The Government Is Wasting Your Tax Dollars!

How Uncle Sam spends nearly $1 trillion of your money each year.

By Ryan Grim with Joseph K. Vetter from Reader's Digest | January 2008

3. Military Mad Money. You’d think it would be hard to simply lose massive amounts of money, but given the lack of transparency and accountability, it’s no wonder that eight of the Department of Defense’s functions, including weapons procurement, have been deemed high risk by the GAO. That means there’s a high probability that money — “tens of billions,” according to Walker — will go missing or be otherwise wasted.

The DOD routinely hands out no-bid and cost-plus contracts, under which contractors get reimbursed for their costs plus a certain percentage of the contract figure. Such deals don’t help hold down spending in the annual military budget of about $500 billion. That sum is roughly equal to the combined defense spending of the rest of the world’s countries. It’s also comparable, adjusted for inflation, with our largest Cold War-era defense budget. Maybe that’s why billions of dollars are still being spent on high-cost weapons designed to counter Cold War-era threats, even though today’s enemy is armed with cell phones and IEDs. (And that $500 billion doesn’t include the billions to be spent this year in Iraq and Afghanistan. Those funds demand scrutiny, too, according to Sen. Amy Klobuchar, D-MN, who says, “One in six federal tax dollars sent to rebuild Iraq has been wasted.”)

Meanwhile, the Pentagon admits it simply can’t account for more than $1 trillion. Little wonder, since the DOD hasn’t been fully audited in years. Hoping to change that, Brian Riedl of the Heritage Foundation is pushing Congress to add audit provisions to the next defense budget.

If wasteful spending equaling 10 percent of all spending were rooted out, that would free up some $50 billion. And if Congress cut spending on unnecessary weapons and cracked down harder on fraud, we could save tens of billions more.

The Tab*
Wasteful military spending: $100 billion (waste, fraud, unnecessary weapons)
Running Tab: $537.5 billion + $100 billion = $637.5 billion

4. Bad Seeds. The controversial U.S. farm subsidy program, part of which pays farmers not to grow crops, has become a giant welfare program for the rich, one that cost taxpayers nearly $20 billion last year.

Two of the best-known offenders: Kenneth Lay, the now-deceased Enron CEO, who got $23,326 for conservation land in Missouri from 1995 to 2005, and mogul Ted Turner, who got $590,823 for farms in four states during the same period. A Cato Institute study found that in 2005, two-thirds of the subsidies went to the richest 10 percent of recipients, many of whom live in New York City. Not only do these “farmers” get money straight from the government, they also often get local tax breaks, since their property is zoned as agricultural land. The subsidies raise prices for consumers, hurt third world farmers who can’t compete, and are attacked in international courts as unfair trade.

The Tab*
Wasteful farm subsidies: $20 billion
Running Tab: $637.5 billion + $20 billion = $657.5 billion

*All figures are estimates.

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