Fraud, Waste and Abuse

These three victims of the putative government expense cutters have been with us for centuries.  Getting rid of them means getting rid of the source:  The size of government and the amount of money it controls.  

Recently, in connection with his vastly unpopular health care campaign Barack Obama claimed that he would cut the cost of the Medicare system by eliminating "Fraud, Waste and Abuse." He seemed to be of the opinion that 1) he could eliminate this big three, and 2) that the amount in question would be substantial enough to make Medicare financially viable. It was, of course, utter nonsense. But nonsense seems to be the very fabric of the various congressional bills known collectively as "Obamacare." Americans for Tax reform performed a detailed analysis based on the 2010 State of the Union speech, showing exactly where the nonsense is located .

But aside from these recent developments, "fraud, waste and abuse" have long been the targets of government bigwigs claiming that they want to and will take action to rein in the budget. And while it is unlikely that Mr. Obama can be taken seriously on this issue; his track record of lies and broken promises in one year is too long, he is actually correct on one count. Fraud, waste and abuse are a big part of the budget.

In 1982, President Ronald Reagan requested an investigation into waste and inefficiency in the Federal government. The team commissioned to do this was officially named the Private Sector Survey on Cost Control, but was more commonly known as The Grace Commission for its head, businessman J. Peter Grace.

The commission report was presented to Congress in January of 1984. It stated that one third of all income tax revenue is consumed by waste and inefficiency, followed by a number of recommendations designed to cut the excessive spending and thereby, the government deficit and reduce the growth of government debt. Congress effectively ignored the recommendations.

The Grace Report and the continual harping on this issue points in one specific direction; that the fraud, waste and abuse are real and while the Commission was somewhat off on it estimates, when you are dealing with the government, that is to be expected, rather than not. What remains important is the fact that Congress ignored the recommendations then and continues what is effectively uncontrolled spending. There are good reasons why it did so, as well as why it has now accelerated the spending to record levels. Within the government bureaucracy and the legislature it is in their best interests to do so.

In the modern federal bureaucracy status is generally determined by the number of people you supervise and how much money your department spends. The more you spend and the more people working under you, the more important you are. And equally important, the more money your department spends, the more vital the services it provides. Thus, there is no incentive to cut spending, regardless of what the spending is for. In fact, fraudulent or wasteful spending is actually encouraged by the system because it increases the apparent level of importance of the department. This should have been expected.

At the same time, in Congress your status is often a matter of how much money you control through your committee memberships. Special interests working with the bureaucracy to assert that increased spending is vital to the public (which may not necessarily be true) plays into the hands of the legislators who want to spend more. Acting at the behest of the people soliciting money, which accrues to their own benefit, the result from congress is always increased spending.

Meanwhile, abusive spending by high profile figures in government such as Nancy Pelosi's personal jet and her $100,000 food and bar tab plus the more than 20 people on Michelle Obama's personal staff becomes business as usual. It is impossible to tell how much of this kind of spending goes on behind the scenes and is not easily located by investigative journalism or similar public advocates.

The situation appears somewhat similar to what occurred in the latter days of ancient Rome. People now see government positions as a road to wealth and power. Many of the opportunities for these benefits come from supporting government spending; playing along with the game as it exists and not rocking the boat. The national well-being can be ignored as long as you get what you want.

In Rome the government was also subject to such opportunism. People who wanted to accumulate wealth or opportunities for power found it was possible to obtain them by attaching themselves to the government and to influential people. As the importance of the Senate declined power was concentrated more in the military and with the Emperor, until the last few Emperors became isolated in Ravenna, and the military exercised what power remained.

However, the above does not address the bureaucracy, and Rome had become a bureaucratic state beginning in the time of Augustus. The bureaucracy had increased significantly in size over time and bribery had become a common method of obtaining bureaucratic favor. And as the government became less financially viable after the steady devaluation of currency in the Third Century, bribery may well have been necessary for the average bureaucrat to earn a living. At the same time, the sheer size of the bureaucracy made it less governable, and made corruption easier. It also increased inefficiency. However, a bureaucrat making a sufficient amount in corrupt payments was not a likely threat to the status quo; they would more probably support it. Can we be sure that the same phenomenon does not exist now, with the legislators at the top of the pyramid, receiving disguised payments?

A system based on corruption degenerates from one with a legitimate purpose into one dedicated to maintenance of personal power, position, cash flow, and as a result, the status quo. Change of any sort is anathema. Barack Obama might have trumpeted "change" but no one in government really wanted it, including Obama, as his conduct in office has shown. Real change was a threat to business as usual and to the money and power that are the perks of office.

In the politics of the late Roman world survival was the most important priority. Loyalty to a powerful patron was a one of the best ways to survive. Real ability was a secondary concern because it could get you into trouble. Attracting attention to yourself could be a mistake if someone thought that you might be a threat. If you could avoid making a mess of your responsibilities or blame someone else when you did, you would continue in your position. Government today has developed and/or is developing the same characteristics. The fancy degrees that many upper level government people sport become mere window dressing. Ability and innovation; the products of real intelligence are not wanted.

The sad fact is that because of the nature of government and bureaucracies it will be virtually impossible to eliminate fraud, waste and abuse without eliminating the sources of these problems. That means eliminating the massive bureaucracy, restricting the level of government spending, severing the relationships between those who spend and those who appropriate funds, and preventing entities who receive or benefit from government funds from lobbying on behalf of government expenditures.

The only reason for the levels of fraud, waste and abuse is, at bottom line, the fact that the size and scope of government make them possible. Reducing that size and scope will kill two birds with one stone.

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