Have A Plan

Federal Comedy & Tragedy

It’s hard to sit still watching the tremendous waste & inefficiency being exposed in Washington DC over the last two years. The proceedings are a maddening comedy & disheartening tragedy at the same time.

Yesterday, the Wall Street Journal reported that a bipartisan Senate Committee was given evidence that as much as $1 trillion on a year are paid out fraudulently by the federal, state, and local governments because they simply fail to use basic identity verification or do basic monitoring of the recipients of trillions in spending.

Link (paywall): WSJ Trillion-Dollar Fraud

The hearing testimony included the estimate that “the private sector has fraud rates below 3%. Meanwhile, the public sector operates at a 20% fraud rate.” This isn’t new learning either. The article cites a US General Accounting Office analysis that identified the issues years ago.

At the same time, we’re learning that the most basic economic statistics provided by the government have been manipulated to make the economy look as rosy as possible. Both parties (and the media) have been complicit in the obfuscation. The unemployment rate, inflation rate, and growth in GDP have all been framed in a way that ignores the basic financial challenges that most Americans see.

Politico published this editorial explaining why voters knew that the economy was very weak over the last 4 years – despite the dubious assurances of politicians and the media. The former Comptroller of the Currency, Eugene Ludwig, plainly explains the gap we see between our own eyes (declining cities, homelessness, higher prices) and the cheery headlines from incumbent politicians.

Link: Politico – Voters Were Right About The Economy

At this point, I’m not sure our economic data is any more believable than China’s.

What this means for Americans diligently planning for a possible early retirement is that you need to save even more and expect your costs to be even higher than your analysis might tell you. Government fraud pushes up tax & interest rates and higher inflation balloons the cost of living. (It also means that government will be short-sheeting your Social Security’s annual cost-of-living adjustment).

An early retirement, like any financial decision, comes with a “caveat emptor” warning. What precautions do you take in your planning to offset these planning risks?

Image: Pixabay

21 thoughts on “Federal Comedy & Tragedy”

  1. Absolutely shocking that the Government is running deficits and is on a flight path to bankruptcy and yet seems to not be interested in reducing $1 Trillion in fraud. Instead we hear from the Demonrats the rich aren’t paying their fair share, and we need to raise taxes. One would wonder who is getting rich off this. As Elon Musk said in his Oval Office press conference with his four year old climbing on him, “We are finding ‘workers’ making between $100,000 and $200,000, who are worth in the tens of millions.” I say build a wall around Washington D.C. and turn it into a penal colony.

    That being said, here is how we are planning for inflation. The Deferred Comp Plan we are currently drawing pays out over forty quarters and started we paying out 1/40th, with the next payment being 1/39th, so the combination of interest and the divisor lowering every quarter increases the payout 5% per year. Our dividend based income grows an average of 3.3% per year. We are waiting until age 70 to start Social Security, so it will be maximized and add on additional income. Finally, we are not starting our mandatory withdrawals from IRAs until age 73. Add all these together and I am forecasting income growth at 10% per year over the next ten years.

    So far our main inflation cost drivers have been electricity, home and auto insurance, groceries, restaurants, entertainment and taxes. The governmental lowballing of the inflation rates results in brackets not offsetting inflation, so the pigs in Washington D.C. collect more of our hard earned money.

    My wife and I have made it. We are concerned about out kids not doing as well.

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    1. Agree – we’ve made it. Our kids are the ones that are running the world now and they need to live with the choices that are being made. Trump could make his entire Presidency consequential by pursuing audits, modernizing the bureaucracy, and driving spending cuts. Today he spoke about cutting the Defense budget by half. He is saying the right things – I certainly hope he follows through.

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  2. Thanks for sharing the Politico article. That was fascinating. I don’t think I would change my personal finance plan based on macro numbers like GDP, unemployment, and CPI. I’m hedging my plan by tracking spending and asset value monthly, owning our home, and attempting to optimize where possible.

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    1. The one government statistic that is a big input to our FIRE plan is inflation. It has a remarkable impact on our portfolio outlook, although the recent inflation spike was more than offset by strong investment gains. It’s the Americans who don’t have investments to help weather high prices that really crushed in a bad economy.

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      1. 100% agree inflation is huge on personal finance. What I’m not sure of is how closely CPI correlates to personal inflation for those on the FIRE journey. If housing and transportation costs are mostly fixed, my hope is the impact is not too bad. That’s why tracking expenses is so important.

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  3. Dapo, I agree that we have shielded ourselves as much as possible from the drivers of CPI, especially on the housing front. We are likely experiencing less than CPI inflation.

    However, the article points out that lower and middle incomes are experiencing double the CPI inflation rate. I can see it at the grocery store. The fixed rate mortgage in my house is a third or a fourth of the rent payment on a one bedroom apartment.

    Think about where you were when you were your children’s age and where they are. They are not being dealt the same hand. Could you get to where you are today if you were just starting out?

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  4. The Politico article is so disturbing but I am not surprised. I saw a photo on X yesterday of Clinton/Gore with their attacking government waste program which was thirty years ago and lip service.

    I just finished observing 9 trial days the jury has the case. A homeless person in a motel room provided by Project Room Key in the pandemic had an epileptic seizure and died. The social services agency paid $500K and this litigation is against the nurses and staffing agency for doing thrice daily Covid screening not providing healthcare!

    What is crazy is I look up the financials of the social services agency that managed the program. 2000 was a year of record revenues from government and of course they were housing the homeless but get this, a Paycheck Protection Program loan of $1,445,000 but none of the employees were furloughed, and get this….loan forgiven!!!

    For my household we owe zero money and our largest expenses are taxes, travel and insurance. Wife pulls small amount of social security, I am building years of service (I missed 24 years when no contributions made as a government employee with no consulting income). I don’t plan on drawing social security until age 70 or from deferred accounts until RMD kicks in and when I draw from those accounts I will likely be at maximum tax rate time!!!!! Mainly due to pre-Roth era contributions and much greater than ever expected growth.

    Like most things involved with planning for retirement, plan for low growth and overfund accounts. I agree that our children will not have as easy of a time but we will begin gifting annually to them as youngest turns 30 soon.

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    1. Wow. That’s quite a story. I think I’m learning that these social service agencies aren’t being managed well. In our state (MN), we’ve had a number of high profile fraud cases with groups like this. They promise they are feeding kids, or helping with autism, or helping with daycare – and we later find out that they are abandoned buildings. The total in MN is over a half a billion dollars.

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    2. Here is a link to an interview with former Los Angeles County Sherriff Alex Villanueva, where he identifies the Homeless Industrial Complex as the reason for homelessness not being resolved despite all the funding. Basically the grift works like this. A homeless non-profit helps Karen bASS getting elected Mayor. She returns the favor by making grants to the homeless non-profit, which is a top heavy organization where the CEO draws an annual salary of $800,000. The organization doesn’t actually fix the problem of homelessness because if there were no more homeless, there would be no more $800,000 salary. This foots with your analysis of the non-profit’s financials. Of course the Demonrat Party had to get rid of this guy.

      https://www.theepochtimes.com/epochtv/former-sheriff-reveals-whats-behind-los-angeles-homelessness-alex-villanueva-5046440?utm_source=ref_share&utm_campaign=copy

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      1. Pretty much the same model the oil industry, defense contractors, pharmaceutical companies, and DEI consultants use. I need to start my own NGO!! 🤪

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      2. Our NGO could be focused on standing up for taxpayers who are getting screwed by all the stupid spending and fraud.

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      3. I love to hike & photograph waterfalls in MN. I told my buddy we could start a NGO to “Protect MN’s Waterfalls”. I could go on the news and say how important they are to protect for future generations. With no evidence, I could say about how they are endangered. Everybody would believe it. Everything is endangered. When we are in a drought, I could raise the alarm of how much trouble we are in. We could have a website to collect donations and government grants to “study waterfalls” and pay myself a nice salary. When the waterfalls are at full gush after a few thunderstorms, I could take credit on behalf of our organization. Everyone loves waterfalls and everybody would believe me!

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  5. Here is a link to an interview with Stefan Rust, the founder and CEO of of Truflation, a blockchain-based financial data service that provides real-time economic and inflation data. He pegged the aggregate inflation rate during BiDUMB’s four years in office at 26%.

    https://www.theepochtimes.com/epochtv/americas-36-trillion-debt-musks-doge-cuts-and-tracking-real-time-inflation-stefan-rust-5810787?ea_src=frontpage&ea_cnt=a&ea_med=top-news-7–top-news-7–1-title-0

    He is very excited about Trump’s cutting big government and its implications for private sector business. Washington D.C.’s pigs at the trough are sucking up too much of our financial and human capital.

    I personally witnessed a similar cycle when the Iron Curtain fell in 1991. The Defense Industry, which was Southern California’s largest employer was massively downsized. Six properties that touch mine were lost to foreclosure in the early 90s as a result. Our local economy beat swords into plowshares. Qualcomm, which was a defense contractor in the early 90s lost a contract for spread spectrum addressable military radios. They repurposed their radio sets into CDMA technology under pinning Verizon’s radio network. Qualcomm was the highest returning stock from 1990 to 2000. The period 1996 to 2000 was personally my high water mark from my income earned from working.

    Here is a link to their website. https://truflation.com/

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  6. Here is an article about potential rampant Social Security Fraud.

    https://www.breitbart.com/politics/2025/02/17/doge-investigating-potential-social-security-fraud-millions-ages-130-on-rolls/

    To me it does not seem intrusive wanting to know the correct birthdate of someone with a Social Security number, whether a number has been highjacked and is the person still alive. What are the payments to people without Social Security numbers? Simply amazing that both sides of the aisle cannot find this reasonable.

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    1. I liked Elons response to Senator Fetterman, “if I wanted personal identification of people I could have grabbed it during my Pay Pal days”. No one mentions how much private information is stolen by government employees or contractors

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  7. You could probably get your waterfall NGO funded. Sounds like an easy extra $800K. Of course you will use your green energy powered bicycle when doing your research.

    My NGO planning to save Unicorns. We need them flapping their wings in front of windmills to generate green electric for Tesla’s. Unicorns are very endangered. Very hard to find.

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      1. Holy Hell. I heard about that Citibank fiasco. I couldn’t understand if the $ were still there or not.

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  8. Hi Mr. Fire Station,

    Your kids are not running the world!! We are though having to live with the choses being made by the older generatons. As a Millennial/Gen Z, I have to say it isn’t us who are running the country or the majority of corporations. Hearing you saying it is our turn without us being the ones holding the positions of power is wrong and incredibly frustrating.

    Please remeber that DOGE needs to constantly promote its existence and thus is often a propaganda tool for Musk. As a proud  Federal Government employee, whose agency DOGE has gone after, I can say he is only talking about part of the story. Our agency is publicly not saying anything because our political appointee does not want to get in the middle of something with DOGE. Please remember there is a side of the story you are not hearing.

    Also, I cannot access the WSJ article because of the paywall. It sounds like though that you are complaining that the Federal Government is using out dated economic indicator numbers and that money is going to contractors that are inappropriately using it. I agree that both of these are issues. 

    We need to work on using better tracking numbers and constantly propose changes, but are often held back by political appointees or politicians from both parties because all of them are comfortable with the way it is. I personally have not heard the current administration actually start anything to help us better track our economy or propose any meaningful way to take on our economic issues…. 

    As for contracting, I completely agree that it is generally not good for America. As you know the Federal Government workforce is the same size as it was in the 1970’s and this is all because of government contracting. We need more people in the Federal Government, but no politician wants to be the person to increase the Federal Government workforce so instead they turn to contracting. We generally pay more for these people than we would a regular employee and these contractors are paid significantly less by their contract company. Thus the contract company owners get substantially richer while the working contractor makes substanially less than they should for their work and what we are actually paying for. Also, we have a ton of checks and balances as well as audits for money in the Federal Government. Most companies do not have the level of protections regarding money that we have. (DOD does though seem to be the giant exception). When most companies have theft by employees or contractors, they hide it. Whereas in the government we prosecute people. Finally, once we distribute out money as told to by politicians or political appointees, we try to monitor the money as best we can. But with a limited workforce, we struggle to monitor everyone to the level that we would like. So if you want to see this not happen in the future, we either need to have the government distribute the money itself or have more government employees who can monitor the distribution of the money. Also, I think theft is significantly higher than the number you listed because companies often do not report or hide theft. Please correct me if I am wrong on that. Out of curiousity did any of the companies you ever worked for hide a theft or not prosecute a theft?

    Instead of turning your backs and saying my generation is running the country please try to instead be a part of the solution. Figure out ways you can help fix issues or give back. It takes everyone to make this country a better place. 

    Thank you for listening to me! I love America and am incredibly proud to work for our country. Although the Federal Goverment is not perfect, I am proud to work my hardest to make our government and country a better place. I invite you in joining me to make our country a better place.

    – Proud Young Government Employee

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    1. Love to hear the passion, PYGE! Glad that you are on the front lines of the battle to make our government more effective & efficient.

      No, I understand that Gen Z & Millennials aren’t really “running the world” yet, but you are getting close. My son likes to debate politics with me and so I try to make him feel responsible for the world by saying that. That said, you probably do have more influence on what is happening in Washington DC than I do. I haven’t had a job in 9 years, so I’m not in the game any more. Of course, many of my former colleagues are working in senior roles. I’ll work on them – you work on your sphere of influence. 🙂

      The Wall Street Journal article relates to a Senate Committee meeting where experts from private industry bemoaned the amount of waste & fraud the taxpayer suffers because of outdated government information technology and lack of basic financial controls. In my home state of Minnesota, it has recently come out that there are no verification or vetting processes for NGOs that receive state money. $5B a year go out with little monitoring. Over $600M has been identified as pure fraud. I’m sure hundreds of millions more go out unidentified.

      I’m glad to see the DOGE effort, even if Elon Musk is at times a imperfect hype man for the effort. He’s certainly gotten the public’s attention, with last week’s Harvard/Harris poll saying that 70% of Americans expect $1T to be cut from the budget. Now we’ll see if Congress follows his lead and actual change is made. So far, it doesn’t look good.

      No, I’m not turning my back. We’re here with you and will each do our best to help. THANKS!

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