Thursday, April 17, 2008

Risk Of Poor Fiscal Leadership And Its Cost To The U.S. Taxpayers

If an adventurous artist drew a picture of President George W. Bush’s fiscal leadership to date, I think the artist would draw a dark picture similar to “The Scream” by Edvard Munch, rendered in the Cubism style. In lay terms, it would look hideous, confused, and nearly deranged with juxtaposed pieces that are difficult to make out clearly.

So what are the risks of the Bush’s Poor Fiscal Leadership? Here are some of the most egregious:

Misallocation of The Federal Budget
1. ($636 to $655 Billion to date) Iraq War: The clearest misallocation of resources was starting the Iraq War. Congressional Research Service (page CRS-5) pegs the cost of the wars in Iraq and Afghanistan through FY 2008 at around $636 billion (Department of Defense calculations) to $655 (Congress calculation). Congressman Ron Paul was very clear on this issue when he grilled General Petraeus

2. ($4 to $7 Billion / year) Grain for ethanol production: As I have previously noted in “Risk Of President Bush's Ethanol Fuel Program To Common Sense,” there is no economical way for the U.S. to be weaned off oil imports by diverting grain toward ethanol production. So, by going to ethanol production, we are spending approximately $7 billion a year on ethanol subsidy (OECD report section 1.4 notes this to be $4 billion).

3. ($41.5 to $79 billion projected) U.S. – Mexico Border Fence: As I have previously noted in “Risks And Rewards(?) Of The U.S. – Mexico Border Fence,” it will take $11.5 billion to $49 billion over 25-years period. Plus we are gave Boeing a $30 billion Secure Border Initiative Project contract, which is to provide electronic surveillance of the border. Only problem with the contract to Boeing is that it is trying to do the job that rightly belongs to the border protection agents.

4. ($6 billion / year) Transportation Security Agency: Department of Homeland Security’s FY2008 budget has earmarked $6.3 billion (actual 2007 spending was $6 billion) for a department that hasn’t done much except to frustrate the flying public.

5. ($3.2 billion / year) Department Of Homeland Security (DHS): In a corporate world, a merger of companies results in cost savings. In government’s world, it creates added layer of bureaucracy. Take DHS. In their FY2008 budget, there are four line items totaling $3.2 billion: the National Protection and Programs Directorate, which duplicates what the FBI and CIA are supposed to be doing, the Science and Technology Directorate, which duplicates what the Department of Technology is doing, Domestic Nuclear Detection Office, which duplicates the DOE’s Office of Nuclear Energy, the FBI, CIA, NSA, and other surveillance organizations out there protecting the U.S. from nuclear threats, and the overarching Departmental Management and Operations, which is the bloated layer of bureaucracy. Oh, according to the FY 2006 report card, page 2, the Departmental Management and Operations failed to meet 69% of its planned objectives. This is what we get for our $913 million that they spent in FY2007. Or, in Bush-speak: the DHS is “doing a fine job.” For those who are curious about how the DHS did in its FY 2006 report card, here is the full 88-page report.

Annualized, the misallocated portion of the federal budget comes to $142 billion to $150 billion a year.

How Is The Misallocation Of The Federal Budget A Risk?
The misallocation of federal budget is a risk to the nation since:

  • the funds have been diverted from truly vital and strategic uses of these funds that could make this a stronger nation.

  • it has help to turn the world's opinion against the U.S., cost the lives of 4,026 of our brave soldiers, and disrupted the lives of our soldiers and their families

  • granting credits and subsidies to ethanol production, we made basic staples more expensive to consumers, worldwide

  • it drove up our national debt and reduced the value of the dollar against other major currencies

  • the devalued dollar just made everything the U.S. consumers use much more expensive, especially gasoline
What Are The Corrective Actions?
While everybody has ready answers for correcting the ills of federal funds misappropriation, I happened to endorse what our founding fathers have said, since they are appropriate now as they were then:
  • "The happiness and prosperity of our citizens... is the only legitimate object of government and the first duty of governors." - Thomas Jefferson to Thaddeus Kosciusko, 1811. ME 13:41

  • "A... chief [executive] strictly limited, the right of war vested in the legislative body, a rigid economy of the public contributions and absolute interdiction of all useless expenses will go far towards keeping the government honest and unoppressive." - Thomas Jefferson to Lafayette, 1823. (*) ME 15:491

  • "[Let us] go on in doing with [the] pen what in other times was done with the sword, [and] show that reformation is more practicable by operating on the mind than on the body of man." - Thomas Jefferson to Thomas Paine, 1792. FE 6:88

  • ”They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.” - Benjamin Franklin

  • ”Great is the guilt of an unnecessary war.” - John Adams

  • ”Government is not reason, it is not eloquence — it is force! Like fire, it is a dangerous servant and a fearful master. Never for a moment should it be left to irresponsible action.” - George Washington
Have A Great Day!

Ed Kim

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