Wasting a Trillion Dollars a Year

Last revised 8-14-03.

Introduction

With suitable legislation, the federal government could save the economy a trillion dollars a year. This is an average of about $10000 per household.

The savings add up to more than a trillion. However, some of the waste goes into buying products and paying salaries. These expenditures generate tax revenues. The net waste is about a trillion dollars a year.

The Social Costs section is at the end.

Regulations

Many regulations are not cost effective. These need to be identified, and workable alternatives legislated.

The cost of regulations show up in higher costs for goods and services, and sometimes in higher local taxes to pay for the cost of compliance.

For example, regulations which unnecessarily drive up the cost of housing show up as higher housing costs.

Government Waste, Fraud and Abuse

Author Martin Gross estimates that there is $375 billion in government waste, fraud and abuse.

Taxes are collected to pay for the waste.

Complying With the Tax Code

It costs about $200 billion a year to comply with the tax code. This is mostly a waste. Another $8 billion is spent by the IRS in administering the tax code.

A greatly simplified tax code and more use of computers for record keeping would save about $200 billion a year.

The savings would show up in higher salaries and increased profits.

Reducing Crime

A young man earning enough money to support a wife and two children is highly unlikely to become a criminal. In contrast, a young man without steady employment and/or not enough income to support a wife and two children is at much greater risk to become a criminal. As a society, it is in our best interests for young men to become family men, and we should avoid placing obstacles in their path. Many say we need more high paying jobs to bring it about. Instead, we need a lower cost of living. Fifty years ago the lower cost of living relative to low wage jobs resulted in a relatively low crime rate and relatively stable families.

The cost of crime shows up in higher prices for goods and services, and also taxes to pay for law enforcement, prisons and courts.

Social Costs

The social costs of the waste are enormous. Most low income families need two incomes to pay the bills. Crime is much more prevalent than fifty years ago. Just about every social ill is made worse by the wasting of money.

The rising cost of living has brought out some of the worst of human nature, but if the cost of living is reduced substantially, much of the worst of human nature will go away.

Stopping the waste would lower the cost of living.

A declining cost of living would make the Social Security system more sound, reduce the cost of welfare and significantly reduce the unfunded liability of Federal pensions.

A woman that is wife, homemaker, mother and wage earner has four jobs. It's too much for most women, they get frustrated, then in time they get uppity, and things go downhill from there, including family breakup with all of it's problems.

As the cost of living declined, many wives and mothers could afford to quit their jobs, and would. The resulting shrinkage in the supply of workers would increase the demand for workers, resulting in higher salaries. Eventually, most men could be the sole supporters of their families, just like it was in the 1950's.

An important side effect here is that the wives can be more involved in the community, paying attention to their children and others' children. Fewer children would fall through the cracks. I surmise that much of the psychological and behavioral problems of children would be reduced by having a stay at home mother.

With the Internet and global economy, many jobs can easily go overseas. If we had a lower cost of living in America, Americans could work for less, keep more jobs in America and they'd still have a good quality of life. This path would be less painful than continuing down the current path.

In conclusion, stopping the waste would lower the cost of living, and we need to do it before the social fabric of America tears.

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