Government Mess-ups this week
Posted March 4, 2011on:
By Tad DeHaven
Over at Downsizing the Federal Government, we focused on the following issues this week:
- Block-granting Medicaid would be a good short-term reform to get the program’s ballooning spending under control.
Medicaid Block Grants
The Washington Postreports that several governors are advocating that Medicaid be converted to a block grant program. Block grants would free the states to experiment with cost-effective ways to provide health care to low-income populations by removing burdensome federal rules and regulations. Giving states a fixed lump-sum payment would also allow federal taxpayer costs to be directly controlled.
Medicaid spending has exploded, and would further increase under Obamacare as a Cato essay on Medicaid reform points out:
Spending jumped from $118 billion in 2000 to $275 billion by 2010. And even before the 2010 Health Act was passed, spending on the program was expected to double in cost to $487 billion by 2020. The 2010 law will boost Medicaid’s cost by about $100 billion a year by 2020.
According to the essay, block-granting Medicaid and freezing outlays would generate considerable savings to taxpayers:
A better reform would be to block-grant the entire Medicaid program, including both acute care and long-term care, and freeze outlays at the current level. If policymakers block-granted the program and froze spending at the 2011 level, the savings would total about $760 billion over the 2012–2020 period, and annual spending would be reduced by about $190 billion by 2020.
Federal taxpayers cannot afford the program in its current form, and the states do not have the money to fund the program’s expansion under Obamacare. Thus, block-granting Medicaid would be a good short-term reform to get the program’s ballooning spending under control. However, the essay reminds us that removing the federal government from the equation altogether should be the long-run goal:
In the long run, federal Medicaid spending should be phased out completely. After all, funding for the program comes from taxpayers in the 50 states, so we may as well keep the money in the states and allow each state government to determine what sort of health care policy it wants to pursue.
- Policymakers who are concerned with bureaucratic duplication and waste should focus their efforts on limiting the government’s capacity to spend.
GAO Report on Duplicative Programs
A Government Accountability Office report on duplicative federal programs is prima facie evidence that the government is a bloated mess. For example, there are 82 federal programs involved in teacher quality, 80 programs involved in economic development, and over 100 programs involved in surface transportation.Sen. Tom Coburn (R-OK) summed it up best in his press release on the GAO report:
This report confirms what most Americans assume about their government. We are spending trillions of dollars every year and nobody knows what we are doing. The executive branch doesn’t know. The congressional branch doesn’t know. Nobody knows.
Nobody knows because no human being could possibly keep sufficient tabs on thousands of programs in a $3.8 trillion federal budget. Compounding the problem is the fact that policymakers devote much of their time to fundraising, campaigning, and other distracting activities.
The report’s takeaway, therefore, should be that the federal government’s scope needs to be drastically curtailed. Unfortunately, a typical response to the report has been to cite it as further evidence that policymakers must “eliminate waste” and “make government more efficient.” Coburn says “This report also shows we could save taxpayers hundreds of billions of dollars every year without cutting services. And, in many cases, smart consolidations will improve service.”
No, no, no.
Most of the “services” discussed in the report need to be eliminated, not consolidated. Turning 82 teacher quality programs into, say, 10 doesn’t change the fact that the federal government should not be involved in education in the first place. (Not to mention that the federal government’s involvement in education has been a failure.)
Throughout the decades, numerous efforts have been undertaken to clean up the federal bureaucracy (e.g., Hoover Commission, Grace Commission, and Al Gore’s “Reinventing Government”). None of these house cleaning endeavors curbed the federal government’s expansion, let alone tamed the bureaucratic wilds.
James Madison wrote in Federalist 45 that the powers delegated to the federal government by the Constitution “are few and defined.” However, the federal government gradually assumed powers that are now many and undefined. Excessive bureaucracy is a natural, and inevitable, result. Thus, those policymakers who are sincerely concerned with bureaucratic duplication and waste should focus their efforts on reinstituting limits on the government’s capacity to spend. Policymakers who pretend otherwise are just wasting their time — and that of taxpayers
- Federal spending would still increase in fiscal 2011 if Republicans get the $61 billion in funding cuts they’re seeking.
Spending Still Increases with GOP Cuts
PrintHouse Republicans engineered a continuing resolution for fiscal 2011 that would trim $61 billion in “regular” discretionary budget authority versus fiscal 2010. The Obama administration and the Democratic majority in the Senate balked at the cuts, and a two-week continuing resolution will be passed in order to avoid a “government shutdown” and give the sides more time to reach an agreement.
Based on the Congressional Budget Office’s score of the continuing resolution containing $61 billion in funding cuts, and the CBO’s recent budget projections, both discretionary and total federal outlays (actual spending) would still be higher in fiscal 2011 versus fiscal 2010.
Keep these charts in mind the next time you hear or read that the Republicans’ supposedly “major spending cuts” will lead to reduced economic growth and hundreds of thousands of jobs lost.
- The solution to a lot of the problems caused by farm subsidies lies not in changing the direction of the programs, but in abolishing them.
Rearranging Chairs on Farmhouse Porch
Mark Bittman had a column on the NYTimes online “Opinionator” blog yesterday on farm subsidies. He included a fairly (but not completely) thorough list of what is wrong with farm subsidies in America, but he ultimately comes down on the side of “fixing” farm subsidies rather than ending them altogether.
Bittman acknowledges that the “temporary” programs intended to offset the worst effects of the Great Depression have morphed into the bloated, corrupt, regressive and damaging programs we see today, and yet he still has enough faith in government to advocate new programs. He would like to see farm subsidies reformed to (a) encourage farmers to grow foods that Bittman determines we need more of; (b) re-size American farms to what he thinks are the appropriate size; (c) help more people to go into farming; (d) prevent farmland from being converted into higher-value development; and (e) allow us to spend more money on programs he thinks more worthy (high-speed rail, for example).
Some of the money for the new farm programs would come from the budget, primarily from the so-called “direct payments” that flow to farmers and landowners based on past production of certain crops, but Bittman seems attracted to the idea of new taxes on food processors (which, you can be sure, would be passed on to consumers). He alleges the food companies are the main beneficiaries of farm subsidies, even as he admits that consumers have benefitted from lower prices of subsidized commodities.
The solution to a lot of the problems caused by farm subsidies, however, lies not in changing the direction of the programs. Perhaps unwittingly, Bittman himself has pointed to the way out:
The subsidy-suckers don’t grow the fresh fruits and vegetables that should be dominating our diet. Indeed, if all Americans decided to actually eat the five servings a day of fruits and vegetables that are recommended, they would discover that American agriculture isn’t set up to meet that need. They grow what they’re paid to grow: corn, soy, wheat, cotton and rice.
While I agree that American farmers are producing far more for government programs than they are the demands of the market, the solution is to get rid of the farm subsidies. If Americans decide to eat more fruit and vegetables, you can be sure that farmers here or abroad (and it does not matter which) will be happy to provide them. The solution lies not in tinkering with the program in the hope that finally, this time, bureaucrats in Washington will get it right, but in freeing the farmers from government interference totally, and letting the market decide which foods are grown.
See this Cato essay for more on farm subsidies.
- “Other mandatory” programs are often forgotten in the debate over how to rein in our extraordinary deficits and mounting debt. That needs to change.
Spending Growth: Mandatory Programs
While Congress haggles over Republican ambitions to trim $61 billion in funding for domestic discretionary programs, it’s important to remember that mandatory (or “entitlement”) spending is the main driver of recent and future budget growth.
The following chart compares fiscal 2007 spending to the president’s proposal for fiscal 2012 for the largest areas of overall federal spending:
Note that the area of spending that has increased the most dramatically is “other mandatory.” Major programs in this category range from food stamps to retirement and disability benefits for federal workers. The following chart shows the increase in spending for the largest of these programs:
This area of spending, and the programs that it consists of, are often forgotten in the debate over how to rein in our extraordinary deficits and mounting debt. That needs to change.
I think all these facts and figures speak for themselves. Our government isx so far out of control that nothing short of totally abolishing the entire current administration and congress AND PROGRAMS OF ALL KINDS will get us back to maybe square five or six where our children and future tax payers has a fighting chance at some kind of life after government. BB