Most Outrageous Government Waste; T. Schatz

Last year, the National Endowment for the Humanities spent $4.2 million to con duct a nebulous "National Conversation on Pluralism and Identity. " Obviously, talk radio wasn't considered good enough. The Pentagon and Central Intelligence Agency channeled some $11 million to psy chics who might provide special insights about various foreign threats. This was the disappointing "Stargate" program. Mr. Schatz is president of Citizens Against Government Waste. The Department of Education spent $34 million supposedly helping Americans be come better shoppers and homemakers. Wasn't it about time? The federal government proposed spend ing $14 million for a new Army Museum, although there already were 47 Army Mu seums around the country . We helped stop that idea. Dubious government spending schemes abound since bureaucrats play with other people's money. For example, the National Institutes of Mental Health (NIMH) spent $70,029to see if the degu, a diurnal South American rodent, can help us better under stand jet lag ... they spent $77,826to study "Coping with Change in Czechoslovakia"

... $100,271 to see if volunteering is good for older people ... $124,910 to reduce "School Phobia" in children ... $161,913 to study' 'Israeli reactions to SCUD Attacks during the Gulf War" ... and $187,042to study the quality of life in Hawaii. Over the years, political wrangling twists the most noble-sounding government pro grams beyond recognition. For example, the Social Security Administration's $25 billion a year Supplemental Security Income (SSI) program. Almost 250,000 children qualify for SSI checks because they can't partici pate in "age appropriate activities." Worse, thousands of prisoners get SSI checks re lating to their alleged disabilities-costing taxpayers about $20 million a year. 444 The Foundation for Economic Education Irvington~on-Hudson, New York 10533 Tel. (914) 591-7230 Fax (914) 591-8910 E-mail: freeman@westnet.com June 1996 Inscrutable Freedom I n every age and in every country, there are two kinds of people - the lovers of freedom and the devotees of power.

The former like to pursue their own good in their own way without infringing on the equal freedom of others. The devotees of power love to exercise control over others, and especially to command over the body politic. Both kinds wax eloquent about freedom which, to them, has very different meanings and connotations. The lovers of individual freedom care fully delineate the scope of personal auton omy and absence of institutional restraint. They are concerned about their religious, political, and economic freedoms. Their most fundamental freedom of all is the personal freedom to move about, to come and go as they please without restraint. Most Americans are accustomed to this basic freedom; to them, it is a great writ of liberty, anchored in the Constitution: "The Privilege of Habeas Corpus shall not be suspended, unless when in cases of rebel lion or invasion the public safety may require it" (Article I, Section 9).

Religiousfreedom,that is, the freedom to believe in a divine power as the creator and ruler of the universe and the right to worship with people of one's own choos ing, was nonexistent during the Middle Ages. Before the great powers of Europe were willing to grant it, they waged numerous bloody wars - eight in France alone (1562-1598) and the bloodiest of all European wars, the Thirty Years War (1618-1648). Exhausted, ravished, and depopulated, the countries gradually learned to tolerate their religious differ ences. In the United States, the First Amendment to the Constitution expressly affirms the freedom of religion: "Congress shall make no law respecting an establish ment of religion, or prohibit the free exer cise thereof." Yet, in recent years, in the name of separation of church and state, American courts have sought to purge reli gion from all aspects of public life. And public education seeks to replace religion with" statism" which elevates government to the center of human concerns and makes it the source of economic care and bounty.

Politicalfreedom,that is, the right to vote and hold public office for all members of society was virtually unknown before the nineteenth century. The Fifteenth Amendment to the Constitution guaran teed "political freedom to all citizens regardless of race, color, or previous con dition of servitude." The Nineteenth Amendment extended the right to ~ote to all citizens regardless of gender. Despite these Constitutional assurances many Americans were denied basic political rights until the Civil Rights legislation of the 1960s and 70s.

Economicfreedom,which is the individ ual right to pursue one's own economic goals and objectives as long as no harm comes to others, is severely limited in most parts of the world. It is always ringed about by envy and covetousness which invite breaches of the peace and denial of economic freedom by people in power. Economic freedom is an easy prey to polit ical force. It is the first thing that is lost when tyranny advances. When the devotees of power speak of freedom they usually mean the freedom of the body politic, especially of its leaders holding the reins of government. Their concept of freedom is holistic and collec tivistic. Hitler used to discourse about the freedom of the German people, Stalin about the freedom of the Soviet society, and Castro about the freedom of Cuba from imperialistic U.S.A. All forms of tyranny build on some collectivistic notion of freedom. The concept of freedom most popular in the United States connotes the freedomfrom wantand poverty,from poor housing, ill health, and poor education. It is an income concept based on entitlement and redistri bution of income and wealth by govern ment force. President Franklin D.

Roosevelt elevated the "freedom from want" to a basic right of all Americans. Every president thereafter added a partic ular want to his freedom program. President Truman fought for higher mini mum wages, increased Social Security ben efits, and more aid for housing. President Eisenhower confirmed the entitlement pro grams begun by his Democratic predeces sors. President Kennedy launched the New Frontier of federal aid to education, medical care for the aged under Social Security, and aid to depressed areas. President Johnson declared "war on poverty." President Nixon imposed wage and price controls in order to alleviate poverty; Presidents Ford and Carter con tinued the Nixon controls. President Reagan consented to "catastrophic care" to Medicare and President Bush added a "kinder face" to the entitlement system. President Clinton is now laboring to extend and reorganize the healthcare sys tem.

All these 1/freedoms" rest on the power of democratic majorities to exact income and wealth from the productive members of society. After all, government is no deus ex machina,no manna ex politia.Whether it is freedom from poor housing, inferior education, or pitiful healthcare, every political demand for improvement is a call for seizure of property from hapless tax payers. Every entitlement is a legal right to lay hands on someone else's income, every new call for more benefits a call for more appropriations. In a speech to the Virginia Convention, James Madison, the fourth president of the United States, wisely observed: "I believe there are more instances of the abridgment of the freedom of the people by gradual and silent encroachments of those in power than by violent and sudden usurpa tion." Having observed the gradual and silent encroachments in recent years, we may understand how they manage to pro ceed so successfully. No matter what we may think of public opinion, it carries all before it. The men in power who may have no opinion of their own appeal to it, pro claim it, and run with it. If public opinion longs for entitlements, they flatter the peo ple and demand as a means for the pro curement of the benefits a gradual surren der of their freedoms. Many people gladly submit; few withstand the temptations. If they resist, they are crushed.

The evils of tyranny are seen and felt only by those who resist it. Hans F. Sennholz • "...ought to be on the bookshelf ofevery thinking man. " -Wall Street Journal "Its majestic sweep embraces almost the whole field of economics and touches at some point or other, on almost every social issue ofour time." -L. M. LACHMANN, Economica by Ludwig von Mises Fourth revised edition, with a new introduction by Bettina Bien Greaves In this seminal work, one of the most brilliant thinkers of our time examines the basic principles that underlie the entire scope of human action. Revolutionary when it first appeared, controversial to this day, Human Action represents the culmination of Ludwig von Mises' lifelong quest to present economic theory as a true science. Considered by many to be the counterweight of Marx's Das f(apital, Human Action is the magnum opus of a genius. Ludwig von Mises (1881-1973) was the most celebrated advocate of capitalism and critic of socialism of his time. He was the acknowledged dean of the "Austrian" school of economics and the teacher of F. A. Hayek and many other influential economists and social scientists. Mises is now universally acknowledged as one of the fountainheads of the worldwide movement toward individual liberty.

• • Published by The Foundation for Economic Education, Inc. Irvington-on-Hudson,NY 10533 ISBN 1-57246-021-0 Hardcover $49.95 Available in bookstores nationally, or call (800) 452-3518 • Fax: (914) 591-8910 • June Book Sale FEE Classics Regular Sale AmericanUnionism:Fallaciesand Follies $14.95 $ 9.95 The intellectual origins and economic implications of the union ideology. Bankersand Regulators 14.95 9.95 The political creation and manipulation of the American banking cartel. Man and Nature 14.95 9.95 The frantic efforts of the environmentalist movement to undermine the use of natural resources for human consumption and enjoyment. Armington, R. Q., & Ellis, W. D. Boomerang 7.95 4.95 A novel of national and international intrigue which may affect our future. More-The RediscoveryofAmericanCommonsense 6.95 3.95 The authors challenge Americans to more freedom from political power at all levels.

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That's not all. In Denver, the government reportedly sent $160,000 to recipients at their "official address" -a tavern. A San Francisco addict used his SSI check to buy drugs, which he subsequently sold on the street for a profit. A Van Nuys, California, alcoholic received a $26,000 SSI check, then spent the money on a van and two cars which he subsequently wrecked while driv ing drunk. Los Angeles SSI recipients re portedly faked mental illness and had a doc tor concoct false medical records, so they could pocket $45,000 worth of checks. An estimated 79,000 alcoholics and drug addicts are believed to spend SSI checks-some $360 million annually-on their habits. Again and again, programs aimed at the poor are captured by well-heeled interest groups. For example, the Commerce De partment's U.S. Travel and Tourism Ad ministration (USTTA) gave away $440,000 in so-called "disaster relief" to Western ski resort operators when there wasn't much snow.

The Economic Development Administra tion spent "anti-poverty" funds to help build a $1.2 millionfootball stadium in spiffy Spartanburg, South Carolina. During the summer, it will serve as a practice facility for the National Football League Carolina Panthers, and the rest of the year it will be used by Wofford College, which has a $50 million endowment. Look at one of the most enduring legacies of Lyndon Johnson's "War on Poverty": the Appalachian Regional Commission. It was billed as help for an impoverished region. During the past three decades, this bureaucracy you've probably never heard of has spent $6.2 billion, yet the region remains impoverished. Where did the money go? Two-thirds was spent building 26 highways connecting well to-do urban centers. The money went to construction workers whose wages are def initely above-average. Despite revolution ary talk in Washington, the Appalachian Regional Commission goes on and on.

Or take the plight of the family farmer. I know you've been regaled about wasteful spending on agricultural subsidies, so I'll 445 just cite a single intriguing example: 1.6 millionfarm subsidy checks for $1.3 billion, mailed to urban zip codes during the past decade. New York City "farmers" pock eted $7 million during the past decade, Washington, D.C., "farmers" $10 million, Los Angeles "farmers" $10.7 million, Min neapolis "farmers" $48 million, Miami "farmers" $54.5 million, and Phoenix "farmers" $71.5 million. Among those on the take, to the tune of $1.3 million: 47 "farmers" in Beverly Hills, California one of America's wealthiest cities. A lot of government spending is justified as necessary for national security. For in stance, maritime subsidies supposedly help maintain a fleet for an emergency. Laws require government agencies to use U.S. flag vessels which are U.S.-built, U.S. owned, and U.S.-crewed, costing two to four times the world market price of com parable vessels available elsewhere. When the U.S. Department of Agriculture and Agency for International Development give away surplus grain, they must use U.S.-flag vessels for at least 75 percent of shipments, adding $233 million to the taxpayer burden.

The U.S.-flagrequirement adds $1.75 billion to the defense budget. Subsidy per maritime job: over $100,000. The defense budget is larded with waste not because it's run by bad guys but because it's big, and bureaucrats are, as always, spending other people's money. The Pen tagon has an "operational support airlift" consisting of some 500 airplanes and 100 helicopters for flying military brass and civilian bureaucrats on 1,800 trips a month-costing taxpayers $380 million a year. Many of the destinations are served by commercial airlines. Last year, the Pentagon announced it would spend $5.1 million to build a new 18 hole golf course at Andrews Air Force Base in suburban Maryland, which already has two. Golf Digest reported there are 19 mili tary golf courses around Washington, D.C. Why a new golf course? One Pentagon of ficialwas quoted as saying "a'lot of golfgets played out there. On Saturday mornings, people are standing on top of each other."

446 THE FREEMAN • JUNE 1996 Can It Continue? How can such outrageous waste go on year after year? Simple: bureaucrats aren't doling out their money, so they have little incentive to be responsible. Politically con nected special interests, who are usually better offthan the average taxpayer, seem to get most of the loot. The most powerful special interest is government itself. In fiscal year 1993, the federal government owned 569,556 vehi cles-one for every six full-time employees. Included were 117 limousines. The govern ment's fleet expanded more than 130,000 vehicles since the Grace Commission called for it to be cut in halfmore than a decade ago. Government officialsmultiply the number of regulations regardless of the waste they cause. For example, the Defense Depart ment has 1,357 pages of regulations about how officials travel. Complying with these regulations adds about 30 percent to travel costs. If the Pentagon adopted the best practices of private companies, it could save an estimated $650 million to $840 million every year. Of course, government regula tions cause enormous waste in the private sector-tax compliance costs alone run into the billions-but that's a vast subject unto itself.

The federal government wastes money through grants to the most politically pow erful environmental lobbyists. For example, between 1990 and 1994, the Natural Re sources Defense Council got $246,622;De fenders of Wildlife, $1,285,658; Environ mental Defense Fund, $1,493,976; and the World Wildlife Fund, $26,584,335. All to gether, environmental lobbyists collected $156,644,352during this period. Everyone pushes the federal government to enact more regulations. Whenever you hear a politician propose that government take over some private business, like New York's troubled Long Island Lighting Company, there should be red flags all over the place, because govern ment operation means high costs. At the U.s. Government Printing Office, for in stance, costs are estimated to be 50 percent higher than in the private printing industry. If the U.S. air traffic control system were transferred to private companies and the services paid by user fees, taxpayer savings would probably be around $18 billion over the next five years.

With a $1.5trillion annual budget, the feds take so much of your money that they can't possibly keep track of it even if they wanted to. For example, a contractor sold $27 electronic relays to the government's Stra tegic Petroleum Reserve for between $484 and $521 apiece. The Department of Energy paid some of its employees $5,000 a year to lose weight-the outlays totaled $10 mil lion a year. The owner of a California apartment buildinggot Department of Hous ing and Urban Development subsidies, then illicitly diverted $610,000 into his own ac counts. One' 'farmer" collected $1.6million in government insurance payments for non existent crops. Forty-three people in New York City pocketed over $40 million in phony food stamp claims. Five Floridians stole $20 millionfrom Medicare-part of the estimated $17 billion of annual Medicare fraud. What to do about such waste? The gov ernment is crawling with auditors, and there have been a zillion investigations, yet waste goes on. Citizens Against Government Waste will continue to be a watchdog. The only long-term solution, though, is to some how cut big government down to size. Only when it's much smaller will you be able to keep more of your hard-earned money, which, after all, is yours. D THEFREEMAN IDEASON UBERTY Today's Fight for Property Rights by Nancie G. Marzulla B ob and Mary McMackin bought prop erty in Pennsylvania's Pocono moun tains and obtained all the necessary permits to build a retirement home. But four years after they moved in, the U.S. Army Corps of Engineers decreed that their property was a "wetland"-even though it was dry.