Freeman

ARTICLE

Notes from FEE: Repeal, Repeal, Repeal

What Will the New Republican Congress Do?

JANUARY 01, 1995 by HANS SENNHOLZ

Filed Under : Government Spending, Morality

Even if the course of the Federal Juggernaut does not change significantly in the coming months, we are pleased to see a change of drivers. The reins of power when held for long periods of time breed inefficiency, arrogance, corruption, and many other vices. To change the drivers is to recondition the monster and make it run more efficiently. But a renovated Juggernaut may be even more predacious than one which bungles and lumbers frequently. Therefore, we are hoping for much more than a new team of eager drivers. They must brake the terrible force, halt it, and dismantle it. They must repeal the laws and regulations which built the Juggernaut.

The American people have entrusted Republicans with control of Congress only twice since 1930, in the elections of 1946 and 1952, and returned it to the Democrats each time after one term. In both cases the Republican Congress did not deviate from the given course by a single degree. On November 8, 1994, the people gave the Republicans one more chance to guide the political process along the lines of a legislative plan called “Contract with America.”

The Contract envisions a Constitutional amendment that would mandate a balanced budget. An equality of revenue and expenditure obviously does not signal a change of direction. Given the deficits of hundreds of billions of dollars, it may necessitate expenditure cuts and tax increases. When forced to choose, most politicians prefer to increase the taxes on business, which is rather defenseless at the polls. To reduce expenditures is to revoke entitlements which are legislative promises made to large numbers of constituents. It takes conviction and courage to reduce or even rescind such entitlements—more conviction than most politicians ever had and more courage than they can muster.

Balanced budgets do remove the pressures of deficit financing from capital markets and may lower interest rates. Yet, no matter how virtuous such a balance would be, the call for a Constitutional amendment raises many questions of politics. To wait for a Constitutional amendment is to spend time and energy and much political capital on constitutional reform rather than on the spending predilection itself. If the Republicans have the courage to cut expenditures and balance the budget, they can start right away without a Constitutional amendment—as they used to do so admirably before the dawn of the New Deal and New Republicanism. During the 1920s Presidents Warren Harding and Calvin Coolidge retired one third of the World War I debt.

A Constitutional amendment cannot impart temperance, prudence, and self-reliance on people who prefer self-indulgence, folly, and dependence. Politicians bent on spending would easily circumvent the restraint through backdoor, off-budget spending. They would create agencies that are federally owned or controlled but deleted from the budget. Or they would spend freely through a great number of privately owned enterprises that conduct government programs such as the Federal Home Loan Bank System, the Federal Home Loan Mortgage Association, and the Farm Credit System. No political scheme or device can impose integrity on people who prefer profuseness, dependence, and debt.

It is significant that the Contract promises various tax cuts but carefully avoids any reference to spending cuts. It promises to reduce the capital gains tax and even gives hope of index adjustments for inflation profits, but remains completely silent about reductions in transfer spending. Republican leaders even reassure their voters that the very pillars of the transfer system—President Roosevelt’s Social Security System and President Johnson’s Medicare System—are untouchable. These remain off the cutting table, as President Ronald Reagan used to put it.

To freeze federal spending or limit its growth to the rate of inflation does not reverse the path of the Juggernaut; it merely permits it to coast and gather strength for another dash in the future. It raises no questions on either suitability or the morality of a spending program, but rather affirms it with new allocations of funds at the given rate. To freeze federal expenditures on international development and humanitarian assistance at the 1994 budget estimate of $7.325 billion or the 1994 general science and basic research expenditure at $4.445 billion is to reaffirm those programs. Yet foreign handouts visibly impede economic development by financing government enterprises and political largess. The post-World-War II recovery of the European countries, for instance, was inversely proportional to the sums of Marshall aid received. Great Britain, the most favored recipient, experienced a painfully slow recovery; West Germany, the vanquished recipient with the smallest per capita aid, recovered miraculously. In recent years, Chile, with General Pinochet in power, was cut off from all U.S. handouts; unhampered by political largess, its economy grew by leaps and bounds.

Economists always return to the question of suitability: does the program actually achieve what it sets out to achieve? Their answer is universally negative. Political intervention in economic life invariably makes matters worse by disarranging the production process. Political coercion always impairs voluntary cooperation. Yet, it may be rather popular with those individuals who expect to benefit from the coercion. It is dear to the heart of every legislator and regulator who wields the lash of coercion.

The question of morality, which deals with the principles of right and wrong, while often maligned and belittled, does overshadow all political action. It wants to know, for instance, whether the 1995 federal outlays of $11.828 billion for higher education or the $156.135 billion for the Medicare program are right and proper. The architects of these transfer systems obviously argue for the righteousness of such transfers. The critics deplore and condemn their sponsors for engaging in raw political plunder. In their judgment, transfer policies force most Americans who labor without the benefit of higher education to subsidize an educational elite whose working and living conditions by far exceed those of the workers who are forced to support them. It is political evil which brings forth ever more evil.

The Medicare program raises a similar question of political morality. Is it fair and proper for the working population which is struggling to raise a new generation to pay some $156 billion in medical bills for a leisure class of retirees whose personal wealth visibly exceeds that of the working class? Is it moral to seize income and wealth from any individual for the benefit of other individuals?

The Republican Congress must raise these questions if it aspires to dismantle the terrible force. It must unhesitatingly reject all political plunder and dismantle the transfer system with all its entitlements and man dates. It must rid the country of affirmative action policies which alienate and disintegrate, and eliminate all special privileges based on race, gender, disability, and sexual orientation. It must rescind all laws and regulations which strangle business and torment businessmen. In particular, it must repeal the Disabilities Act, the Clean Air Act, and other regulatory acts passed in recent years, and liquidate the FDA, FTC, EEOC, OSHA, EPA, HHS, HUD, BATF, CPB, NEA, and many other regulatory authorities. In short, it must dismantle the task forces of the federal Juggernaut.

Human history must be understood as a theater of diverse groups of individuals guided by incompatible ideals and values and pointing in opposite directions. Our theater is managed by the forces of political power and legislative and regulatory command; the forces of individual freedom and private enterprise have barely been audible in the din of command politics. The November 8th election has given them another opportunity to be heard in the coming session of Congress. History will judge them not by the speeches they will give and the number of new laws they will pile on the mountain built by their predecessors, but by the number of laws they will repeal. To be discernible in American history they must repeal, repeal, repeal.

 

Hans F. Sennholz

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January 1995

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