No, this isn’t a poem of the season, but an early New Year’s collection of hopes for the future. As we end the season of extravagant spending and approach the receiving of credit card bills and W-2 forms, we should take a long look at our government, our society, and some impending decisions.
A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned – this is the sum of good government.
-- Thomas Jefferson
The US government hasn’t been frugal for over sixty years. How can this country continue along the path it has been on for over sixty years? Ever since the programs of the New Deal began to be implemented, the government has grown, both in power and in scope. And it continues to grow into the future, with programs like Obamacare and Cap-and-Trade yet to start.
Why are these government programs bad? Don’t they fill a need – didn’t someone make a case for each of them?
These questions don’t get discussed in the nightly news, or even in Congress, as often as they should. And there is almost never a review of a program to determine if it should continue, just another appropriation year after year.
Government was created to provide a collection of services that a society needs to operate smoothly, and cannot be provided by individuals or independent groups. For example, printing money. Before the American Revolution and the establishment of the Constitution, each colony printed it’s own currency. So if you were a farmer in Pennsylvania and you sold produce in New York, you were paid in New York “dollars”. How would you convert them to Pennsylvania currency? At what exchange rate? How would you plan your income and expenses in that environment? In fact, would you know enough about New York currency to recognize counterfeit bills?
So the document that defined the structure of the US government also defined the services and powers that government would be expected to provide. The Preamble to the Constitution summarizes the goals as being
…to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity…
In the body of the Constitution, the government is given a list of powers for running the country. Article I Section 8 defines the powers of Congress. Some of these, such as coining money or operating the postal service, are predictable. Others, such as “…promote the Progress of Science and useful Arts…” by establishing copyright laws, are not so obvious.
Nowhere is there a power to create a Social Security program, a Welfare program, farm subsidies, Medicare, the FCC, the FAA or most of the other alphabet soup of agencies and commissions now part of the Federal bureaucracy. Where did all that come from?
Two sentences in the Constitution have been interpreted very broadly by politicians and the courts to grant added power to the government. “To regulate Commerce…among the several States"…” (commonly referred to as the Commerce Clause) and “To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers” (the Necessary and Proper Clause) are these two sentences. During the Great Depression, FDR argued that creating the various programs would either aid in regulating commerce or that they were necessary and proper. The courts agreed (eventually) and the race for power was on.
While a comprehensive review of the legal issues, decisions and dissents is well beyond the scope of this blog, one case can be used to illustrate how power began accruing to the Federal government.
In Wickard v. Filburn, the US Supreme Court expanded the power of the Commerce clause to limiting what a farmer could grow on his farm for personal use. This decision was leveraged as precedent for other cases and different causes, along with dozens of others over the years, led to the mass of agricultural subsidies, incentives, price controls and import duties of today’s marketplace.
Here are a couple of examples of the consequences:
- The American public pays twice the world price for sugar because of a sugar subsidy program that benefits a wealthy sugar barons. The program adds about $2 Billion to the price of food annually. As a result, most soft drinks have switched to corn syrup or artificial sweeteners, which some people blame for declining health and obesity.
- The peanut subsidy program not only establishes price supports and import quotas, it even limits production to individuals who have an approved production quota. While the current program was created in the 1990s, the peanut subsidy program has it’s history in the days of World War I, when the army wanted a portable source of high protein for soldiers in the field. The result is that parents pay triple the world price for peanut butter while the ‘licensed’ growers become multi-millionaires.
Why are these bad programs? Individually they might sound like a good idea: The wealth of the general public is used to provide a source of stabilized income and prices to farmers. If this was a good idea when 80% of private sector employment was tied to farming, why is it still a good idea when less than 10% is? Keep in mind that these are not the only two programs the government operates – there are over 10,000 such programs! From dairy prices to research funding, from Social Security to Welfare and Food Stamps, from the National Endowment for the Arts and National Public Radio, to billions of dollars of tax incentives for clean energy, and mandates for ethanol use.
The government has no money of it’s own – there is no great savings fund earning interest or a factory producing a product that everyone buys out of economic need and provides the government with a profit margin. The funds the government spends is taken from people: The form might be income taxes, “payroll taxes”, import duties, excise taxes and a variety of other taxes and fees. (Recently the new highlighted one such fee: The FAA charges airplane owners to register their planes. The fee is $5 per plane, and hasn’t increased in almost 50 years. Think about the hundreds of dollars that are paid to register an automobile every year, and you’ll realize that federal fees are far below the value delivered.)
It’s the funding of these government programs that the public needs to learn more about. For every dollar the government delivers to recipients of a subsidy or incentive, that dollar (and more) must be taken from someone else. No analysis is done on what purposes that dollar would have been put to had it not been taken from the earner…and if such an analysis had been done at the beginning of every program, it’s certainly not updated to determine if the original justification still exits.
Before going any further, why the “and more” in the prior paragraph? Because the dollars don’t just move magically from one bank account to another. Each program generates a small army (sometimes a large army!) of bureaucrats, analysts, experts and administrators. This army in turn establishes the rules for qualifying for each program – income levels, geographic restrictions, ethnic or racial preferences, etc. These civil servants are paid, also out of taxpayer funds, more than comparable private sector jobs. They have practically guaranteed employment, and generous benefits (paid for by taxpayers as well). I have seen reports that the larger social programs cost twice as much as the services/benefits they deliver: Food Stamps delivers $2 Billion in services, but costs the government (ah, the taxpayers) $6 Billion to operate. We don’t have to worry about fraud and waste – the program’s built-in overhead ensures that taxpayer funds are used inefficiently.
Additionally, the Federal government spends more than it receives in taxes and fees, resulting in debt which must be repaid with interest. There was a time when a majority of the debt was owed to American citizens and corporations, and the common philosophy then was that the amount of debt was irrelevant because paying the interest back to Americans would be another economic stimulus. That is no longer true, and debt repayments are a major outflow of tax revenue to foreign entities. Currently, interest on the national debt averages more than $30 Billion per month.
And over time, a complimentary army of lobbyists, funded by the various groups interested in each program, to tweak future legislation and rules to benefit their supporters. The lobbyists spend money on supporting single-issue votes in Congress. There is even a warped vocabulary surrounding these programs, which the bureaucrats and the lobbyists created: The “cutless spending cut” is a reduction in the increase of a programs funding. So program is scheduled to increase from $100 Billion to $110 Billion and the news reports that “funding was cut to $105 Billion”. More than simply shades of Newspeak.
Politicians love to label this mix of lobbyists, career bureaucrats, administrators, unions and interested others as “Special Interests” if they don’t agree with the goals of a particular program, and as “entitled” or “needy” if they do agree. From the perspective of the general public, these are all the same – people representing a claim on government money, which comes from the pockets of that same general public.
There is another dimension to all of these programs, and it is more insidious than the others: Federal spending comes “with strings attached”, and it is these strings which make the states and the public dance to the tune from Washington, DC. For example, the Federal government does not have the power to dictate what food is sold in school cafeterias or bake sales in the public schools around the country. But when legislation that does just that was passed, it wasn’t an outright ban on “junk food” or “non-nutritious” snacks. It was a string on existing federal school funds: You want to get these BILLIONS of dollars, then you must follow these “guidelines”. Once a program gets its hooks into the operation of an organization, Congress and the bureaucracy is free to add such strings at any time. This is how state speed limits were tied to federal highway funding, and welfare block grants to state medical programs.
The conversation the public must enter into with their representatives is not whether a given program should have funding increased or decreased – but should the program exist at all. Not a vague “this program intends to deliver X” but a proven track record of delivering, or an end to the program entirely.
The government established in the United States was designed to deliver a limited number of services, and to wield a certain amount of power. It was not intended to ensure an income or a job or a home for every citizen, but that is the direction it has been going for sixty years. It cannot continue without bringing ruin to the country. Finally, people are talking about the current situation not being “sustainable”, but there is still no wide discussion on how we make a significant change.
President Obama was elected on a promise of hope and change, with very little in the way of details. So far all he has done is moved the country closer to catastrophe than anything else. Even members of Congress who voted for his various programs did not advertise that fact when they ran for re-election this year. The public has begun to notice that change of a different kind is needed: Not the Democrat/Republican kind of rearranging spending priorities, but the difficult – and necessary – kind of reducing spending, ending programs, and reining in the growth of government.
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