FRAUD AND THE
FEDERAL BUDGET
by Doug Fiedor


Years back, I attended an address by a managing partner of a major accounting firm. His topic was the differences between accounting practices of businesses and the federal government. It was an hilarious speech. And I must admit that I took pleasure in watching two Members of Congress cringe as the speaker identified dozens of accounting "tricks" regularly used by the federal government that would get a business person swiftly prosecuted for fraud.

And so it is today. The administration and Congress tell us that the Social Security "fund" is running a surplus. In fact, all tax money collected for Social Security goes into the general fund. There is no Social Security fund - except for a pile of IOUs.

They tell us that the nation is $5.7-trillion in debt. Yet, no one in Washington mentions that none of the money belonging in the Social Security fund is listed as part of this national debt. Nor do they count the many hundreds of billions of dollars of debts owed by the various federal departments, or the money owed by any of the federal regulatory agencies.

So, reading the federal budget is more akin to reading a book of lies. Congress voted for it, but not one of them read it before voting. Clinton signed it, but he doesn't read any of it either. Actually, no one reads it. Each department's bureaucrats do their own respective budget, and budget for increases every year. The administration usually attempts to slip in new programs. And Congressional committees play with the numbers a little - and add pork.

Often, it is not clear exactly what all was signed into law for weeks, or maybe months, afterwards. And, as sometimes happens, devious political types sneak in stuff after the vote. In fact, many budgets were actually voted through Congress before they were even printed, let alone studied by anyone. Truly, that is negligence of office by all of the elected ones.

The fact is that our federal budget is such a mess simply because the people we elect to watch it do not. Rather, they play with it, each person in government paying only limited attention to one or two of the many sections. Therefore, every year it increases. And, every year, the bill to the taxpayer increases.

Federal taxes are now the highest they have been since 1945, and that was a war year. In 1997, federal taxes alone reached 20 percent of gross domestic product (GDP), and there is really no relief in sight. Closer to home, federal taxes claimed 19.9 percent of the earnings of a middle-class family in 1957, but by 1997 this had grown to 26.1 percent. State and local taxes went from 7.4 percent in 1955 to 12.9 percent in 1997. Add to this the hundreds of hidden taxes due to federal and state regulations and, like sharecroppers, American taxpayers are paying out over half of their earnings to that master called government each year. So, the Clinton administration proposes an increase of $100-billion (about $875 per taxpayer) in domestic spending. Clinton starts out with a new baby-sitter entitlement of $7.5-billion. But that's not all. There is another $12.72-billion in the new budget targeted towards the incidentals of the "child care" industry. That's over $20-billion in new entitlements. Oh, and there's another $900-million to enroll 3 million uninsured children in Medicaid - which, incidentally, is not nearly enough money and they know it.

This allows the federal government a foot in the door. Bureaucrats will then move forward to regulate - control - all child care in the nation. That's what co-president Hillary wants, and so shall it be, evidently.

The Clintons also want federal control of all schools. So, there is $7.3-billion included for more teachers and another $5-billion for school building bonds. In other words, the federal government will provide a small percentage of the necessary public school funds, then write 90% of the school regulations. Typical.

Another totally silly whopper in the new budget is a $6.3-billion package to spur development of ultra fuel-efficient automobiles. Why silly? Because the Big-Three in Detroit do not need the money. They are already rich. Anyway, as Heads Up readers know, all three corporations already have electric vehicles. And all three have fuel cells coming out of research shortly to power these electric vehicles efficiently. Therefore, all will have cars for sale that get 60 to 90 miles per gallon within a few years. The $6.3-billion, then, is play money -- probably targeted to "selected" research companies of dubious scientific expertise, and to schools so engineering students can reinvent what the auto companies have already done. On top of that, Clinton proposes a $3,000 to $4,000 tax credit for anyone purchasing one of these "fuel-efficient" automobiles. That, of course, means battery-powered electric cars right now.

Also interesting is a new entitlement for the middle aged. Clinton actually says, with a straight face, that a program of selling Medicare coverage to people aged 55-64 for $400 per month would pay for itself. Obviously, that is not true. Because, were it true, these folks would already have used that money to purchase medical coverage on the open market. However, commercial insurance companies know that the $400 monthly premium will not cover the costs.

And, here's a special for all you Heads Up readers with web pages: The administration proposes $8-million to construct a World Wide Web site to facilitate job searches. Now, how hard can this be? You receive notices of open jobs and paste them on a web page. Some sort of order will be necessary, of course. A good search engine would also be necessary for users. And you would have to pay ten to twenty people about $50,000 a year. That leaves a bunch of profit!

If the Department of Labor sets up the database, they'll probably hire 200 people and spend a million or two on computer equipment. Then, it will work somewhat like the IRS computers, which is not very well.

The Cato Institute reported that "Americans are justifiably skeptical about promises of a balanced budget. Surveys show 17 percent believe it will occur, about the same as the percentage who think space aliens are now living on earth." Yup. We're catching on.

Waste, fraud and abuse, that's what's in our federal budget. A waste of money by government doing things it has no authority to even think about. Fraud because there is no real accounting system used in the federal government. And abuse because we serf-citizen, share croppers are forced to pay for this waste and fraud year after year.

Time for some MAJOR changes.

Copyright © 1998 by Doug Fiedor

See The Grace Commisssion Report


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