Too Big Not To Fail…..

 

We were at a dinner party the other night and I sat next to a lovely young woman who by her own admission was an avowed liberal. Fair enough. She said she was for more government and power to the people. I asked her if she felt that universal healthcare was appropriate? Of course. I then asked if we could afford the ultimate in treatment for 320 million Americans. For instance there is a new drug for cancer that would give someone with cancer an extra three months of life but at a cost of $250,000. Needless to say there was a pregnant pause in the conversation.

In these days of presidential aspirations we are being treated to all manner of hyperbole when it comes to what this candidate or that will do for you. Bernie is selling the everything for free Kool Aid and there is a large group that is drinking it up much to Hilary’s dismay. On the other side the Donald is going to build the wall that is bigger and better than anything in China and of course we are going to build a hundred more ships and yada yadda. How are we going to pay for it? Just leave it to Carl Icahn.
Leaving all the discourse aside I have reached the conclusion that we cannot afford one more iota of growth in government. No more programs, departments, sub secretaries or weapons systems. We have grown too unwieldy and beyond any genius of management. We spend $3.8 trillion per annum which is about 20% of our GDP. About $450 billion of that is money we don’t have, ergo the deficit. Including defense we have about 4 million employees in the federal government and nationwide there are 20 million in the employment of the public sector.

We have had a fiasco here in Denver which is the problem in a nutshell. As a center for veterans in the Rocky Mountain region, Denver is home to a rather large and antiquated medical facility. Some 20-25 years ago it was determined a new or renovated medical center was needed. Coincidentally the University of Colorado was building an entirely new campus in nearby Aurora. A proposal was made to share facilities with the Vets with equal advantages to both. The cost was to be around $325 million. Not so fast, TTG. The American Legion of all groups weighed in and said our boys needed a stand alone independent operation. Presto chango our congressional delegation fell in line and now we were headed to a singular development at much higher cost.

The story gets worse. The architectural firm got out of control and started designing block long atriums and zigzagging and curved walls. If you have ever built you know the cost of these versus squared off walls. Beyond belief the whole operation was started without a firm price. Finally they agreed to $604 million on the fly but only if the design was changed to more normal specifications. This agreement was handwritten on a legal pad which the builder and the VA signed. That’s for 1.2 million square feet and 12 buildings….on a yellow piece of paper.
Long story short the bill has now climbed to $1.73 billion and the number of beds lowered from 182 to 148. They still have the custom doors, windows and wooden floors. That does not include furnishings and equipment which add another $340 million. I can’t make this stuff up. And construction will not be completed until 2017. An aberration? No, the VA are having the same types of problems with hospitals in New Orleans and Florida.

Now you say let’s make someone pay for this lunacy. Can’t do that because the project managers and internal designers have taken early retirement. By the rules of Civil Service they are untouchable. I wish it was just the VA. The F35 jet fighter is overwrought with overruns and capabilities that are far less than first envisioned. The web site for Obamacare was originally pegged to cost $465 million but came in at $825 million. Go back to those 4 million workers doing who knows what with little management oversight. I guarantee there are people working in offices on programs that were shut down years ago and nobody knows why they are there.

There are three pieces to the puzzle. First and foremost is the agency. People have champagne tastes on beer budgets because it is not their nickel. They put everything into the design and then proceed to submit change orders well into the project. They have no profit and loss statement to worry about. They intentionally lowball the estimates. Usually the viability of a project is judged by its ability to make economic sense. They know that once we get into this or that the government vis a vis the politician will come through with the additional funding. But if the real facts were known if never would have gotten off the ground in the first place.

The second piece is our elected representatives who have gotten there because they have brought this to that governmental spending piece to their home district. He or she will do everything in their power to keep it there and crow to the electorate. And of course the supplier is there contributing to his campaign. Northrop Grumman, Raytheon et alia have strategically made sure that some portion of that ship or plane is manufactured in every congressional district in the country.

That is just bricks and mortar and hardware. We have not even begun to speak of medicine and wellness. Day care, food stamps, anti poverty programs, housing, transportation, airports…shall I continue on? The enormity and complexity of the problem boggles the mind. Forgive me if the latest and greatest idea doesn’t give me a warm fuzzy.

My solution is this. For the next two to four years we do nothing new. Congress and the executive branch twiddle their thumbs.They can do that. We put the departments on a budget. You want to do this? Then eliminate that. Forget about balancing the budget by 2020. Do it now at all cost. Now you and I can vote the bums out.We can all give up our sacred cows. But you and I know that won’t happen and that is why I say we are too big not to fail. It’s inevitable and incredibly sad.

As always,
Ted The Great

Factoids:

It is estimated that due to fraud and poor management the US Government pays out over $125 billion on funds annually that are unnecessary or illegal.Over the last five years, the GAO said it has made 440 recommendations across 180 areas where federal agencies can cut back on fragmented, overlapping and duplicative spending programs, but as of November 2014, only 29 percent of the actions were fully addressed, according to the report. Congress refuses to hold their feet to the fire and bureaucrats stonewall.

We have a debt of over $18 trillion. How much of that as noted above is the residue of waste and fraud ? We pay interest on that every year. That is the most galling of all to me.

Over the past three years, the Government Accountability Office found 162 areas where agencies are duplicating efforts, at a cost of tens of billions of dollars. Government agencies are spending billions on new mapping data — without checking whether some other government agency already has maps they could use.It took the GAO three years to identify the federal catfish inspection programs in triplicate, inefficiency of fragmented military uniform procurement, and overlap in almost 80% of drug treatment programs. I rest my case.

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