Fiscal “Cliff” Solutions – Remember the Grace Report? “It’s the Fraud, Waste and Abuse, Stupid!”

If bandwagon broadcasters had focused on the actual cause of our national financial fiasco – Fraud, Waste and Abuse – rather than the beltway spin of a “Fiscal Cliff” sequestration need not have happened.  Even now pundits broach the subject with the timidity of a tourist tipping his toes in the Pacific Ocean.

Rhetoric requires challenging the initial assumption.  In this case it is whether our spending problems are in fact a “Fiscal Cliff”.  As an alarmist sound bite the image conjures up a precipitous (as in abrupt, sheer, or perpendicular), Thelma and Louise plunge into the Grand Canyon. In reality we’re not approaching a “cliff” at all.

The term “boiling lobster” crisis  just doesn’t have the buzzword pizzazz as “cliff”.  Everyone can picture themselves at the edge of a cliff and feel the terror of falling off.    Not so watching a live lobster in a gradually boiling pot of water. This is considered “merciful” – a “kinder, gentler” way to kill the crustacean [I have to be careful here because I don’t want to give ObamaCare “death boards” ideas].  Think of congress as the chef, wasteful spending as the water and taxpayers as the lobster. Congress has been slow boiling us taxpayers through special interest pork barreling for well over fifty years.  American “lobsters”continue asking for hotter water by re-electing the chefs.  The decision point for us lobsters was to refuse to be put in the pot in the first place.  Screaming now is an exercise in futility….and we’re screaming into a mirror.

We actually hit the bottom of the so-called cliff in 2000. Do these sound familiar:

• The Health and Human Services Department has routinely paid out Social Security benefits to some 8,000 dead people, whose need for them is, well, doubtful.
• Most of the subsidized mortgage loans made by the government went to people who could have bought homes without government help.
• The “off-budget” Federal Financing Bank hides government spending by offering Federal agencies a “back door” to the Treasury.  What is released to the public is the “on budget” deficit.  Actual Federal debt is more than double.
• The book Fat City describes 963 Federal programs that give money away for nonessential purposes at taxpayers’ expense.
• By making our national defense efficient, we can eliminate at least $100 billion in military waste over three years without costing a single weapons program, dismantling of defenses and without forgoing new weapons systems.
• 42.4 percent of those receiving poverty benefits had total incomes which were 150 percent above the poverty level.
• Under the Freedom of Information Act, the Food and Drug Administration processed 33,000 requests at a cost of $4.5 million.  The FDA collected only $231.000 for this service.  80 percent of these requests were from the marketing departments of pharmaceutical companies doing research on their competitor.

The British Army lost over 300 UneXploded Ordinance (UXO) technicians trying to figure out how to disarm Hitler’s time bombs during the London blitz of 1939. After the war they found the diagram for the bomb filed with the London Patent Office in 1932.  America is not ignorant of the solutions to our fiscal time bomb- we are ignoring them.   They were identified by President Reagan in 1984 (fulfilling prophesy by George Orwell).  President Reagan asked registered Democrat, J. Peter Grace to gather a panel of successful business men and volunteer to identify wasteful government spending.  The President’s Private Sector Survey on Cost Control took two years to recommend 2,478 ways to cut wasteful spending (of which the above list was taken).

“The Grace Commission Report^] was presented to Congress in January 1984. The report claimed that if its recommendations were followed, $424 billion could be saved in three years, rising to $1.9 trillion per year by the year 2000. It estimated that the national debt without these reforms, would rise to $13 trillion by the year 2000, while with the reforms they projected it would rise to only $2.5 trillion. Congress ignored the commission’s report. As a result, the debt reached $5.8 trillion (three times the estimate) in the year 2000. [three times greater in 16 years. From 2000 to 2013 -16 trillion- three times greater in 3 years less time]

The 1984 report said that one-third of all income taxes are consumed by waste and inefficiency in the federal government, and another one-third escapes collection owing to the underground economy. “With two thirds of everyone’s personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the federal debt and by federal government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services taxpayers expect from their government.”

Again, total savings would have been $424.4 billion over three years (vs. the $85 billion screamed about today!)  The results were published in Burning Money: The Waste of Your Tax Dollars.  Congress acted on only 646 of the recommendations. What is the status of the other 1,842 recommendations?  The Grace Commission’s report warned ominously that without eliminating wasteful government spending, the national debt by the year 2000 would jeopardize America’s freedoms and enslave our children with insurmountable debt.  This from a non-partisan, volunteer panel chaired by a Democrat.  Like a former Treasury Secretary told Romney during the 2012 campaign “It’s all an illusion now.  There has been nothing backing the dollar for ten years.”

Congress could still cut hundreds of billions from wasteful government spending without affecting jobs or benefits – certainly without furloughing anyone.  Instead Congress is eating the goose that lays the golden egg – arranging deck chairs on a sinking Titanic. Rather than abdicate constitutional budgetary authority to the  President, grant the Inspector General’s Office criminal prosecuting authority and fund it sufficiently to ferret out fraud, waste and abuse (making it more than an ignored telephone hot-line).  They could start with the Grace Commission Report and the book Fat City.

In 1984 one congressman replied to congress’ inability to cut wasteful spending thus: “We have confessed to an already doubting nation that we are ruled by political cowardice rather than economic courage.”  The more things change the more they remain the same.   www.LigonClanLaw.com