Like common panhandlers, Democrats have been begging to finance their habits. Granted, the Obama class war is more coercive than what you would expect from your typical urban beggar, but the idea is the same. Out of money and options, Democrats have been hitting up the wealthy for spending money since January 2009. Despite favorable noises from Harry Reid that they might compromise before the end of the year, their search for tax revenue is not over yet.
A portion of each and every tax dollar we pay the government is lost to waste, a cost of how big government does business. Our government wastes or fails to collect in tax revenue far more than we need to finance the year-end tax cut and unemployment benefits extensions. Hundreds of billions are waiting to be retrieved while we hear that Washington is making good on promises to halt the loss of our money.
Politicians throw out figures for everything from job creation to the size of the national debt, leaving details and accuracy to the bean counters. When the White House guesstimates of jobs saved or created by the Recovery Act were examined by the Government Accountability Office, the agency remarked:
. . . GAO’s fieldwork and initial review and analysis of recipient data from www.recovery.gov, indicate that there are a range of significant reporting and quality issues that need to be addressed. 1
No big surprise that the president’s assessment just one month before was more optimistic:
Based on reports coming in from across America – as shovels break ground, as needed public servants are rehired, and as factories whir to life – it is clear that the Recovery Act has now created and saved more than one million jobs.2
There are all sorts of quality issues when it comes to how Washington uses numbers. We have been assured that the government is on top of the improper payments problem. Just last month the White House told us that:
. . . agencies have avoided making over $20 billion in improper payments in the two years since President Obama issued an Executive Order initiating an aggressive campaign against wasteful payment errors.3
White House officials take credit for saving tax revenue:
“Because of the sustained commitment from the President, the Vice President, and leaders across the Administration – and the effective use of technology – we are seeing real progress cracking down on this waste of taxpayer dollars that has persisted for far too long,” said OMB Director Jack Lew.4
Two days after these comments were made, the U.S. Comptroller General gave us his version of how well the fight against bad payments was going:
Estimated levels of improper payments across government have been rising steadily for years. In fiscal year 2010, improper payments jumped an estimated $16 billion to $125 billion, largely because of significant increases in the outlays associated with unemployment insurance and the earned income tax credit program, both of which continued to exhibit very high error rates. 5
Democrats focused on slapping high earners with a tax increase because it makes for much better press than admitting that programs like unemployment insurance waste billions. The unemployment insurance program had a $13.7 billion, 12% improper payment rate in 2011, and its goal of 9.7% errors for 20126 would be punished anywhere but government, where a one in ten error rate is something to strive for.
How much more are we losing than Washington will fess up to, or is even aware of? The tax gap raises big questions about how the government estimates billions in waste and uncollected revenue. In 2009, the Treasury Department released a report on the tax gap describing how estimates of uncollected taxes came from figures that were nearly a decade old:
In 2005, the IRS estimated this gross tax gap to be approximately $345 billion. After subtracting revenue obtained through enforcement actions and other late payments, the IRS estimated the net tax gap to be approximately $290 billion. These estimates, which remain the most recent estimates available, were conducted using data collected in tax year 2001 and before. 7
The 2001 figures are still being used in 2011.8
Our government is too large to be managed, but instead of reigning in the bloat and recouping what was lost, all we have been hearing from congressional Democrats and the White House are cries for more money, and for extending the size and reach of government. Improper payments and uncollected tax revenue amount to hundreds of billions of dollars, and this is where Democrats should be looking when they need funding. Anyone who lives in a big city knows that when you give money to panhandlers, they keep coming back, pockets empty. Our congressional panhandlers have been at it since Barack Obama took office. Whatever happens with year-end negotiations on spending and tax cuts, they will be back, hands out, looking for more because they lost what we paid them, or never collected the taxes they are already owed.