Will Washington Ever Cut Spending?

By Deroy Murdock

Monday, December 24, 2012

 

Raul Castro is right.

 

The powerful brother of dictator Fidel Castro is almost always wrong. But he was perfectly right when he told comrades in Camaguey, Cuba: “No country has the luxury of spending more than it has.”

 

Even now, as America slouches toward the fiscal cliff, House Speaker John Boehner (R., Ohio) and leading Republicans seem ho-hum about limiting federal expenditures and restraining a government gone crazy. Obama and top Democrats are downright allergic to these concepts. Too bad this Cuban tyrant’s rare words of wisdom escape Washington’s spendaholics.

 

There are billions of ways to shrink the $3.8 trillion federal budget. Let’s start with these:

 

First, the Mack Penny Plan, created by outgoing Congressman Connie Mack (R., Fla.), would cut a penny from each dollar that Uncle Sam spends each year, for eight years. In 2013, Congress would spend 99 cents per dollar disbursed today; in 2014, 98 cents, etc. Rather than consume 24.3 percent of Gross Domestic Product today, federal spending in 2020 would be capped at 18 percent, just below the 18.2 percent at which Bill Clinton left it.

 

Such steady reductions, spanning nearly a decade, finally would lasso the spending monster. Washington policymakers should be able to prioritize and reallocate funding within a predictable, slowly decreasing budget.

 

Second, Washington should terminate antiquated and extraneous programs.

 

  FDR launched the Rural Electrification Administration in 1935 to bring power to Appalachia. It morphed into the Rural Utilities Service and now spends taxpayer dollars to bring wind turbines and broadband Internet to the countryside, including an $81.6 million gift to VTel Wireless. Now that Appalachia has been electrified since at least 1960, let’s declare, “Mission accomplished,” thank the staff, retire them, and sell their offices.

 

  Except for food-safety inspections, the Agriculture Department creates little value. Americans can thrive without agrocrats dictating sugar prices and paying farmers some $1.8 billion annually not to farm. Food growers and eaters can manage without Washington’s relentless interference.

 

  Washington expands affordable housing, so millions of Americans can buy homes, and simultaneously supports housing prices, so millions of Americans can enjoy precious nest eggs. Which is it? Washington should close the Department of Housing and Urban Development and exit the housing sector, which it nearly demolished in 2008.

 

   Launched in 1970, the Public Broadcasting Service challenged the three original broadcast networks, back when many TVs received just 13 channels. Today, anyone unhappy with ABC, CBS, or NBC can watch C-SPAN, the History Channel, National Geographic, Turner Classic Movies, and literally hundreds of other culturally enriching cable channels. Thousands of DVD titles offer tremendous educational and artistic value. And don’t forget books. PBS and Jim Lehrer will survive once they fully depart the federal dole and let donations and other non-government money finance 100 percent of their budget rather than a mere 85 percent, as they do today.

 

 

Third, between December 2008 and December 2011, Washington-based executive-branch civilian employees grew from 345,326 to 368,706. This 6.8 percent expansion across Obama’s first three years is ripe for reduction, especially when we consider these feds’ paychecks. According to Bureau of Economic Analysis data analyzed by Chris Edwards of the Cato Institute, federal civilian employees in 2011 averaged $128,226 in total compensation ($84,671 in wages and $43,555 in benefits). Private-sector workers, meanwhile, earned half that: $64,560 ($53,463 in wages and $11,099 in benefits).

 

This federal-wage advantage can be obscene. Despite taxpayer bailouts of $170 billion and counting, Fannie Mae and Freddie Mac executives get paid as if the housing bubble they helped create still were expanding. Based on median-cash-compensation figures in a December 10 report by the inspector general of the Federal Housing Finance Agency, 825 directors at Fannie and Freddie last year made at least $205,300. Among the agencies’ vice presidents, 166 received a minimum of $388,000. Thirty-one senior vice presidents saw at least $723,500. And eleven executive vice-presidents scored $1,718,200 or more. And this is what these 1,033 feds took home after wrecking the housing sector!

 

“The federal workforce has become an elite island of secure and high-paid workers, separated from the ocean of average American workers competing in the global economy,” Edwards commented. “Federal wages should be frozen or cut, overly generous federal benefits should be overhauled, and the federal workforce downsized through program terminations and privatization.”

 

Fourth, rather than grant Obama’s wish to borrow whatever sum he desires, former Reagan Treasury official and Forbes columnist David Malpass would impose a hard ceiling to curtail spending. Today’s debt limit is no such barrier. Instead, it resembles an elevator’s digital indicator that cheerfully chirps past each floor as it zooms skyward.

 

“The current law doesn’t work because it threatens defaults and government shutdowns, but not spending cuts,” says Malpass, an economist at Encima Global in Manhattan. “Better would be a permanent debt-to-GDP limit that forces Washington to do what it is paid for — make true spending choices.”

 

Malpass explains further: “A new law would give the president extra authority to cut spending (e.g., impoundment authority or a fast-track process for entitlement reform), but then shove him in that direction. When the debt ceiling has been breached, this law would require that the president give monthly spending updates to the public — in person. It would prohibit all raises for government employees making over $100,000 annually and require lobbyists to file weekly disclosures of their contacts. It would defund congressional travel while over the debt ceiling. The idea is to make Washington wear a hair shirt that is so uncomfortable that federal officials actually cut spending.”

 

If Washington will not stop hiking spending, spending hikes will stop Washington. How sad that nearly every Democrat and too many Republicans cannot grasp a concept self-evident even to a Cuban Communist.