10 Ways for the Federal Government to Save Money…Almost Immediately
The massive federal budget deficits of the last several years have resulted in an unprecedented increase
in our national debt. Since President Obama came to office, the national debt has soared from $10
trillion to nearly $16 trillion, a 50% increase. This uncontrolled federal spending and the accompanying
increase in the level of national debt cannot continue. Otherwise we will find ourselves in the same
situation as Greece, Spain, Portugal, Italy and other countries whose massive social programmes
have led them to financial collapse. If we do not control the amount of federal spending, stop deficit
spending, and stop increasing the national debt, several things will ultimately happen. This isn’t
speculation, it is simply economic fact what will eventually happen:
1. Higher interest rates—as borrowing and debt increases, particularly since the US Treasury debt
has been downgraded for the first time in history, interest rates will eventually rise. Not only
will it cost more the Treasury to borrow money, individuals and businesses seeking bank loans,
mortgages, etc. will have higher borrowing costs.
2. Higher taxes—increased spending will result in higher taxes to fund the spending in addition to
the incursion of more debt
3. Lower economic growth—as rates rise and taxes rise, economic activity declines
4. Weaker dollar—Lower growth+Higher Taxes+Higher Interest Rates=Depreciation in the Dollar
5. Inflation—Continued accommodative monetary policy aimed at keeping rates low and
stimulating economic activity has massively increased the money supply. More dollars chasing
If the President and the Congress are serious about reducing the deficit, it’s pretty simple—return the
budget to 2000 levels immediately. There’s absolutely no reason that the budget can’t be balanced
before 2020. Any politician who doesn’t support a return to 2000 spending levels isn’t serious about
cutting spending, eliminating the deficit, or reducing the national debt and should be voted out of
office. Would it be easy to revert to spending levels from 2000? No. Would it be painful for a lot of
government agencies and programmes? Yes. Can it be done? Yes. Would it be effective at eliminating
the deficit? Yes. If there a political will to do this in Washington, D.C.? No.
Remember, every dollar that the federal government spends, that is appropriated by members of the
Congress and approved by the President, is a dollar from the pocket of a working American or a business
that employs workers and creates jobs or is a dollar that is stolen from future generations of American
workers and taxpayers. Money doesn’t grow on trees. It comes from someone’s pocket. Borrowing the
money to fund spending is only robbing from Peter to pay Paul. Someone down the road will ultimately
have to foot the bill for spending today over which they may or may not have had any control or any
In addition to reverting to 2000 spending levels, I’ve come up with a few additional ways that the federal
government could start saving money.
The first five ways were published last week and can be read by clicking here.
Here are five fresh ways... ways 6-10!
#6 Federal workforce cuts
Federal workers are paid well and receive benefits that would be
the envy of most state workers and private sector employees. There are about 1.86 million
federal workers. The average pay is about $76,000. About 420,000 federal workers make
less than $50,000 and about 420,000 make more than $100,000. Just over 1,000,000 workers
make between $50,000 and $100,000. A lot of Americans would love to fall into one of these
categories. And, this doesn’t include generous benefits offered to federal workers such as the
Federal Employees Retirement System, Thrift Savings Plan, Federal Employees Health Benefits
Program (the Cadillac plan), Federal Employees Group Life Insurance, 13 days sick leave, 10
days paid holiday, up to 26 days of vacation based on years of service, Family Friendly Leave
Flexibilities, Recruitment Bonuses, Relocation Bonus, Retention Allowance, Student Loan
Repayment, Long Term Care Insurance Programs, and Child Care Subsidy Programs.
It is an insult to the American taxpayers that hard earned tax dollars are going to pay for federal
workers’ child care, particularly when the majority of the taxpayers have to foot the bill for their
own child care. And why should the American taxpayers repay student loans for government
workers? Look, these federal employees are, on average, making more than private sector
counterparts. Why should all of these benefits be paid for by the taxpayer in addition to these
very generous salaries? Let them pay for their own damn childcare and student loans just like
everyone else. It seems like the bureaucrats, and that’s what federal workers really are, get to
ride the gravy train at the taxpayers’ expense. Salaries for federal workers alone (excluding the
cost of benefits) costs each worker about $684 annually.
Federal workers can’t go crying poor mouth. The average state employee in the US makes
about $58,000. The average salary of federal workers at $76,000 is over 30% higher than state
workers, who make about $2,500 more annually than comparable private sector workers.
I’ve long advocated eliminating completely some federal departments like the Department of
Education, the Department of Labor, the Department of Energy, the Department of Agriculture,
just to name a few. These departments employee tens of thousands of federal workers, and
no one seems to know what they really do. The folks at the Department of Energy haven’t
solved our energy problems and dependence on foreign oil. The Department of Education isn’t
teaching our students, and so on. They don’t seem to be accomplishing much, so maybe we
should start with some personnel cuts in these departments?
But eliminating who departments probably isn’t going to happen overnight, so how about this
proposal? Let’s cut the entire federal workforce across the board by 3% OR cut all federal
employee pay by 6% OR reduce federal pay to state worker averages. What would this mean
in dollar terms? Eliminating 3% of the total federal bureaucracy would eliminate about 56,000
jobs at an average salary of $76,000, saving taxpayers about $4 billion annually. Cutting
all federal employee salaries by 6% (this doesn’t touch the issue of “benefits”) would save
taxpayers about $8.5 billion annually. Now, let’s say we cut federal salaries to the average state
worker salary of $58,000. That would say taxpayers a whopping $34 billion annually.
I don’t have a problem with people being paid well, but the pay for bureaucrats is, quite frankly,
ridiculous by any reasonable standards.
#7 Audit each department for fraudulent spending
Here’s a novel idea…let’s have the IRS
not only audit for Social Security, Medicare, and Welfare fraud but also audit each and every
department of the federal government. Remember the scandal at the GSA where the taxpayers
footed millions of dollars in wasteful spending, like the trip to Las Vegas? If the IRS had been
auditing the federal government, maybe the GSA wouldn’t have gotten away with this.
The GAO has, in fact, done some auditing of their own and determined that nearly half of all
purchases on government credit cards are improper, abusive, or fraudulent for things like
gambling, mortgage payments, liquor, iPods, Xboxes, jewelry, televisions, entertainment,
prostitutes, and vacations. Apparently, bureaucrats like to wine and dine on the taxpayer
dollar—one such dinner cost taxpayers $13,000 at a Ruth’s Chris in Orlando. And how about
the $146 million annually on flight upgrades to first class because some bureaucrats refuse to
fly coach? Where’s the accountability? Purchases on federal credit cards total over $18 billion
annually. If roughly half of these purchases are classified at improper, abusive, or fraudulent,
this costs taxpayers $9 billion annually or about $43 per worker annually. It sort of like each
worker in America buying a federal employee a dinner at Ruth’s Chris each year. How do you
feel about this?
#8 Eliminate ineffective or redundant programmes
Numerous studies have concluded that there
is a tremendous amount of overlap or redundancy in federal programmes and a high degree of
inefficiency in federal programmes.
First, the GAO did a study a few years back that indicated duplication in over 300 economic
programmes, over 100 programmes for at-risk youth, 100 programmes for the disabled, and so
on. These are all duplicate programmes being handled by difference departments or agencies
within the federal government. It makes no sense for multiple departments to be handling
similar programmes. Consolidate them and reduce the overlap and redundancy.
Second, the administration of President George W. Bush reviewed over 1,000 different federal
programmes and found that about 20% are either classified as ineffective or results not
demonstrated such as the IRS Earned Income Tax Credit Compliance, Workforce Investment Act,
Trade Adjustment Assistance, Juvenile Accountability Block Grants, AmeriCorps National Civilian
Community Corps, just to name a few. Does anyone actually know what these programmes are
or what they do or what they hope to accomplish?
It sounds like these programmes are just a waste of taxpayer money. If they’re ineffective or
if the results aren’t sufficient to be noticeably measurable, they’re probably not doing what
they were intended to do. Pull the plug on them and quit wasting money! In fact, duplicate
programmes or ineffective programmes cost taxpayers over $120 billion annually. That’s about
$580 per worker each year. It certainly seems like these programmes are only intended to give
some bureaucrats a job or the opportunity to misappropriate taxpayer funds.
#9 Close overseas military bases
Did you know that the US military has more than 700 bases
overseas (not including those in Afghanistan)? These bases cost money to operate. They
aren’t free. There are utilities, maintenance and repairs, rent, etc. In addition, these bases are
concentrated in places where we don’t need to be. There are about 200 bases in Germany,
over 100 in Japan, and over 80 in South Korea. We don’t need to be in Europe. Germany isn’t
going to rise up again and try to take over France. There are some estimates that these bases
overseas cost US taxpayers over $100 billion annually to operate and maintain. Really? Do
we really need to be spending taxpayer money to maintain and operate bases in places that
aren’t in danger anymore and that don’t have a strategic value in this day and age? World War
II is over. The Cold War is over. Let’s get out of these places, close the bases, and bring our
troops back home. They can be redeployed to protecting our border and guarding our airports,
nuclear facilities, ports, etc. We’ve got about 81,000 active servicemen and women in Europe
alone! Keep one base with a skeleton crew and bring the rest home. Do you know what kind of
economic boost we would get with 75,000 troops along the border with Mexico? These service
personnel with combined salaries of well over $1 billion would be spending money here in the
United States not in Germany or Italy or anywhere else in Europe. Putting the money into our
economy is a whole lot better for us!
Closing a number of overseas bases and bringing the troops home won’t weaken our military.
I’m not suggesting we reduce the size of the military. I’m merely suggesting we close the bases
overseas and redeploy the troops to more strategically advantageous locations—like our border
At $100 billion annually to operate the overseas bases, the 207 million workers in the US are
each paying about $483 per year to keep these bases open. Is it worth it?
#10 Sell off government owned properties
Even the Obama administration has realized that
the federal government has a lot of excess properties—about 14,000 unused or underused
properties to be exact. Some government estimates suggest maintaining these properties
costs taxpayers over $1 billion annually. Other estimates suggest the cost of unused federal
properties is upwards of $25 billion annually. The Department of Defense, for example, may be
spending $3 billion annually on maintenance of unused buildings.
The simple fact is that the federal government has a lot of property and it isn’t managing its real
estate assets very well. If the building isn’t being used, why keep it and maintain it? Sell it if you
can and get some money for it, or if it’s in an area that would have to be remediated, demolish
it and eliminate the annual maintenance expense. If the federal government has over 1 billion
square feet of excess space, why not consolidate offices as much as possible?
If you have two buildings that are half empty, you’re paying utilities for both buildings,
maintenance, etc. Consolidate operations into one building, shut the other building down, save
on the utilities of the empty building, and then sell it. If you have two homes and you can only
live in one of them and you can’t afford to let the other one sit empty, you have a couple of
options: sell the second home or rent it out. In either case, you’re converting an asset that is
only incurring expenses into one that has generated a lump sum of cash or monthly cash flow
from rental income.
Evidently, the federal government isn’t concerned about that. Of course, it’s easy to spend
other people’s money. These excess federal properties or unused federal properties are costing
each American worker somewhere between $5 and $121 per year.
The federal government wastes massive amounts of taxpayer money annually on improper payments,
fraud, simple waste, excessive salaries for federal workers (not including the generous benefits
packages), redundancies, foreign aid, etc. The aforementioned areas where the federal government
could start saving money almost immediately are costing the average American worker about $2,000
per year. The IRS has a lot of tenacious employees who would just love to dig into federal departments
and audit their expenditures. Let’s have the IRS focus on investigating this type of fraud as well. Isn’t
it time we turn the tables and make government departments across the board accountable for the
money they are spending? This isn’t their money. It’s money that belongs to each and every taxpayer
in America. There is a pervasive lack of concern or lack of caring about waste and fraud in the federal
government by employees of government agencies. After all, it’s easy to spend money that isn’t yours,
particularly when there is little or no accountability. It’s like the fox guarding the henhouse. Any federal
agency or department that is spending taxpayer money has a fiduciary responsibility to the American
taxpayer to make sure that money isn’t wasted or misappropriated or fraudulently spent.