Congress Promotes Abuse and Corruption

November 13, 2013

One story after another emerges about dysfunctional federal programs plagued by waste, fraud, and abuse. The core problem is that the government has grown so large that trying to make it function with efficiency and soundness has become impossible.

But Congress compounds the problem by creating programs that are ideal targets for crooks and scammers, and they resist repealing them even after years of scandal. The Earned Income Tax Credit, for example, has long suffered from an “improper payment” rate of more than 20 percent, which translates into throwing $10 billion of our hard-earned money down the drain every year. Whatever the policy arguments in favor of the program, that level of waste is hugely unfair to taxpayers and the program ought to repealed on this basis alone.

The Washington Post discusses another long-abused activity today—contract set-asides for small businesses. The article profiles how a Virginia businessman hit the jackpot with $1 billion of federal contracts by posing as a “disadvantaged” and “small” business under the Small Business Administration’s 8(a) program. The Post found that this Mercedes-driving owner of a luxury home is certainly not “disadvantaged,” and his business empire is not “small.”   

The whole thing is disgusting, and I suspect a congressional committee will hold an oversight hearing to pretend to be concerned about the case. But the SBA 8(a) program gets abused over and over, as do other federal preference activities, such as Alaska Native Corporations. All such preferences ought to be abolished, and the government should live up to the goal of “Equal Justice Under Law” engraved on the Supreme Court building.

Indeed the entire SBA ought to be abolished. The agency’s programs distort the economy and promote crony capitalism. Americans are sick of dysfunction in Washington, but if they want the government to operate with any degree of integrity and competence they should demand much less of it.

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