How Your Government Wastes Your Moneyby Brian Riedl  (June 3, 2005)

This year, Washington will spend an eye-popping $22,039 per household. That is the highest inflation-adjusted total since World War II, and $5,000 per household more than Washington spent just four years ago. With difficult decisions ahead, government waste should be the easiest place to begin bringing spending under control.

Amazingly, Congress hasn’t undertaken any serious look at government waste since the 1984 Grace Commission. Lack of information isn’t the problem: Hundreds of recent government program audits are collecting dust on bookshelves across Capitol Hill. Instead, the problem is that reducing waste would distract lawmakers from shipping pork-barrel projects home and shoveling government spending to favored interests. So it is no surprise that the federal government costs 33 percent more than it did in 2001.

While lawmakers focus on expanding government, The Heritage Foundation uncovered the following ways in which Washington wastes tax dollars:

First, the federal government cannot account for $25 billion it spent in 2003. That’s billion with a “b.” Federal auditors know that $25 billion was spent by someone, somewhere, on something, but don’t know who spent it, where it was spent or on what it was spent. That amount is more than the total federal taxes paid by all of the residents in each of 28 states. It’s enough to fund the entire Department of Justice budget.

That’s just the beginning. Another audit shows the Defense Department purchased and then left unused approximately 270,000 commercial airline tickets at a total cost of $100 million. Even worse, the Pentagon never bothered to file a refund for these fully refundable tickets.

And that’s not counting the 27,000 times the Pentagon paid twice for the same airline ticket, at a total cost of $8 million. This wasted $108 million could have purchased seven Blackhawk helicopters, 17 M-1 Abrams tanks, or a large supply of additional body armor for U.S. troops in Afghanistan and Iraq.

Credit-card fraud is another problem. Federal employee credit-card programs were designed to streamline government procurement rules by allowing government employees to purchase job-related products with credit cards that would be paid by their agency. But this well-intentioned idea was quickly abused. Over one recent 18-month period, Air Force and Navy personnel used govern­ment-funded credit cards to charge at least $102,400 for admission to entertainment events, $48,250 for gambling, $69,300 for cruises and $73,950 for exotic dance clubs and prostitutes.

Not to be outdone, investigators randomly sampled 300 Department of Agriculture (USDA) employee credit cards. They found that, over six months, 15 percent of them charged a total $5.8 million in personal expenses that included Ozzy Osbourne concert tickets, tattoos, lingerie, bartender school tuition, car payments and cash advances.

The USDA has pledged a thorough investigation, but it will have a huge task: 55,000 USDA credit cards are in circulation, including 1,549 held by people no longer employed by the agency.

Waste also permeates the student loan program. In 2002, the Department of Education certified the Y’Hica Institute’s participation in the federal student loan program and disbursed $55,000 in loans to three of the school’s student loan applicants.

One problem: Neither the Y’Hica Institute nor the three students who received the $55,000 existed. Congressional investigators created them (on paper) to test the Department of Education’s verification pro­cedures. All of the documents were faked, right down to naming one of the fictional loan student applicants “Susan M. Collins,” after the senator requesting the investigation. Is it any wonder that $22 billion worth of student loans remain in default?

From the Redundancy Department of Redundancy: Washington runs 342 economic development programs, 130 programs serving the disabled, 130 programs serving at-risk youth, 90 early childhood development programs and 72 safe-water programs. This means not only additional bureaucracies to run these overlapping programs, but also an administrative nightmare for program beneficiaries who must navigate each program’s distinct rules and requirements.

Among the many examples: The Army Corps of Engineers is alleged to have purposely rigged dozens of scientific studies in order to justify expensive (but unnecessary) water projects. The federal government loses $20 billion annually by accidentally overpaying the recipients of government programs.

Just a few examples to remember the next time lawmakers claim there is no room to restrain spending.

Technology Has Made Our Public Schools Less Efficient


Written By: Frederick M. Hess
Published In: IT&T News
Publication Date: August 1, 2006
Publisher: The Heartland Institute


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Michigan education officials are championing a new regulation that would require every high school student’s education to include a substantial “online experience” of some kind, with the assumption being most students would complete an online class.

To fulfill this vague new mandate, district technology officials in Detroit and elsewhere argue extensive, unspecified expenditures will be necessary. This proposal is drawing national attention as visionary, though it is more remarkable for the manner in which it neatly illustrates the problems with how we think about technology and schooling.

Absent in Michigan, and often elsewhere, is serious thought about how technology might help cut costs or modernize educational delivery. The Michigan Department of Education’s chief academic officer explains the idea’s genesis in the same vague manner that a sophomore might describe a class project: “We thought of this as a skill that people would need to have to continue to be lifelong learners.” The Michigan proposal finds a way to turn the sensible adoption of new technology into a boondoggle that promises to expand bureaucracy, increase costs, and turn a blind eye to pursuing new efficiencies.

Even as public schools have made ever-larger investments in new technologies, they have steadily added to the ranks of teachers and staff. Spending on technology in public schools increased from essentially zero in 1970 to more than $100 per student in 2004, according to Education Week, a leading publication for teachers and school administrators. In the past five years alone, the nation has spent more than $20 billion linking schools and classrooms to the Internet through the federal E-Rate program. Between 1997 and 2004, the federal government appropriated more than $4 billion to help states purchase educational technology.

Meanwhile, these huge new investments in technology were coupled with a massive increase in the teacher workforce that drove the student-teacher ratio from 22 students per teacher in 1970 to 16 per teacher in 2001. There is no reputable analysis suggesting that the billions invested in technology have enhanced the productivity or performance of America’s schools.


Spending Without Re-Engineering

This state of affairs contrasts sharply with how technology is used by enterprises that face meaningful competition from alternative manufacturers and service providers. For these businesses, technology is not an end--it is a tool for self-improvement. New technologies are adopted when they enable workers to tackle new problems or do the same things cheaper and more efficiently.

Even the oft-maligned U.S. Postal Service understands this. It found ways to trim its workforce by more than 40,000 in the past four years when sufficiently squeezed by competitors such as UPS and Federal Express. The Postal Service substituted technology as it identified routine tasks where automation was cheaper and more efficient than human labor.

Why do inviolable laws about the productive benefits of technology seem to stop at the schoolhouse door? Organizations like the Postal Service make effective use of technology because they must keep up with the competition. Knowing their competitors are constantly seeking ways to boost productivity, hold down costs, and develop new products, for-profit enterprises are always on the lookout for similar advantages. It’s not that any executive likes painful measures such as downsizing; they take these steps because survival requires it.


Hostility to Real Benefits

Insulated from such pressures, school boards and superintendents have little incentive to view technology as a tool for trimming jobs or rethinking educational delivery--especially given union hostility and public skepticism. Meanwhile, existing collective-bargaining agreements between school districts and employees have made using technology to displace workers or reinvent processes extraordinarily difficult.

If anything, there is a bias in education against ideas deemed too “businesslike.” Indeed, the very words “efficiency” and “cost-effectiveness” can set the teeth of parents and educators on edge. Proposals to use technology to downsize the workforce, alter instructional delivery, or improve managerial efficiency are inevitably attacked by education authorities like the wildly influential Henry Giroux, a professor at Canada’s McMaster University, as part of an effort to “transform public education ... [in order] to expand the profits of investors, educate students as consumers, and train young people for the low-paying jobs of the new global marketplace.”

Ultimately, if leaders lack the incentives to pursue new efficiencies, they won’t. So long as technology serves as an easy applause line and an excuse to demand ever more school spending, rather than an opportunity to re-engineer educational delivery, America’s schools will remain ill-equipped for the rigors of the twenty-first century. Michigan’s bad idea is evidence of that

Following the spending on programs purportedly designed to make our commercial aviation system secure, one is startled by two facts:

1. The staggering amount of money that has been spent to rebuild the nation’s aviation security program after 9/11; and,
2. How the enormous expenditures made in the attempt to hire effective federal workers to replace existing ineffective private sector workers, and to install new electronic equipment to protect the system from on-board weapons and explosives has failed to accomplish either.

It was saddening if not surprising to read in the Washington Post on May 22nd, that the major purposes for establishing the Transportation Security Administration: effective screening equipment and skilled screeners to use it have not yet been achieved. But then we have known that ever since the GAO and various Inspectors General started reporting on the progress and effectiveness of the TSA in implementing the goals of the Aviation and Transportation Security Act. All of the news is not bad however, it was refreshing to read that the former Inspector General of the Department of Homeland Security, Clark Kent Ervin, repeatedly warned the agency’s Secretary, Tom Ridge that its goals were not being met; and in the face of internal criticism for doing that for which he was being paid, Ervin continued to warn the Congress and the American people of the seriousness of the problem.

It might be argued that in their haste to establish a line of defensive actions against terrorism at home, the DHS and TSA reached out to the nation’s biggest and most expensive contractors with blank checks in hand, offering to have them put in place the best security that money could buy immediately if not sooner. It could also be argued I suppose, that their errors in putting limitless faith in companies like Lockheed Martin, Boeing, Unisys and General Dynamics were understandable in the face of danger so potentially lethal that the very future of an America as we know it was at stake, and only America’s most experienced and resourceful corporate giants could do the job of protecting us. But the future of America is not a football game in which a "hail Mary" pass is allowable, and our elected leaders are supposed to lead, particularly in times of peril and with more than promises, slogans and calls to rally around the flag. After almost four years of constant and repeated warnings from men and women who have served this country in roles that made them truly expert on questions of security for our aviation system and the other homeland security issues, their counsel was discounted in favor of the wishful thinking that with enough money we could buy something to solve our problems even without testing it first.

Attributing bad decisions possibly motivated by considerations that I will not speculate on, to meeting unrealistic congressionally imposed deadlines to hire, install and implement voodoo security for the nation’s airports lacks credibility given the magnitude of the danger we faced and continue to face from terrorism. From the outset of the project to locate, recruit, test, investigate, hire, train, outfit and assign the originally planned upon force of some fifty thousand screeners for our 429 commercial airports, the fledgling TSA awarded contracts without giving much thought to exactly whom they wanted to hire, how to recruit them, what it would take to train them, and what existing organizations, including the FAA academy for screeners, might be best to oversee the responsibility. When reports came back from some cities of insufficient interest in the screening jobs; of trainers sitting idle with nobody to train; and of some trainers working overtime at premium pay at other locations, nobody in authority wanted to hear it. The entire inflated process was failing to provide men and women with the skills and training necessary to protect airliners from sophisticated terrorists while fully trained former law enforcement and military personnel willing to serve were not recruited.

We did not fair any better at installing equipment to screen either carry-on or checked baggage. Despite the years of repeated problems and disappointments over the failure of our behemoth, over priced and unwanted EDS equipment to find even make-believe explosives, TSA set out with a determination to jam equipment stored in warehouses long before 9/11 by airports that considered them more trouble than they were worth into airports that still didn’t want them. Sadly, the fact that neither Congress nor the White House offered any direction to an inexperienced TSA for dealing with theses problems demonstrates that there were more than enough blinders to go around.

While we struggle to explain why waste and abuse by government characterizes the failed attempt to secure the commercial aviation industry, we must not be too willing to blame those failures on a lack of time. This is not the first time America has been asked, on short notice, to quickly replace an inadequate and archaic national defense with effective new systems. Compared with the need to create an armed force capable of fighting a two front war, rebuild a naval armada, develop an effective intelligence community and establish a national defense industry, as was asked of our parents and grandparents more than sixty years ago, hiring and training fifty thousand competent workers and supplying them with equipment capable of identifying weapons and explosives in four years time doesn’t seem to be a harrowing task. When faced with a crisis the one commodity always in short supply is time. It was not a lack of time that caused waste and abuse; it was a lack of knowledge for some decision makers and a lack of dedication for others. The proof is that almost four years later the same decision makers make the same bad choices knowing that their choices are bad. The argument made by government officials today for purchasing equipment that doesn’t perform the task for which it was purchased is that it was all that was available. Such decisions are the equivalent of purchasing unpacked parachutes for airborne troops because no silk was available. Knowingly providing inadequate security is negligence for which lack of time should not be accepted as a defense.

Since at least 1988 when terrorists destroyed Pan Am 103 in flight over Scotland, we have known that terrorists could take down an airliner by placing explosives on board because they did so. Since at least the early 1960’s, we have known that armed hijackers could commandeer a commercial aircraft because they did so with impunity, sometimes targeting multiple airplanes in a single day. And while we continued to fail to provide reasonable security against such acts, we never suggested that our failure was due to insufficient time. Then as now, it was a lack of will by those in charge to change the status quo that kept business functioning as usual despite the recognized foreseeable risks.

The sky marshals that were rushed into service in the 60’s and 70’s all but disappeared as the twenty-first century rolled around despite awareness of growing threats against aviation. The EDS equipment ushered in with great fanfare in the 1990’s was allowed to sit unused in terminals and in storage facilities as though airliner bombings had never been heard of with nothing of substance being accomplished to improve the performance and design of the equipment. The airlines and airports required by federal mandate to provide trained manpower to screen passengers, baggage and cargo looked upon that responsibility as a low priority, and the performance of those they selected was proof of it.

No amount of terrorism directed at America at home or abroad or the passage of any amount of time motivated government to take on the job of defending commercial aviation in earnest prior to 9/11. Unless we start now making security decisions based upon sound security principles established by professionals who reasonably understand the concept of reasonably foreseeable risks and what can realistically be done about them, the security decisions we make will continue to be inadequate and susceptible to abuse. There will never be enough time to put in place a successful aviation security program without skilled, trained and experienced leaders at the helm of it. With the right management, the job of effectively responding to the security needs of commercial aviation can begin to experience real progress in less time than we imagine.

At a time when we are sending our best and brightest in harms way around the world, to fight against banditry, genocide, rape, murder and religious bigotry, the characteristics of the often ill-defined enemy that continues to return them maimed or worse, we should not give a pass to civilians who when entrusted with the responsibility of defending the homeland whine about how they couldn’t perform because they were asked to do so under pressure. Some of us would like to believe that before we send our kids and their parents too into the heat of combat, those who send them would be willing to take the heat for their failures to fight the war at home under much more favorable circumstances. For those who stood by in government agencies, in the halls of Congress or in the White House while contractors tripped over themselves rushing in with high priced "solutions" that all knew didn’t work, please don’t further disgrace us with lame excuses. For contractors who took their piece off the top and then passed on the responsibilities they agreed to accept to sub-contractors often created overnight, remember: "It ain’t over until the fat lady sings."

The Washington Post has done a service to the nation by pointing out the abysmal failures of our homeland security program in general and aviation security in particular. They are also to be commended for spotlighting the important role played by the nation’s inspectors general in our federal agencies. I now look forward to the second of their two articles on this topic. I would like to believe that time constraints were indeed the reason for the failure to give the nation the level of security that we have paid for because lack of character in things political we have sadly come to understand; but I suspect the explanation requires more digging.