Your tax dollars at work

[techweenie]

Government is a blunt instrument. The bigger the government entity, the blunter.

But still, you should be questioning how the feds came to authorize nearly $1,000 per hour compensation in post-Katrina repair efforts.

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(snip)
Knight Ridder has found that a lack of oversight, generous contracting deals and poor planning mean that government agencies are paying as much as 10 times what the temporary fix would normally cost. The government is paying contractors an average of $2,480 for less than two hours of work to cover each damaged roof -- even though it's also giving them endless supplies of blue sheeting for free.

Many of the contracts were signed by the Army Corps of Engineers in advance in July after the government was criticized for having signed lucrative deals on the fly after hurricanes ravaged Florida last year. But at least one contract signed in July was for the same amount the Corps was criticized for last year, while two others negotiated after Hurricane Katrina were for less.

Former government contract officials and private contracting experts say the Corps neglected to negotiate better rates when it had the chance before the hurricane season began. Once the storm hit and the vast amount of destruction became obvious, they say, the Corps failed to negotiate a lower rate for contractors, who could still make decent profits because of the sheer amount of work to be done.

Jim Pogue, a press officer for the Army Corps of Engineers, said the agency strictly followed government contracting requirements and did all it could to get the best deal possible for the roofing work, given the magnitude of the task and the need to protect vulnerable homes quickly.

He also said the Federal Emergency Management Agency, which by statute is in charge of the program, asked the Corps to manage the program because FEMA's resources were spread thin.

Billions to spend

The amount the government is paying to tack down blue tarps, which are designed to last three months, raises major questions about how little taxpayers may be getting for their money as contractors line up at the government trough for billions of dollars in repair and reconstruction contracts.

As many as 300,000 homes in Louisiana alone may need roof repairs, and as the government attempts to cover every salvageable roof by the end of October the bill could reach hundreds of millions of dollars.

``This is absolute highway robbery, and it really does show that the agency doesn't have a clue in getting the real value of contracts,'' said Keith Ashdown, vice president for Taxpayers for Common Sense, noting that he recently paid $3,500 for a new permanent roof. ``I've done the math in my head 100 times, and I don't know how they computed this cost.''

[Superman]

There will be winners and losers on the NE rebuild. The losers will be the taxpayer, and the poor folks who are currently homeless. The winners knew who they were when the wind first started blowing.

[techweenie]

Originally posted by Superman
There will be winners and losers on the NE rebuild. The losers will be the taxpayer, and the poor folks who are currently homeless. The winners knew who they were when the wind first started blowing.

The really amazing thing is that these contracts were written up in July '05 -- long before the first storms hit, so there's no reason contractors should be getting $1.75 a square foot for putting tarps on roofs.

BTW, that was about the time Mike Brown was informed that FEMAs computer system was inadequate to support fast response to a major crisis.

[RoninLB]

[911pcars]

That's one way of looking at capitalism in the US.

Govt. money is our (taxpayer) money. If the govt. spent it more judiciously, maybe they wouldn't need to tax so much of it and we'd have more to circulate ourselves.

Sure, the govt. contractors are making gazillions off the hurricane tragedies. But why do they have to be recognized as kick-starting the economy as if their boat payments are going to help us. It's as if you gave me your paycheck so I can spend it - that'd help the economy too wouldn't it?

Sherwood

[911pcars]

Mikester,
I prefer to purchase my own $600 toilet seat.

As we've seen most recently, the govt. isn't capable of spending wisely. I think the average US consumer can do a lot better job propping up our economy and directing monies where needed. With more disposible income, which would you rather purchase, said bullet-proof toilet seat or one w/o the hole from Recaro (assuming Recaros are outsourced in the US)?

Sherwood

[vash]

you are pictureing what it would be like for you to tarp the roof. it takes alot of effort and money for large contractors to even mobilize to an area. lots of unknowns out there. trucking, over-time for union guys, storage, access...the list goes on and on. the scary part is that emergency jobs are typically 'time and material" meaning the contractors can milk it to death.

[911pcars]

I understand what you're saying. However, the economy being propped up by govt. spending is just a byproduct, not as an objective economists should strive for. Are we in agreement there?

IMHO, when govt. spends, taxpayer dollars tend to go into the pockets of those in the upper income brackets, those with investments in businesses that deal with the govt. If you believe dollars trickle down from there in any meaningful way to the general populace, then you're of one theory. There's a bottle neck in the trickle down path. I think it merely goes into savings and/or other investments; i.e. businesses that outsource to other countries, those who pay minimum wage, etc. Maybe some key legislation could open up the bottle neck and allow it to work as theorized.

However, as it is, the end effect is a disproportionate distribution of wealth which continues each time our govt. spends more tax dollars and/or borrowed money. If trickle down worked as they say, then we'd have close to zero unemployment, an upwardly mobile poverty class and a truly healthy economy.

Just rambling I guess,
Sherwood

[RoninLB]

Judging the Hispanic working poor in a static state says the numbers are growing. The influx is huge.

Judging the Hispanic working poor in a dynamic state says that in 10yrs 60% of them, as history shows, will own their own houses.

Fed #'s by law must show static #'s that are disassociated from reality. The recent past tax rate drop is a good example. Static #'s show a drop in Fed tax revenue. Dynamic #'s show an increase, as it has always shown in past tax rate declines, due to increase incentive.

Congress may be dysfunctional but the hard #'s that they are expected to work with are no prize either.

[hardflex]

That's quite the spin there, RoninLB, if the numbers look bad, they must be bad numbers..... It reminds me of the saying "if you can't dazzle them with Brilliance, baffle them with Bull*****!"

[RoninLB]

Dealing with reality isn't the easiest thing if you have a predisposed belief already programed.

The real issue that should be discussed is the income inequality that has been going on for the past 30yrs. The split is being caused by an intelligence in job demand. The significantly lowering of union jobs as a total of the whole number is a simple indicator of that. Unfortunately the higher the job growth numbers are the greater the split. If you compare our extreme job growth numbers in a world competitive economy to old Europe socialist economies the split between low and high paying jobs becomes stark here in the US.

[techweenie]

Originally posted by RoninLB
Fed #'s by law must show static #'s that are disassociated from reality. The recent past tax rate drop is a good example. Static #'s show a drop in Fed tax revenue. Dynamic #'s show an increase, as it has always shown in past tax rate declines, due to increase incentive.

This is a myth, AFAIK. The conservatives' favorite example is the "Reagan tax cuts" that were quickly reversed into a tax increase. Under Bush2, we have the AMT (stealth tax increases).

How about tossing out some hard numbers?

[competentone]

My brother got a FEMA load of MREs to Texas; he was paid three times what his normal rate would have been. Then he was paid $600 a day while sitting and waiting 4 days to be unloaded!

I'm glad to see he's getting some of his (and my) tax dollars back, but his experience demonstrates exactly how inefficient and wasteful our government is.

The thing that really annoys me too is how no one complains when the government is paying exorbitant rates for services, but if someone in the private sector tries to conduct business and charges high rates after a disaster like these hurricanes, plenty of people are screaming "price gouging!"

[RoninLB]

Originally posted by techweenie


How about tossing out some hard numbers?

you could have replied that "I've never heard of static vs dynamic economics, please explain."

Mistaking emotions for facts leads to blindness.

[hardflex]

"I've never heard of static vs dynamic economics, please explain."

Why don't you explain.......

[hardflex]

Some reading on my own

Dynamic economics only tells you that cutting taxes raises tax revenue if you can'd add. That's not dynamic economics, it's voodoo economics -- to quote the one time Pappy got it right.
Say, for example, that taxes take about 20% of GDP. (That's a bit high for the Federal net tax take). Say the GDP is 10 trillion, so the net tax take is 2 trillion. Say the base growth rate is 3%, so tax revenues will grow at 3% in the absence of a tax cut. That means next year's tax revenue, if there is no tax cut, is 2.06 trillion. Now say we cut taxes by 1/4, to a 15% net rate. Next year's GDP is 10.3 trillion and 15% of that is 15.45 trillion. That's assuming no increase in growth. To get 2.06 trillion at a 15% rate, next year's GDP has to be 13.73. That's a 37% growth rate. So, to get an increase in tax revenue, we the 25% cut in tax rate has to lead to more than a 10fold increase in the growth rate. Look at the record. The rate of economic growth in this country has never exceeded 10%, and in the world as a whole, I don't believe a national growth rate has ever exceeded 20%, and only the Soviet Union ever came close.

To see why this is impossible, ask yourself: what proportion of the tax cut would have to be invested? A key variable in dynamic economics is the ICOR, incremental capital output ratio. The U. S. ICOR is about 4. We have seen that to get increase in revenue, in this example, the increase in GDP would have to be about 4 trillion. This requires a 16 trillion investment -- based on a 5 trillion tax cut. So over 3000% of the cut would have to be invested.


rogerashton

(Professor, Dept. of Economics and International Business, Drexel University, Philadelphia, PA, USA).

[techweenie]

Originally posted by RoninLB
you could have replied that "I've never heard of static vs dynamic economics, please explain."

Mistaking emotions for facts leads to blindness.

So you don't have any hard numbers? Just strong feelings?

[Mulhollanddose]

Econ-101...tax cuts stimulate the economy. Marginal tax cuts increase revenues...Paradoxical as it may seem to be it is nonetheless truth. Indeed it is happening as we speak.

The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business and invest it in tax-exempt securities or to find other lawful methods of avoiding the realization of taxable income. The result is that the sources of taxation are drying up; wealth is failing to carry its share of the tax burden; and capital is being diverted into channels which yield neither revenue to the Government nor profit to the people.



Heritage

[Mulhollanddose]

Originally posted by Mulhollanddose
Econ-101...tax cuts stimulate the economy. Marginal tax cuts increase revenues...Paradoxical as it may seem to be it is nonetheless truth. Indeed it is happening as we speak.

July 11 (Bloomberg) -- President George W. Bush's administration will report this week that surging tax revenue is shrinking this year's budget deficit from the record 2004 level, possibly by as much as $90 billion, giving him a shot at fulfilling his deficit reduction promise three years early.

With tax revenue running $1 billion a day ahead of the 2004 pace in late April and May, the deficit will likely decline to about $325 billion from $412 billion last year, according to the Congressional Budget Office and private forecasters such as Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut.


What happened to the Democrats and their media friends and their drumbeat of "the worst economy since Hubert Humphrey"?...Why is the media near silent regarding the fact that, despite an inherited economic mess and 9-11, Bush the Great has turned around the economy and is reducing the deficit?

Do you hear that?....

the silence is deafening!