THE COST OF UNDERFUNDING GOVERNMENT
While whining about the cost of government has become an obsession for some, this summer provided several examples of what happens when Americans do underfund their society. This week The Today Show focused on how many are required to buy flood insurance simply because Congress has not given FEMA enough money to update its flood zone maps. For some, that means paying an extra $25,000 over the life of a mortgage for something they will never need for a reason as incontrovertible as they live atop a hill.
A more tragic story is how veterans have to wait months and years for the benefits they are legally entitled to receive simply because Congress will not give the Dept. of Veteran Affairs enough money to hire adequate staff to process the claims and appeals. The Washington Post’s recent story on that tragedy captures most of the details. When will this country learn that after calling on Americans to fight for their country we must not ignore their special needs? America is awash in unemployed lawyers who would be ideal candidates to work this backlog quickly, but Congress refuses to authorize the funds thanks to the fiscally obsessed. So, the veterans twist in the wind without financial help we promised them, the lawyers remain unemployed collecting unemployment insurance to do nothing, and the economy loses out on the money that would be quickly spent by veterans and their claims processors, thereby stimulating the economy further.
Another take on the effects of underfunding government has been playing out for months with the IRS. Congress has cut its funding drastically since the early 90s despite the fact that the number of new tasks it has been assigned have skyrocketed. Then, when the IRS staff working the tax exempt applications from nonprofits fell behind in their work after the Supreme Court triggered a flood of new applications, Congress pronounced it a scandalous conspiracy against certain political groups, forced career employees into early retirement, and threatened imprisonment of those responsible – even though the entire show was simply about generating support and campaign contributions from a certain constituent base.
Finally, there is the issue of Medicare fraud which one recent bipartisan report said costs Americans about $60 billion a year. Imagine what could be done if Congress funded an effective anti-fraud effort. Not only would Medicare last years longer without cutting benefits or increasing taxes, but more employees would be hired to do the work, who in turn would feed their salaries back into the economy generating a stimulus effect for everyone, a reduction of unemployment insurance costs, and new tax revenues.
Obviously, there are limits beyond which government should not be funded. But Time Magazine revealed this week that Denmark is the world’s happiest country–even though its effective tax rate on $100,000 is 42% while America’s is 26%. Hummmmmm.