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By Steve Kelman

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What does the $16 muffin really mean?

$600 hammer, step aside. The media has been abuzz with the story that the Department of Justice paid $16 apiece for muffins eaten at one department-sponsored conference. The Washington Post story on the costs paid for food service got far more comments on the paper’s website and tweets than President Obama’s speech around the same time to the General Assembly on Israel and Palestine.

Clearly this story makes great copy. But I have to ask two questions. First, is it true as an individual anecdote? Second, is it helpful to efforts to get the nation’s fiscal house in order?

On the first question, I will confess I am not a muffin expert. However, I have, over 30 years as a public management professor, frequently examined similar claims about outrageous government waste (and eaten several muffins). These claims turn out to be misleading, incomplete, and downright mistaken.

About 25 years ago I examined 10 claims about egregious government waste highlighted in the press release of the Reagan-era Grace Commission to illustrate their findings. Not one of the cases was correct as stated. (In one case, the commission misplaced a decimal point, inflating the purported government cost tenfold.) In the case of the $16 muffins, it appears that perhaps the hotels are providing the actual function rooms at no separate charge, and baking (so to speak) the cost of the room into the item charge for the refreshments.

However, there is a much broader issue than muffins. The fact is that the public has a bizarrely inflated idea of the role these kinds of examples of waste (or alleged waste) play in our fiscal problems. In a survey a number of years ago, the public on average believed that $52 out of every $100 in social security expenditures went to administrative costs. The real figure at the time of the survey was $1.30. (It's probably lower today.) The public is frequently asked what percentage of the federal budget goes to foreign aid. On average, people think it is 25 percent. The real figure is 1 percent.

This kind of misunderstanding has consequences. With due respect to the dysfunctionality of our political system, a fundamental reason it is so difficult to deal with our long-term fiscal woes is that the American people are not convinced we need either benefit cuts or tax increases to deal with the problem -- they have the illusion we can eliminate the deficit if only we can stop bureaucrats from gorging on $16 muffins. A lot of what the politicians are doing is to respond to that popular delusion.

So the most damaging myth -- nurtured by the muffin madness -- is that we can solve our fiscal crisis without doing some unpleasant things.

Posted on Sep 27, 2011 at 12:09 PM


Reader comments

Thu, Sep 29, 2011 Jim

Agree partially. But another way to look at this is to undertand that the government does waste and explaining away this as being irrelevant is also doing injustice. Why are they doing sessions at the Hilton in the first place? for every $16 muffin how many $16 million programs are wasteful. How much does the vendor community spend in marketing to the federal govt. Who pays for these in the indirect costs.

Wed, Sep 28, 2011 Vern Edwards

From the Washington Post, September 22: "Hilton Worldwide, which manages and franchises hotels including the Capital Hilton where the conference took place, says the price included not only breakfast baked goods but also fresh fruit, coffee, tea, soft drinks, tax and tips. It says the report misinterpreted its invoices, which often use shorthand and don’t reflect the full menu provided."

Wed, Sep 28, 2011

If I had a dollar for every time my agency mis-spent a thousand dollars, I could probably afford to retire or at least take a nice long vacation. I have saved my agency over $2Million over the past 5 years and I have to scrounge retiree desks for working pens. My biggest peeve is that the government has no incentive to save money. If you don't spend it all you wont get as much next year. Where do you see that in private industry?

Wed, Sep 28, 2011 KRL

Way to go Steve and thanks for bringing some sanity into the world of outrages claims. Let their be a pox on the press for poor reporting and no follow-up to confirm the facts. If people read about the details, they would have seen that Hilton provided a true accounting of what made up the cost of the muffins. Per Hilton, the costs included a full hot breakfast, coffee, juice, meeting rooms and breakout rooms. Considering I have planned a number of these types of conferences at good hotels, $16 a head for breakfast, beverages, service and space is not a bad deal whether you are in DC, LA or Dallas. Companies who provide these types of services, as a practice, usually average (or amortize) costs around some point withing the package that can be measured based on actual consumption. The auditor should have asked for this back-up detail before making this outrages claim (another one of those new auditors fresh out of college??? Been seeing a lot of them lately - talk about green behind the ears. The last auditor we had did not even now what cost principles were). In this case, the number of muffins actually eaten. This is what happened with the $600 toilet seat and hammer before Congress demaded unit price integrity (and amortized costs such as materials, project management, overhead, etc were broken out separately). What does a company do when a cost per unit is demanded? In the instance of KBR in Iraq, I understand that KBR was required to find some unit of measure to define a price for their care and feeding of 150,000 or so troups. How do you do this when you have 100,000 of these troups that are between the ages of 18-25 who eat their weight in food every day. They came up with a price per plate. Each time a soldier came to the chow line, they were required to use a new plate, which were carefully counted when they were placed on the buffet line. If the press were subject to the same rules of integrity, the multitude of laws related to acquisition, and the constant threat of criminal prosecution due to "the reckless disrgard for accuracy" that are applied to federal contractors, most would already be in jail.

Wed, Sep 28, 2011

I see that Mr. Kelman fails to mention that the $16 muffins were uncovered by the Inspector General for Justice during an audit.

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