Stimulating the Dead and Incarcerated

With around 310 million people, the United States is the third most populated nation on earth, falling only behind behemoths like China and India. It is so large that many feel it is largely ungovernable, particularly with a slow moving democratic process that appears to be in a state of perpetual elections, fractured by state and local jurisdictions and mired in national blocking and bickering. And yet, here we are, damaged but not down, scared but not hopeless. Go figure. Are we going to heal the gaping wounds that separate the governmental minimalists from Keynesian stimulus seekers?

It does seem that we are likely to see a Congress snailing through critical issues over the next three years with states struggling with how to continue while shouldering untenable deficits and perhaps as much as $3.4 trillion in unfunded government pension obligations. We have a decade or more of “catch-up” for both our employment picture and our housing market. Just about every program favor by the “new incumbents” is based on some kind of reduction in government effort, a need to restore “deficit sanity” to the country.

Without more significant signs of growing consumer demand, tax breaks for employers to hire new people or general tax breaks to put more spending cash in the pockets of our citizens will probably result in increased savings, reduction of existing debt but very little in the way of job creation. What is truly missing from current and expected near-term federal policy-making is any real consideration as to how to increase the one missing ingredient in or current equation: growth, near-term and long-term. Even in the pre-crash go-go days, our modest growth was almost nothing more than a reflection of our general population increase.

To have growth, we have to do more and create more of what the earth wants and needs. In an increasingly competitive world, the most basic building block of that challenge is education. But if anything, money for schools is falling precipitously, and “inexpensive” state-sponsored college and university education is witnesses some of the highest tuition hikes in our history, pushing an increasing number of students out of school to even less prudent levels of debt. In a society where our new priorities need cash to function, that which doesn’t work in government, that which produces costs without benefit, cannot really be tolerated anymore.

What is never acceptable and also unavoidable is massive government error and concomitant government waste. The hard fact remains that a government making huge fiscal decisions has to rely on voluntary compliance (think about the tax code) and some kind of complete and total link between every government agency as to each and every member of society. For example, when $250 tax-stimulus checks were sent out by the government, it would really have to know the exact status of each recipient at that moment. If anyone died and the relevant federal agency was not notified, guess what?

By way of example, the November 17^th Washington Post looked at some examples where such errors have become almost an unavoidable reality: “The federal government's improper payments totaled about $125 billion in fiscal 2010 as unemployment insurance and Medicaid payments increased, officials said Tuesday. But agencies also recovered about $687 million mistakenly paid to delinquent government contractors and beneficiaries.

“The government's total improper payment amount climbed $15 billion from the previous year, according to statistics from the Office of Management and Budget. The payments included about 89,000 checks for $250 each sent to dead or incarcerated people as part of the economic stimulus program.”

We know we cannot afford such mistakes, but they will not stop. But the bigger mistakes we pursue with knowledge of our folly, throwing boatloads of good money after bad, do not seem to raise the ire of taxpayers as do the smaller incidents of governmental waste and perceived excess spending on social programs. Iraq is a failure; it cost about a trillion dollars. The government is unraveling and violent insurrection (fomenting the growth of both al Qaeda and Iranian influence) is now commonplace. Afghanistan promises to be with us until a planned withdrawal in 2014… encompassing three more years of waste on a country that will return to malevolent status quo ante – empowering Taliban and corrupt war lords as before – when we are gone. Indeed, even today most of Afghanistan is clearly in enemy hands, and our “liberation” of local areas is almost always temporary (returning to “bad” when our thinly stretched troops move on to the next battle). In a battle of budgets, it would seem, however basic, to establish a hierarchy of budgetary essentials, and begin cutting those elements, particularly the big and the costly, that do not jibe with our longer term necessaries.

I’m Peter Dekom, and every budget conscious families know that spending is always based on priorities.