A couple months ago, President Obama gave a speech in St. Charles, MO in which he argued that his health care plan would make Medicare stronger even as it cut the Medicare budget, because “There’s no cutting of Medicare benefits. There’s just cutting out fraud and waste.” As you can probably guess, I’m skeptical about that, but maybe not for the reason you think. I’m not skeptical because it’s him or his party—this is a recurring bipartisan theme. Politico’s Chris Frates put it well when he wrote,
Obama’s efforts follow those of a long line of Republican and Democratic presidents who promised to save taxpayers money by cutting fraud, waste and abuse in the government insurance programs. The sentiment is popular because it has bipartisan support and doesn’t threaten entrenched health industry interests that benefit from the spending.
“Waste, fraud and abuse have been the favorite thing to promise first because it’s a way of promising cost control while not doing any of the painful stuff,” said Len Nichols, a former senior health policy adviser in the Clinton administration. The method is “as old as the Bible,” he said.
“It’s a way of promising cost control while not doing any of the painful stuff”—that’s it right there. It’s how politicians convince us that they’ll be able to cut government spending (which we want) without cutting any of our programs (which we don’t want). After all, politicians who cut our programs—even if we elected them to cut spending, even if we know government desperately needs to cut spending—tend to become unpopular as a result, at least in the short term . . . and we know there’s nothing politicians hate worse than being unpopular.
The problem is, the idea that we can solve our budget problems (or even make a major dent in them) is a myth—a fairy tale—a chimera. It’s never happened yet, and it isn’t going to, either. That’s not to say, certainly, that we shouldn’t do everything we can to reduce waste and fraud, but we need to do so realizing that we’re fighting, at best, a holding action; we’re never going to achieve victory, and we’re never going to gain enough ground to make a significant improvement in the budget. In truth, just keeping waste and fraud from growing is an accomplishment.
That might seem cynical, but I think it’s just realistic. Waste is an inevitable part of any human activity, as we should all know from daily life. There’s always peanut butter left in the jar when it’s “empty”; there’s always shampoo left in the bottle when we can’t get any more out; there’s always some of the fruit that falls off before it’s ripe. We can and should work to reduce waste—say, the amount of energy given off by our light bulbs as heat rather than light—but we’ll never eliminate it. We’re simply too limited to ever achieve 100% efficiency.
Within large organizations, there’s an additional problem that reinforces and aggravates this reality: cutting waste isn’t to everybody’s benefit. The bureaucracy has its inevitable turf wars, which waste money, and its (often competing) agendas. What’s more, the people who control the money as it trickles down through the system have the same self-protective instinct as anyone; those who benefit from waste want to see it perpetuated, and this waste has a constituency. The people who profit by waste are there, they are connected, they have clout; those who would profit if waste were removed are abstract, theoretical, not present, not connected, and can’t prove their case, since it’s a might-have-been. Anywhere except Chicago, a voter who shows up and argues will beat a voter who isn’t there any day.
As for fraud, any time there’s a lot of money moving around, there will be those unscrupulous and clever enough to siphon some of it off. Whatever ideas you come up with to stop them, or failing that to catch them, will have only limited success; as in warfare, so in this area, the advantage is constantly shifting between offense and defense—the defense may pull ahead for a while, but the offense will always adapt and regain the advantage. What’s more, when it comes to preventing fraud, the defensive position is intrinsically harder, because the fraudster only has to find one loophole in order to succeed, while those on the other side have to keep every last loophole closed, even the ones they don’t know are there. In the end, we can only say of the fraud artist what Dan Patrick used to say of Michael Jordan: “You can’t stop him—you can only hope to contain him.”
All of which is to say, the commitment to fight waste and fraud in government is laudable, and we should certainly do everything we can to encourage our politicians in that direction—but any politician who tells you they can solve our budget problems by eliminating waste and fraud is selling you a bill of goods. The only way to significantly reduce waste and fraud is to significantly reduce the spending that produces and attracts them; if you want to cut waste and fraud, you have to cut government.