, says Citizens Against Government Waste, based on data from the Federal Real Property Profilecreated by the Bush administration, which helps federal agencies manage and dispose of their excess property.
One alarming example of the government's wasteful holdings is Chicago's Old Main Post Office, a 2.5 million-square-foot abandoned structure that has been vacant since 1997 and costs $2 million to maintain annually, (the government recently moved to unload it, after spending more than $26 million to maintain it, government sources note).
And don't forget the John Murtha airport in Johnstown, Pennsylvania, the first project in the country to get stimulus money, an airport that cost $200 million in taxpayer money over the last decade but has more security officials than passengers on any given day.
Democrat Rep. John Murtha got the funds for the airport, and his portrait hangs in the entrance. He uses the airport often during campaign season; it has a new restaurant, and a new $8 million radar system that rivals international airports. The passenger count has dropped by more than half in the last decade. Just three commercial flights depart on any given day, all headed for Dulles International Airport in Washington, DC.
The $1.2 trillion unused property figure doesn't include the $29 billion in assets picked up from the Federal Reserve's bailout of Wall Street investment bank Bear Stearns.
For example, the central bank now owns the Crossroads Mall in Oklahoma City, a shopping complex abandoned after anchor stores Macy's, J.C. Penney, Montgomery Ward and Dillard's all pulled stakes. It has an oil well pumping crude in the car park -- except the Fed does not own the mineral rights.
The Office of Management and Budget (OMB) says there are more than 21,802 abandoned federal property assets littering the country that could be sold, worth a notional $17.7 billion. Tough to do in a downturn, as the property market is priced for the Ice Age.
Still, "it is obscene that the value of our government's vacant or unused properties exceeds the annual gross domestic product (GDP) of half of the nations on earth…something is wrong when Congress asks taxpayers to sacrifice more but does nothing to eliminate an area of waste that is double the size of Afghanistan's GDP," said Dr. Thomas Coburn (R-Okla).
$123.5 billion on government programs that have consistently failed
The OMB has something called the Program Assessment Rating Tool. It found 218 government programs that were either inadequate or ineffective virtually throughout the entire government--programs run by the Departments of Agriculture, Commerce, Defense, Education, HHS, Homeland Security, HUD, Interior, Justice, Labor, Transportation, Treasury, the VA, Army Corps of Engineers, the EPA, the CFTC, EEOC, and the FCC.
$98 billion in annual agency overpayments
--Health and Human Services: $55.1 billion, or 9.4%. Includes overpayment rates of 7.8% and 15.4% in the Medicare fee for service and Advantage programs, respectively.
--Labor: $12.3 billion, or 9.9%. Almost all of the overpayments were in the unemployment insurance program.
--Treasury: $12.3 billion, or 25.5%. All of it was attributed to overpayments in the earned income tax credit.
--Social Security Administration: $8 billion, or 1.2%, in overpayments.
--Agriculture: $4.3 billion in overpayments, or 5.9% of total department spending. Much of it was in the food stamp, federal crop insurance and school meals programs.
--Transportation: $1.5 billion, or 3%. Much of it was in the Federal Highway Administration planning and construction program.
--Veterans Affairs: $1.2 billion, or 2.7%. That included overpayments in the pension and other compensation programs.
--Housing and Urban Development: $1 billion, or 3.5%. All attributed to public housing and rental assistance.
--Defense: $849 million, or 0.5%.
--Homeland Security: $644.5 million, or 3.7%. Much of it was in the Homeland Security grant program as well as Disaster Relief Fund Vendor Payments.
--Education: $599 million, or 2.1%.
"It goes without saying that these results would be completely unacceptable in the private sector, as they should be in government, especially at a time of record deficits," says Sen. Tom Carper, (D-Del.), who chairs a Senate panel on federal financial management.
$92 billion in corporate welfare
The US taxpayer has been very good to businesses, and this even before the TARP and the Federal Reserve's massive intervention into the U.S. economy. Companies like Boeing IBM, General Electric, Xerox, Motorola, Honeywell, Xerox, and Dow Chemical have benefited.
The Cato Institute's $91 billionfigure doesn't include tax breaks or trade protections. The figure includes direct cash payments, to farmers and research funds to high-tech companies, as well as indirect subsidies, such as funding for overseas promotion of specific U.S. products and industries. The cash payments come from the Departments of Agriculture, Commerce, Defense, Energy, HUD, and State.
$19.6 billion on 10,160 earmarks
Congress managed to jam 10,160 earmarks worth a whopping $19.6 billion into 12 appropriations bills last year, a 14% spike from 2008. Despite promises, the 2010 budget [also] contained over 10,000 earmarks,” Heritage'sRiedl notes. Of the 10,160 projects, Citizens Against Government Waste identified 221 earmarks worth $7.8 billion that were passed in violation of Congress's own transparency rules.
Alaska leads the country with $221 million in earmarks - which comes out to be $322 per capita. Hawaii ranks second at $302 million in earmarks, or $235 per capita. Some of the more absurd calls for taxpayer funds:
$1.49 million for Mormon Crickets in Utah
$75,000 for Wayne Gomes Youth Baseball Diversity Foundation
$381,000 for Jazz at Lincoln Center, New York, NY
$254,000 for Wool Research, Montana Sheep Institute
$2.2 million for Center for Grape Genetics, Geneva, NY
$1.8 million for swine odor and manure management research in Ames, Iowa
$4.4 million for the Army Center of Excellence in Acoustics
Defending the pork for swine odor on the Senate floor, Democrat Senator Tom Harkin said: “I'm sure that David Letterman will probably be talking about it and Jay Leno will be talking about it, we've got $1.8 million to study why pigs smell.”
Also worth noting, the Montana Sheep Institute, backed by Senate appropriators Jon Tester (D-Mont.) and Sen. Max Baucus (D-Mont.) has received since 2002 seven earmarks worth $3 million, says Citizens Against Government Waste.
Massive program redundancies
Wasteful duplication in government is rampant, and it's an issue that's been out there for more than a decade—one hand of the government doesn't know what the other is doing. The list includes 342 economic development programs; 130 programs serving the disabled; 130 programs serving at-risk youth; 90 early childhood development programs; 75 programs funding international education, cultural, and training exchange activities; and 72 safe water programs.