Wasteful spending will sink our country

With a budget deficit in 2017 of $666 billion, adding to the $21 trillion of debt already outstanding, $15 trillion of it owned to foreigners, time is long overdue to reduce federal government expenditures.  Congress has been unwilling to eliminate any wasteful program if a significant group of voters supports it.  And overspending on ongoing programs is the rule because of Congress's failure to exercise the required oversight.

Two important economic laws, the Law of Diminishing Returns and the Law of Increasing Cost, apply to government spending.  According to the former, increasing expenditures in a government program will result in smaller and smaller increases in benefit per dollar expended.  Overspending on existing programs is probably the rule rather than the exception.  According to the latter law, increasing expenditures for government programs will increase the costs of producing goods and services in the private sector.  The reasons we don't see these effects is that the economy is complex and dynamic.  Over time, the private sector will invent new products, improve management techniques and methods of production, and experience other changes.  Increasing government expenditures diverts funds from the private sector to the public sector, forcing the private sector to consume less or save and invest less.

When government spends more money on projects to reduce global warming, for example, it is at the expense of increased costs of other goods people buy.  No one claims that it would prevent global warming because climate is determined by natural forces, and man-made global warming is only part of it.  Moreover, since electricity produced by wind and solar power is more costly than electricity produced from fossil fuels, businesses and consumers have to pay the higher utility costs, and consumers will have to pay higher prices for domestically produced goods.

Failure to pay attention to these economic laws means that government expenditures on many if not most programs exceed the amount that cost-benefit analysis would justify.  Government would get increasing returns by reducing expenditures, and the private sector would enjoy increasing returns and reduced costs as government expenditures are reduced.

There can be little doubt that federal government spending is excessive on a wide range of programs in nearly every department and agency.  Depending on whom you use as the source, there are 78 to 137 independent federal government agencies, most of which you probably never heard of.  How much it costs the federal government to ignore the cost of overspending in the programs of these agencies and how much it costs the private sector because too much is spent by the federal government is unknown, but it has to be in the hundreds of billions of dollars.

Estimates of the cost of continuing failed programs are likely to be on the order of additional hundreds of billions.  Everyone should be aware of the fact that in Chicago, St. Louis, Pittsburgh, and other cities, high-rise buildings built only a few decades ago by the Department of Housing and Urban Development had to be torn down because they were too expensive to maintain.  Billions wasted.  Low-rent housing does not mean low-cost housing.  Apparently, no benefit-cost analysis was used.  

Poor administration probably accounts for many billions.  The GAO reports that five federal agencies alone spent $3.1 billion on workers placed on administrative leave in a two-year time span.  The Heritage Foundation reported that Washington spends $25 billion annually maintaining unused or vacant federal properties; government auditors spent the past five years examining all federal programs and found that 22 percent of them – costing taxpayers a total of $123 billion annually – fail to show any positive impact on the populations they serve.  The Congressional Budget Office published a "Budget Options" series identifying more than $100 billion in potential spending cuts.  Sen. James Lankford (R-Okla.) wrote in a recent report that there was over $473 billion in wasteful spending in one recent year.

Why these instances of management incompetence are ignored can only be blamed on a Congress unwillingness to perform its obligation to taxpayers.  We have to face the fact that most expenditure decisions are political designed to win elections by passing legislation appealing to special groups of citizens, often regardless of whether the nation benefits or not.

Together, ignoring the two economic laws and congressional unwillingness to do something about known instances of waste are costing taxpayers hundreds of billions per year.  Congress's inability to address the problem of waste is giving democracy a bad name. 

With a budget deficit in 2017 of $666 billion, adding to the $21 trillion of debt already outstanding, $15 trillion of it owned to foreigners, time is long overdue to reduce federal government expenditures.  Congress has been unwilling to eliminate any wasteful program if a significant group of voters supports it.  And overspending on ongoing programs is the rule because of Congress's failure to exercise the required oversight.

Two important economic laws, the Law of Diminishing Returns and the Law of Increasing Cost, apply to government spending.  According to the former, increasing expenditures in a government program will result in smaller and smaller increases in benefit per dollar expended.  Overspending on existing programs is probably the rule rather than the exception.  According to the latter law, increasing expenditures for government programs will increase the costs of producing goods and services in the private sector.  The reasons we don't see these effects is that the economy is complex and dynamic.  Over time, the private sector will invent new products, improve management techniques and methods of production, and experience other changes.  Increasing government expenditures diverts funds from the private sector to the public sector, forcing the private sector to consume less or save and invest less.

When government spends more money on projects to reduce global warming, for example, it is at the expense of increased costs of other goods people buy.  No one claims that it would prevent global warming because climate is determined by natural forces, and man-made global warming is only part of it.  Moreover, since electricity produced by wind and solar power is more costly than electricity produced from fossil fuels, businesses and consumers have to pay the higher utility costs, and consumers will have to pay higher prices for domestically produced goods.

Failure to pay attention to these economic laws means that government expenditures on many if not most programs exceed the amount that cost-benefit analysis would justify.  Government would get increasing returns by reducing expenditures, and the private sector would enjoy increasing returns and reduced costs as government expenditures are reduced.

There can be little doubt that federal government spending is excessive on a wide range of programs in nearly every department and agency.  Depending on whom you use as the source, there are 78 to 137 independent federal government agencies, most of which you probably never heard of.  How much it costs the federal government to ignore the cost of overspending in the programs of these agencies and how much it costs the private sector because too much is spent by the federal government is unknown, but it has to be in the hundreds of billions of dollars.

Estimates of the cost of continuing failed programs are likely to be on the order of additional hundreds of billions.  Everyone should be aware of the fact that in Chicago, St. Louis, Pittsburgh, and other cities, high-rise buildings built only a few decades ago by the Department of Housing and Urban Development had to be torn down because they were too expensive to maintain.  Billions wasted.  Low-rent housing does not mean low-cost housing.  Apparently, no benefit-cost analysis was used.  

Poor administration probably accounts for many billions.  The GAO reports that five federal agencies alone spent $3.1 billion on workers placed on administrative leave in a two-year time span.  The Heritage Foundation reported that Washington spends $25 billion annually maintaining unused or vacant federal properties; government auditors spent the past five years examining all federal programs and found that 22 percent of them – costing taxpayers a total of $123 billion annually – fail to show any positive impact on the populations they serve.  The Congressional Budget Office published a "Budget Options" series identifying more than $100 billion in potential spending cuts.  Sen. James Lankford (R-Okla.) wrote in a recent report that there was over $473 billion in wasteful spending in one recent year.

Why these instances of management incompetence are ignored can only be blamed on a Congress unwillingness to perform its obligation to taxpayers.  We have to face the fact that most expenditure decisions are political designed to win elections by passing legislation appealing to special groups of citizens, often regardless of whether the nation benefits or not.

Together, ignoring the two economic laws and congressional unwillingness to do something about known instances of waste are costing taxpayers hundreds of billions per year.  Congress's inability to address the problem of waste is giving democracy a bad name.