Waste, Fraud, and Abuse

I knew this was coming.  Here’s Minority Whip Eric Cantor (R-VA) on the Obama stimulus package:

If you look at the bill that passed the ways and means committee yesterday, for every dollar spent to help small businesses, four dollars is being spent to help upkeep the grass on the lawns of Washington. Again, what does that have to do with a stimulus bill?

Of course.  Any time a spending bill goes through Congress, the “government is the problem” crowd sends it’s staffers forth to find “fraud, waste, and abuse”.  This time they’ve found massive wasteful spending on “the lawns of Washington”.

It turns out that this particular claim is bogus.  The lawns of Washington actually need a lot of work, and of course the money isn’t being spent just on lawns.  But my point would be—what if it was a total waste? What if the $200 million Cantor is talking about actually was flushed down the toilet?

That would be bad, but in the scheme of things—we are talking about an item in a $700 billion spending bill—it’s nothing.  Further, let’s take a look at the options.  Every time anti-government types find wasteful government spending the implication is that private spending would never—-I repeat NEVER–engage in waste!  It’s simply a given that private enterprise is frugal and efficient.

So how exactly did it come to pass that the  financial sector—private businesses whose job it is to allocate and supervise the allocation of capital—recently allocated hundred of billions of dollars into a grossly  inflated housing market?

We’re not talking about an over-watered lawn here.  We are talking about a massive mis-allocation of resources that would have embarassed a Soviet central planner.  Yet the game-of-the-day continues to be poring over government spending projects in search of “waste”, no matter how immaterial.  Help me.

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2 Comments

Filed under economics

2 responses to “Waste, Fraud, and Abuse

  1. donnafairy

    Speaking of misallocation of resources in the private sector, we heard last night on PBS News Hour that the former CEO of Merrill Lynch spent $1.2 million remodeling his office last year. Among other things, he spent $14,000 on a wastebasket. Where did he buy it? A jewelry store? How do you even find a wastebasket at that price? I am guessing that he didn’t find it on Craig’s List!

    Then there was David Brooks’ commentary on the same PBS News Hour program. He says that funding for special education, Head Start teachers and training programs for nurses does not qualify as economic stimulus. I don’t understand his thinking. Teaching and nursing are jobs – professions where we don’t have adequate numbers of trained individuals to fill the slots. I thought that job creation, putting people to work, stimulates the economy. Brooks seems to think that it all comes back to the capital markets and banks. That’s where we need to focus the funding. Apparently, he missed the earlier segment on the $14,000 wastebasket!

  2. steve

    Good point. I kind of like Brooks, but he frequently just gets stuff wrong. I remember seeing him on the same show several years ago when the Iraq invasion was a year or two old. Brooks was predicting that Iraq would emerge from Saddam’s authoritarian rule just like Poland emerged from Communist rule in the late 1980’s. WTF? The countries are completely different, culturally and historically, and maybe most important—Poland was fighting for their independence behind a popular Polish movement: Solidarity. How Iraq is comparable to this is beyond me.

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