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Government spending

By John Silveira

Issue #99 • May/June, 2006

"A billion here, a billion there, pretty soon you're talking real money."
      ... attributed to Sen. Everett Dirksen, 1896-69

A recent report by the U.S. Government Accounting Office (GAO) said millions of dollars is being wasted during Hurricane Katrina relief. I think the esteemed former Senator Dirksen might have responded to this report with, Really ... millions? Is that all?"

And Senator Dirksen's assessment of how government spends our tax dollars would be funny if it didn't highlight the truth about how bureaucrats and politicians view our money. The GAO report would be good news if it were true. Unfortunately, it's not; they should have said billions.

The Department of Homeland Security projects the cost of Katrina's recovery at about $88 billion with another $20 billion requested. Some analysts are saying total cost of recovery will be at least $200 billion and others are saying $300 billion is closer to the mark. Of this, do we think only millions will be wasted? Do you know how big a billion is compared to a million? Let me put it into perspective. A million is one one-thousandth of a billion. In other words, wasting one one-thousandth of a sum of money would be like going to the grocers, spending $100, and finding out you were cheated out of a dime. If only 10ยข out of every hundred dollars the government spent was wasted, I'd say we were lucky. The problem is, it's not going to be millions that'll be wasted; it'll be billions.

An example of the way money is being wasted on hurricane relief can be demonstrated in the microcosm of Saint Bernard Parish in Louisiana. According to an item in the Washington Post, the parish was so devastated by the hurricane that they laid off 206 of their 390 police officers. There's no money to pay them, so they have to hire security.

Before the hurricane, the parish paid its entry-level officers about $18,000 a year, which is about $70 a day based on 8-hour days and a 52-week work year. It paid its veteran officers about $30,000 a year, which is $115 a day. Even loaded with benefits that only comes out to about $90 and $150 a day, respectively. What's hiring private security going to cost?

Right now Blackwater USA, a firm that "sells" security, is already billing the Federal Emergency Management Agency (FEMA) $950 a day for each employee it "rents" to protect FEMA sites in the state. However, there's a good chance that FEMA can get another company, DynCorp, to provide that service in St. Bernard Parish at the bargain rate of about $700 a day.

Why is the parish willing to pay out this amount of money for security? Well, it's not. It has a sugar-daddy called Uncle Sam who it expects to foot this bill. You see, nothing's too good for St. Bernard Parish if they don't have to pay for it.

Now, you may be wondering: If the average pre-Katrina cop had cost the parish $90-$150 a day, why not spend the money on rehiring those laid off officers and hiring new ones? According to my calculations they could get about 750 cops instead of the "up to 100" they expect by contracting with DynCorp. And in three years they'll have a trained cadre of peace officers, not a bunch of high priced "hired guns" who are going to leave and chase the next lucrative FEMA contract.

Count the hundreds or thousands of times this happens with cops, medical help, housing, construction, repairs, etc, and count the times goods and services will be contracted for without regard to cost because they're buying goods and services with other people's money, and you can see why post-Katrina costs are so high.

Do you think this only happens in St. Bernard Parish? It's happening all over the state, and in Mississippi too. Nearly $1 billion to purchase 24,000 mobile homes, of which only 1,200 were used. The rest are sinking into the mud in Arkansas. Then there's $236 million, or over $33,000 per person—$132,000 for a family of four—to house evacuees on four cruise ships for six months. Can you think of a better way to spend $132,000 to help a family of four for six months?

And do you think waste happens only in Louisiana or with Katrina? It happens in other states and it's endemic at the federal level. Between 1997 and 2003 the Department of Defense let over a quarter of a million commercial airline tickets go unused at a cost of more than $100 million. Medicare pays as much as eight times per unit of drugs as any other federal agency. Medicare waste runs into the tens of billions—money that could be spent on the elderly.

Then there's at least $21 billion in uncollected student loans and almost $10 billion annually in earned income tax credit overpayments. Should we delve into uncontested contracts that go at top dollar to the politically connected? Can you spell Halliburton? I could go on and on. It's a nationwide epidemic and a nationwide scandal, and I'm just scratching the surface.

How does all this money get wasted in the first place? It seems as if those we have entrusted with governing the country have no concept of what our money is, how hard we worked for it, or how to spend it. And why should they? It's not theirs. Is it possible for bureaucrats and politicians to spend money wisely? Of course it is. Lawmakers often know where the fraud and waste lie. The problem is, they have little motivation to correct it. Why? Because it's our money, not theirs. And because we're going to vote for them anyway.




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