Study: Greater government spending may be causing even greater waste

Even if you think that government spending is compassionate spending, a new study from the Mercatus Center at George Mason University reveals that we've wasted billions at a time when every penny should count. From Veronique de Rugy's paper:

According to the 2010 Financial Report of the United States Government, $ 2.3 trillion in outlays were reviewed by federal executive branch entities for improper payments last year; 5.5% of these payments, or $125.4 billion were found to be improper. This represents an increase of $16.2 billion from the fiscal year 2009 estimate of $109.2 billion.  Furthermore, the GAO estimates that at 5.49%, the rate of error across the entire federal government is roughly the same.  Put differently, this means that in fiscal year 2010, $189.7 billion in federal spending, or 5.49% of $3.5 trillion, was overt waste.

The increasing level of federal waste observed above can be interpreted two ways. Either the amount of waste in the federal government has been increasing or the amount of waste has remained relatively constant, while federal reviewers are simply becoming more and more adept at documenting it. Under either explanation, overt waste in the federal government represents a significant problem.

With a government-wide error rate of 5.49%, improper payments in the federal government represent an often overlooked cost of expanding federal spending – on average, over $.05 of every dollar of spending is simply thrown away.

It doesn't take libertarian sentiments to feel cheated here. Every penny wasted is a penny that could have gone toward federal assistance for low-income earners, or health care for the indigent. This is government at its dumbest, when it throws cash at a problem without concern for the effect. And remember, this kind of waste also has a ripple effect. It causes budget requests to increase, as managers who don't keep an eye to detail start noticing dwindling funds and no results. It causes worthwhile projects to be underfunded and ineffective while trivial pursuits increase in price as change orders mount. And it causes politicians to think that the easiest solution is to raise taxes when they should instead be cutting the fat.

It's not merely that government shouldn't be in the business of spending so much. It's that government shouldn't be in a position to spend so recklessly. Taxpayers are hard at work taking care of their families and paying their share, ensuring that every dollar counts in a recession. But by providing the huge federal government with so many responsibilities, mistakes that cost billions aren't just mistakes: They're inevitabilities.

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