According to the federal government’s website USASPENDING.gov, as of June 30, 2021, the federal government is spending $7.7 trillion, yet the government only brings in about $3.42 trillion per year. Last year, the federal government spent $3.13 trillion more than it took in, creating a deficit. A deficit occurs when money going out exceeds the money coming in and the federal government needs to borrow in order to compensate for that deficit. In 2020, the federal government spent more than it collected. By the end of 2020, the federal debt was $26.95 trillion and now is $28.7 trillion. So where does all this money go?
Source USASPENDING.gov
The largest two expenditures have gone out to the Department of Health and Human Services (HHS) and the Department of Treasury. Almost 25 percent of HHS’s spending has gone to Medicaid via grants to the states while 18.4% of the department’s spending has gone toward payments to health care trust funds. Other large spending by HHS went to help supplement American’s insurance premiums and to the federal hospital insurance trust fund. The U.S. Treasury has been spending a lot of money on COVID-19 response, which has accounted for around 44% ($559.7 billion) of its spending. Interest on the federal debt owed by taxpayers accounts for 24.3% ($419.2 billion) of its spending.
U.S. Treasury Spending
The Social Security Administration (SSA) is accounting for just over 12.1% of federal spending ($933.5 billion). Most of SSA’s spending went to regular social security payments to the tune of $743.7 billion, about 80% of the spending for the agency. About 11.5% of the agency’s budget went to disability payments ($107.6 billion) and $48 billion went to the supplemental security income program (SSI).
The Department of Defense’s spending accounts for 11.4% of federal spending, which is $880.9 billion. Almost $100 billion of the department’s spending goes toward military pensions and 92.6% has gone to working capital which includes contractual supplies and services, personnel compensation and benefits. About 8% of the military’s “working capital” spending is “unknown.”
Department of Defense spending
Other spending by the federal government goes to these agencies:
Dept of Labor
$562,676,803,764
7.3%
Small Business Administration
$332,170,135,101
4.31%
Department of Education
$278,071,341,412
3.61%
Department of Agriculture
$235,729,594,780
3.06%
Department of Veterans Affairs
$188,223,475,785
2.44%
Office of Personnel Affairs
$164,254,458,014
2.13%
Department of Transportation
$106,812,579,740
1.39%
Department of Homeland Security
$99,924,715,851
1.3%
There are more agencies; however, these are the largest
Democrats and many Republicans in Congress have agreed to restore corrupt, costly, and inequitable Congressional earmarks.
Earmarks are the most wasteful practice in Congressional history. They have resulted in members of Congress squandering $392.5 billion in taxpayer funds since 1991 on pork-barrel projects like Alaska’s “Bridge to Nowhere,” Iowa’s indoor tropical rain forest, and North Carolina’s teapot museum.
The restoration of earmarks will lead to an avalanche of pet projects and cause federal spending to explode, because someone can legally bribe members of Congress with a few million dollars in earmarks in exchange for voting in favor of big, bloated spending bills.
Earmarks reward the privileged few—congressional appropriators, special interests, and lobbyists—at the expense of taxpayers. They are exactly the type of “swampy” business as usual in our nation’s capital that Americans roundly reject.
After Democrats took control of the White House and Congress in January, prominent Congressional Democrats—and even many Republicans—called for the restoration of earmarks, which had been subject to a moratorium since 2011. Shockingly, after the Democrats agreed to bring them back, the House Republican Conference supported their return. But Senate Republicans refused to go along, and they are the last group standing against this wasteful practice.
As part of President Biden’s Build Back Better, another $3 trillion is reportedly now in the works on top of the $1.9 trillion that was just approved earlier this month with the American Rescue Plan. The $3 trillion would come in two parts; one for infrastructure and a second focus on childcare and education. Officially, White House Press Secretary Jen Psaki said, “”Those conversations are ongoing, so any speculation about future economic proposals is premature and not a reflection of the White House’s thinking.”
It is unclear how much an appetite Republicans and many Democrats have for additional spending over what is part of the regular budget and the $6 trillion extra spending that has been allocated in the name of COVID relief. This extra spending allocated so far comes to about $37,000 per federal income tax paying American on top of the regular budget for the federal government.
The $3 trillion plan is still in its early phases of development and could change if it ever makes it to President Biden’s desk for signature. One part of the plan would help pay for roads, bridges, and public transportation in addition to 5G telecommunications and rural broadband. Part two of the plan deals with social welfare programs such as government run pre-K plans, community college support and to help pay childcare costs for parents.
It is unclear how federal taxpayers would pay for the $9 trillion in new spending on top of the $32 trillion federal debt we will have by the close of the year, or the unfunded liabilities of $83 trillion. The entire U.S. gross domestic product is only $21.6 trillion, so by the close of this year, the United States will probably run at least 140 percent of the country’s GDP (currently 130%). When you add in total debt owed by all U.S. governments (federal, state, and local), we are currently at 145.31 percent of GDP. As for spending, the federal deficit is now running over $4.5 trillion.
As most economists will tell you, although governments can run the debt that high for a very temporary time, it must be made up quickly either by paying down that debt, reducing spending, dramatically raising the GDP or a combination of both quickly in order to not default on the U.S. debt. We have seen the federal debt as an issue that most politicians have not wanted to address and continue to “kick the can down the road” in hopes it will fix itself. The Congressional Budget Office (CBO) has warned that a “large and continuously growing federal debt would… increase the likelihood of a fiscal crisis in the United States.” Experience shows that high levels of government debt reduce growth and increase financial fragility. In their study of financial crises in history, Carmen Reinhart and Ken Rogoff concluded, “again and again, countries, banks, individuals, and firms take on excessive debt in good times without enough awareness of the risks that will follow when the inevitable recession hits.” Government debt, they found, “is certainly the most problematic, for it can accumulate massively and for long periods without being put in check by markets.”
We are at the highest level of federal debt to GDP in the United States’ history since 1940. For comparison, the level was at 34.55 percent in 1980 and 58.67 percent in 2000.
At 1PM on Monday, February 22, 2021, the U.S. House will present the American Rescue Plan Act of 2021 and House Speaker Nancy Pelosi hopes to have a vote in the U.S. House by the close of next week. The 591-page reconciliation bill was made public late yesterday and provides billions of dollars of U.S. taxpayer obligations to spend on everything from agriculture to education. Since the U.S. government does not have $1.9 trillion to spend on the Act, it will need to borrow the funds if the bill passes to be paid back by U.S. taxpayers on top of the $28 trillion owed by taxpayer already and the $122 trillion of unfunded liabilities on the federal government has obligated U.S. taxpayers.
Besides $1,400 direct payments to most Americans, the bill includes a raise in the federal minimum wage from $7.25 per hour to $15 per hour by 2025. The Act includes implementation of a national vaccination program that includes setting up community vaccination sites nationwide. It would also take measures to attempt combat with COVID-19, including scaling up testing and tracing, addressing shortages of personal protective equipment and other critical supplies, spending on high-quality treatments. The plan will also spend money to reopen schools.
The Act would also provide funds for housing and nutrition to families (via SNAP), expand already funded child care and health care, extend and expand unemployment insurance, and give families with children and childless workers enhanced tax credits.
While stimulus has been the most talked about a vote on spending for Congress to approve, few realize President Trump had to sign a 24 hour stop gap measure last night to keep the federal government running as it technically ran out of spending authority last night. Though this will all be resolved today as Congress reconvenes in Washington, D.C. to pass a mega bill which includes somewhat of an omelette du jour of spending. It is such a mess, no one has read the entire package and most, if not all, U.S. Senators and House members will vote on a bill not read, which will go to President Trump to sign and he will probably not have read it either before signing it into law. Nearly all the spending being voted on today will involve adding more debt to the federal balance sheet and increase the federal deficit dramatically.
The investors in the nation apparently dislike what they see. Both Wall Street and Bitcoin are being negatively affected by this news. Futures this morning for the DOW are crashing with an implied open down over 600 points. Meanwhile, Bitcoin which would normally rise when the federal government adds to its debt and deficits is down substantially. This temporary financial turmoil could be related to the news that additional strains of COVID-19 in the U.K. could create more problems here in the United States for a future free of the COVID.
Regardless, today, the U.S. House and the U.S. Senate are expected to vote to spend $1.4 trillion in omnibus spending in leu of passing an actual budget for normal government spending. Besides that, Congress will probably pass stimulus money which will reach a wide range of people, companies, and governments.
Even though the text of the bill has not been released, we know some basic frameworks which have been agreed upon by members of Congress. Foremost, most Americans will have $600 dropped into their bank accounts similarly they received $1,200 earlier this year. If one makes under $75,000 ($150,000 for married couples) they will receive the payment plus $600 per child. We believe there is a scale down effect based on income, similar to the $1,200 payments earlier this year; however, those numbers have not yet been released. Americans should start seeing those payments drop into their bank accounts or mail box in 3-6 weeks.
For those who had been receiving $600 per week in Pandemic Unemployment Assistance earlier this year, you will receive $300 per week through March 14, 2021. Talk of having this retroactive is not likely including in this latest round of negotiations, so don’t expect a huge payment, only expect the $300 per week besides regular state unemployment payments. This is mostly for freelance workers who receive 1099s and should see the extra $300 appear in their unemployment in about three weeks, depending upon which state they live. Another positive for freelancers and small business owners is that business meals will be 100 percent deductible through 2022.
The Payment Protection Program (PPP) for businesses has been allocated another round of $325 billion in federal taxpayer-funded aid. Those who received funds from PPP earlier this year will probably qualify for another round of potentially forgivable federal loans. The positive of this part of the legislation is that it ensures that if a business has been or will be given a PPP loan and the federal government has forgiven it, it will not be a taxable event. There was a doomsday scenario looming over small businesses who were granted relief from loans they received as taking that on as income, potentially causing one’s tax liability to soar.
Ten billion dollars is in the bill for the Army Corps of Engineers to pay for 46 water projects around the country, which is supposed to help with flood controls and coastal protection projects.
Americans who experience unexpected medical bills will now be able to receive treatment from out-of-network providers. We have not seen details of this part of the bill; however, this aspect of health insurance has been financially challenging for many who have had to pay out-of-pocket in some rare cases.
The U.S. Postal Service will receive forgiveness for a $10 billion loan the taxpayers had funded. Another $10 billion is going to Child Care Development Block Grants. Those receiving federally funded food help via SNAP will see a 15 percent bump in their benefits and Meals on Wheels and other food programs for low-income individuals and families. This additional spending will cost taxpayers $13 billion, and another $13 billion will go to farmers and ranchers.
$82 billion will go to government-run school systems around the country. K-12 schools will receive $54 billion, colleges and universities will receive $23 billion, $4 billion will go to the Governors Emergency Education Relief Fund, and nearly $1 billion to Native American schools.
For those needing help to meet their home rental payments, the federal taxpayer will set aside $25 billion for those who may have fallen behind in their rent and are potentially facing eviction. State and local governments will administer the $25 billion.
To assist with the COVID-19 epidemic directly, they have allocated $69 billion for vaccine distribution costs, treatment, and to create a stockpile of the various vaccines coming out. Of that $69 billion, $22 billion is being allocated for testing, tracing, and mitigation. Another $9 billion is being set aside for health care providers directly, and $4.5 billion for mental health treatments for those affected by COVID-19.
There is likely more pork included in the package, and though some non-COVID projects have been bantered about in different circles around D.C., we do not know what pork they will pass in this legislation. Many items of pork will probably show up in a future publication of the Congressional Pig Book. We will report on those in the future once we see what will probably be a 5,000+ page bill. The $10 billion for the Army Corps of Engineers was 400 pages on its own, so it will interest to see how many pages of pork this bill covers.
The national debt will explode if either Joe Biden or President Trump is elected. But disaster can be averted if Libertarian candidate Dr. Jo Jorgensen becomes our next president. The federal government has already amassed $216,000 in debt per person—every man, woman, and child in the United States.
Jo Jorgensen, Libertarian Party presidential nominee
Trump’s plans would increase debt by another $35,000 per person in the next ten years. Biden’s plans would increase it by $39,000. At interest rates near zero percent, few financial institutions will lend that amount of money to the federal government. Except for one: the Federal Reserve Bank.
“The Fed will happily create brand new money, conjured out of thin air, and lend it to the U.S. Treasury,” said Jorgensen. “That will inexorably lead to bankruptcy, poverty, unemployment, and price inflation. We could see social and political chaos that make this year’s protests look quaint.”
“The only solution is to decrease federal spending,” she said. “We’ve tried it before, and it works. In the four years from peak World War II spending in 1944 until 1948, the U.S. reduced spending by 75 percent. An economic boom ensued.” She noted that tax cuts unaccompanied by spending cuts are virtually meaningless.
“Under my Libertarian leadership, we would cut spending like it’s 1945,” said Jorgensen. “By getting our fiscal house in order, happy days will be here again.”
Dr. Jorgensen is the only presidential nominee besides Trump and Biden who appears on this year’s ballot in all 50 states plus the District of Columbia.
American taxpayers get to take home just 54 cents on every dollar they earn, while federal, state and local governments take the other 46 cents.
What a great deal for federal, state and local governments. Not so hot for taxpayers. Crushing, in fact.
President Trump’s tax reform proposal that he partially-unveiled on April 26 includes cuts in corporate tax rates, death taxes, and alternative minimum taxes. Republicans claim this plan will be ‘revenue neutral’ after these measures stimulate economic growth.
But when politicians say their plan is ‘revenue neutral,’ what they’re saying to taxpayers is, “we’re keeping your taxes high. We’re not cutting them a nickel.”
“Drain the swamp” President Trump wants to keep spending at the same perilously-high $4 trillion water mark as President Obama.
Keeping taxes and government spending high means government will remain wasteful, bloated, and dysfunctional. It will sustain thousands of wasteful bureaucracies and failed government programs. It will kill jobs, diminish people’s freedom, invite more overseas meddling, and inflict stifling red tape on businesses and individuals.
It’s taxpayer negative.
The goal of any tax reform proposal should be to dramatically reduce the total amount of money in politicians’ hands.
Government revenue negative is taxpayer positive.
We need tax cuts that give back thousands of dollars – every year – to taxpayers. Cuts that substantially hike everyone’s take home pay so taxpayers can save for their retirement, pay off their debts, support their families, enjoy the fruits of their labor, and take care of their loved ones in need.
Politicians forget: the money they take is not the government’s. It belongs to the hard-working taxpayers who earned it.
Better than two-thirds of all Americans believe that federal government spending is way too high.
We must reduce total government spending enough to both immediately end deficit spending and enable huge, immediate taxpayer-positive tax cuts.
The only way to drain a swamp is to pump water out of it – not keep it at the same level.
The only way to drain the swamp in Washington D.C. is to dramatically reduce total government spending and slash taxes.
Washington, D.C. — This morning, March 16, 2017, President Trump made public his 2018 budget proposal which includes cuts in many agencies and increases in others. While the federal deficit is around $600 billion and the federal debt sits at $20 trillion, Trump’s proposal would continue the deficit and offers no relief to reduce the deficit or the debt. The budget is relatively spending neutral as for all the increases in spending, Trump proposes cost savings elsewhere.
While 73 percent of the budget is non-negotiable with items such as Medicare, Social Security and interest on the debt, the remaining portion of federal spending offers big changes. The largest is an increase of $54 billion to military spending on top of the $580 billion we are spending now which is about a nine percent increase. It also includes an additional expenditure of over $2.5 billion for the Mexico/U.S. border wall that Trump has promised his supporters throughout his presidential campaign. Other spending increases are seven percent for the Department of Homeland Security and a six percent increase for Veterans Affairs.
Under the budget, Trump suggests the elimination of these 19 agencies:
African Development Foundation
Appalachian Regional Commission
Chemical Safety Board
Corporation for National and Community Service
Corporation for Public Broadcasting
Delta Regional Authority
Denali Commission
Institute of Museum and Library Services
Inter-American Foundation
U.S. Trade and Development Agency
Legal Services Corporation
National Endowment for the Arts
National Endowment for the Humanities
Neighborhood Reinvestment Corporation
Northern Border Regional Commission
Overseas Private Investment Corporation
U.S. Institute of Peace
U.S. Interagency Council on Homelessness
Woodrow Wilson International Center for Scholars
Besides the elimination of these 19 federal agencies, reductions in federal spending would come from a 31 percent reduction for the EPA, 29 percent for the State Department, and 21 percent for both the Agriculture Department and the Labor Department. More spending reductions would come from the Department of Health and Human Services, the Commerce Department, Education, HUD, Transportation, Interior, Energy and to a lesser extent, reductions in spending for NASA, Justice, Treasury, and the SBA.
This is simply Trump’s 2018 blueprint budget and will now go to be picked apart by Congress and will likely look nothing like his proposal.
And if you want to be even more specific, the fastest-growing entitlement program is Medicaid, which was originally supposed to be a very small program to subsidize health care for poor people but has now metastasized into a budget-gobbling fiscal disaster. Arguably, it’s the entitlement program most in need of reform.
So how big is the problem? Enormous if you look at the numbers from the National Association of State Budget Officers.
States increased their spending in fiscal year 2015 by the biggest margin in more than 20 years, but most of the increase was thanks to huge leaps in Medicaid spending under the first full year of the Affordable Care Act (ACA). Spending increased last fiscal year, which ended on June 30 for most states, by 7.8 percent, according to new estimates from the National Association of State Budget Officers (NASBO). It’s the biggest boost since 1992 and was thanks to a 15.1 percent increase in Medicaid spending, much of that paid for via federal Medicaid funds. Illinois, Michigan, Kentucky, Nevada and Oregon saw more than 30 percent increases in federal funding because they expanded Medicaid under the ACA. But 2015 was also a year where states were putting up more of their own money again.
Here’s the chart showing which outlay categories grew the fastest.
The article points out that spending is outpacing revenue.
On average, state revenues aren’t keeping pace with spending; NASBO estimates General Fund revenues will increase by just 3.8 percent.
Though the real problem is that spending is expanding faster than the private sector, which is the opposite of what is called for by my Golden Rule.
One of the reasons Medicaid grows so fast is that the program is split between Washington and the states, with both picking up a share of the cost. This may sound reasonable, but it creates a very perverse incentive structure since politicians at both levels can vote to expand the spending burden while only having to provide part of the cost.
The National Center for Policy Analysis explains how this system produces bad decisions.
Medicaid has a horrible financing mechanism: Federal transfers to states are not based on the number of poor people, or any other reasonable calculation. Instead, they depend on the amount of its own taxpayers’ money a state spends. Traditionally, when California spent $1 on Medi-Cal, the federal government kicked in $1. …So, state politicians hike taxes and spending on their own citizens in order to get as much funding as possible from people in other states (via the feds). Hospitals and Medicaid MCOs maximize this by agreeing to a state tax on themselves, which the state uses to ratchet up the federal funding. After multiplication, the money goes right back to these providers. …Stopping this wild spending growth requires fundamental reform to Medicaid’s financing. Congressional Republicans have proposed “block grants,” whereby states would get federal Medicaid transfers based on their population of poor residents, not how much they gouge out of their own people.
But unless that kind of reform happens, the program will continue to grow and become an ever-larger fiscal burden.
Heritage Action has more details on the perverse incentives of the current system.
…the federal government promises to reimburse states for a majority of their Medicaid spending, most of which involves reimbursements to health care providers. Therefore, states collude with health care providers in the following manner: they tell providers that they will tax them (so-called “provider taxes”), bringing in more revenue to the state. The state then promises to filter that money back to those same providers in the form of higher Medicaid reimbursements. States then bill the federal government for this added cost. Because the federal government provides more than 50% of total Medicaid funding, both state governments and Medicaid providers are made better off by the arrangement, while the federal government is stuck footing a larger bill it had no part in creating.
Though I partially disagree with the assertion that the feds are blameless. After all, it was politicians in Washington who created this wretched system, including the reimbursement rules that states manipulate.
The net result of all this is a nightmare for federal taxpayers, but states also are losing out when you consider the long-run consequences. And that’s even true with the Medicaid expansions contained in Obamacare, which supposedly were going to be financed almost entirely by Uncle Sam. The Wall Street Journalreports.
…the Affordable Care Act was designed to essentially bribe states to expand their Medicaid programs: The feds offered to pay 100% of additional costs through 2016, dropping to 90% by 2020. This “free money” prompted 30 states and the District of Columbia to take the deal. Democratic activists have joined with state hospital lobbies to pressure lawmakers in the remaining 20 state capitals to follow.
But free money can be very expensive.
Consider the experience of the states that did expand Medicaid. “At least 14 states have seen new enrollments exceed their original projections, causing at least seven to increase their cost estimates for 2017,” the Associated Press reported in July. The AP says that California expected 800,000 new enrollees after the state’s 2013 Medicaid expansion, but wound up with 2.3 million. Enrollment outstripped estimates in New Mexico by 44%, Oregon by 73%, and Washington state by more than 100%. This has blown holes in state budgets. Illinois once projected that its Medicaid expansion would cost the state $573 million for 2017 through 2020. Yet 200,000 more people have enrolled than were expected, and the state has increased its estimated cost for covering each. The new price tag? About $2 billion… Enrollment overruns in Kentucky forced officials to more than double the anticipated cost of the state’s Medicaid expansion for 2017, the AP reports, to $74 million from $33 million. That figure could rise to $363 million a year by 2021. In Rhode Island, where one-quarter of the state’s population is now on Medicaid, the program consumes roughly 30% of all state spending, the Providence Journal reports. To plug this growing hole, Rhode Island has levied a 3.5% tax on insurance policies sold through the state’s ObamaCare exchange.
Interestingly, Obamacare is causing pro-big government states to dig even deeper fiscal holes.
The National Center for Policy Analysis has some remarkable data on this development.
States that expanded Medicaid tend to have per capita state spending that’s about 17 percent higher than non-expansion states. …In 2004, expansion states had median per capita tax collections (both state and local) of 19 percent more than non-expansion states. By 2012, this gap had widened with expansion states collecting 28 percent more taxes per capita than non-expansion states. Moreover, since 2008 expansion states have moved to increase taxes, while non-expansion states have reduced taxes slightly.
Unsurprisingly, the states that are making government bigger are experiencing slower growth.
In 2001 expansion states had real median income that was nearly 13 percent higher than non-expansion states. However, by 2013 this gap had narrowed to just over 9 percent. Expansion states have historically had slightly lower poverty rates, but the difference was only 1 percentage point by 2012 (12.9 percent vs. 13.9 percent). Non-expansion states, although slightly poorer, have lower unemployment than expansion states (6.7 percent versus 7.2 percent).
Another point worth mentioning is that the program isn’t even a good deal for the poor according to Scott Atlas at the Hoover Institution. Here’s some of what he wrote for the Wall Street Journal.
Americans should be more worried than ever about Medicaid… The cost of the $500 billion program is expected to rise to $890 billion by 2024… Yet more spending doesn’t necessarily mean better care for beneficiaries… The expansion of Medicaid is one of the most misguided parts of ObamaCare… Some 55% of doctors in major metropolitan areas refuse to take new Medicaid patients… Medicaid enrollees who manage to see a doctor typically experience outcomes worse than those under private insurance. That means more in-hospital deaths, more complications from surgery, worse posttreatment survival rates, and longer hospital stays than similar patients with private insurance. A randomized study by the Oregon Health Study Group showed that having Medicaid did not significantly improve patients’ physical health compared with those without insurance.
The proverbial icing on this foul-tasting cake is the way the program enables staggering amounts of fraud and theft.
I’ve written about this before (including how foreigners are bilking the system). But here are some fresh details from the Wall Street Journal.
…one of our favorite political euphemisms is “improper payments.” That’s how Washington airbrushes away the taxpayer money that flows each year to someone who is not eligible, or to the right beneficiary in the wrong amount, or that disappears to fraud or federal accounting ineptitude. Now thanks to ObamaCare, improper payments are soaring. Last week the Health and Human Services Department published an “alert” warning that the improper payment rate for Medicaid in 2016 will likely hit 11.5%. That’s nearly double the 5.8% rate as recently as 2013… The 11.5% for 2016 is likely an underestimate given that HHS’s goal last year was 6.7% and instead scored 9.8%, which amounts to $29.1 billion. The dollar amount of improper payments in Medicaid was bound to rise because ObamaCare vastly opened eligibility. In 2015 enrollment climbed by 13.8% and one of five Americans are now covered by the program. …In recent audits of Medicaid in Arizona, Florida, Michigan and New Jersey, the GAO uncovered 50 dead people who recouped at least $9.6 million in benefits after they died; 47 providers who registered foreign addresses as their location of service in places such as Saudi Arabia; and $448 million bestowed on 199,000 beneficiaries with fake Social Security numbers—12,500 of which had never been issued by the Social Security Administration.
But as bad as all this sounds, it can get worse.
If HHS tries hard enough, maybe the department can match the failure rate for school lunches (15.7%) or the Earned Income Tax Credit (23.8%).
And Kevin Williamson of National Reviewadds some acidic observations.
…the criminal — and I do not use the word figuratively — administration of Medicaid by the Obama administration. …improper payments under Medicaid have become so common that they will account this year for almost 12 percent of total Medicaid spending — just shy of $140 billion. …That rate has doubled in only a few years…12 percent in improper payments isn’t an error rate — it’s a malfeasance rate. …If improper and illegal federal payments were an economy of their own, that economy would be bigger than Hungary’s… The Obama administration is not lifting a pinky to do anything about this, even though analysts such as John Hood have — for years — been arguing that it is necessary and possible to reform this mess. As the Wall Street Journal has reported, we don’t even verify that doctors billing Medicaid for services rendered are actually doctors. In many cases, we do not do much to verify that their patients actually, you know, exist. We’ve paid untold billions of dollars to “clinics” that turn out to be little more — or nothing more — than post-office boxes and prepaid cell phones. And as bad as that 12 percent rate is, some policy scholars believe that it is in fact probably worse.
Kevin observes that this system is good for the Poverty Pimps.
…the real problem with the welfare state is not the poor people receiving checks — it’s everybody in the middle, the vast array of government employees, their union allies, contractors, and third parties who earn six-, seven-, eight-, or nine-figure paydays taking their cuts of money we think we’re spending on the poor. This is an enormous criminal conspiracy against the American people and the public fisc.
You might think that fixing this fraud would be an area for bipartisan cooperation.
But the sad reality is that fraud is a feature, not a bug. Politicians like the fact that scam artists in their states and district are stealing healthcare money from taxpayers. After all, recipients of the loot can be registered voters and campaign contributors.
So what’s the best way of fixing this mess?
Will big tax hikes solve the problems? If the problem is that America isn’t enough like France, then the answer is yes.
But if the problem is that government already is too much of a burden and that it would be a good idea to at least slow down the rate at which America becomes France, then the answer is genuine entitlement reform.
P.S. For all intents and purposes, block granting Medicaid is a partial repeal of Obamacare. Just in case you wanted an additional reason to support reform.
A version of this article was published on Dan Mitchell’s blog.
Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.
This article was originally published on FEE.org. Read the original article.
I’ve written (some would say excessively) about the fact that America has too many bureaucrats and that they’re paid too much. That’s true in Washington. That’s true at the state level. And it’s true for local governments. But since I’m a big believer in beating a dead horse, let’s revisit this issue. We’ll narrow our […]
budget proposal which includes cuts in many agencies and increases in others. While the federal deficit is around $600 billion and the federal debt sits at $20 trillion, Trump’s proposal would continue the deficit and offers no relief to reduce the deficit or the debt. The budget is relatively spending neutral as for all the increases in spending, Trump proposes cost savings elsewhere.
The main culprits are the so-called mandatory programs. Entitlements such as 
The Palm Beach Examiner 