Downsizing Blog

That’s the title of a piece in Saturday’s New York Times. That welfare usage is up in a recession isn’t surprising, but if the stigma is truly fading it’s not a positive development. As a Cato essay on food subsidies states, “The [food stamp] program contributes to long-term dependence on government and produces various social pathologies as side effects.” Disturbingly, the USDA official who oversees the program is pleased:  

The state of California recently received $60 million in U.S. Department of Labor stimulus funds to upgrade its 23 year-old unemployment benefits system. But according to the Associated Press, California is yet to spend $66 million it received from Labor in 2002 to upgrade its system. The price tag isn’t whopping by federal standards, but it is another reminder of the need to return to fiscal federalism.

Official estimates put the amount of improper payments in federal subsidy programs at about $100 billion a year, with Medicare and Medicaid accounting for more than half. The actual loss to taxpayers is probably much higher.

A New York Times report on the Federal Housing Administration’s subsidies for higher-priced real estate reveals the insanity of federal housing policies. The 2008 stimulus package signed by President Bush temporarily doubled the maximum loan the FHA insured to $729,750 on single-family homes. Coverage on multi-family units can exceed $1 million.

The Taxpayers’ Alliance has published a new study examining a sample of 240 government capital projects in Britain, including weapons systems, highway projects, computer upgrades, health care spending, and other items. The results mirror the serious cost overrun problems we have in the U.S. federal government.

The Obama administration and its allies in Congress want the federal government to expand its role in subsidizing health care. We are told that this expansion will restrain rising health care costs. But an OMB report yesterday that the government made $98 billion in improper payments last year – $55 billion of which came from Medicare and Medicaid – ought to raise suspicions about that claim. 

The U.S. Postal Service reported that it lost $3.8 billion last fiscal year and that it expects to lose $7.8 billion this year. The loss occurred despite cost-cutting measures and legislation that allowed the USPS to forgo $4 billion in required payments to pre-fund retiree health benefits.