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Monday, June 1, 1998

Potomac Principles

Lack of Purpose Is No Bar to a Big Bureaucracy and Generous Budget

Doug Bandow, a nationally syndicated columnist, is a senior fellow at the Cato Institute and the author and editor of several books, including Tripwire: Korea and U.S. Foreign Policy in a Changed World.

Potomac Principles: Institutional Immortality, Washington Style

“Don’t count on your budget surplus before the check clears.” That should be this year’s motto for taxpayers. Politicians are already debating how to spend the extra money they expect to collect. President Bill Clinton has a $150 billion wish list, and many Republicans are almost as bad. Unfortunately, if last year’s budget deal was any example, taxpayers are unlikely to benefit from the predicted budget cornucopia.

The failings of that supposedly historic agreement were many. Federal domestic spending continues to rise even though, adjusted for inflation, it had already risen by a third over the previous decade (nearly four times as fast as family income). Three-fourths of the supposed savings is slated to occur in the year 2001 or beyond, two Congresses away. Moreover, supposedly economy-minded GOP legislators failed to corral any of Washington’s most notorious sacred cows.

The Appalachian Regional Commission, a Great Society program devoted to bringing economic growth to Appalachia, still chugs along, no closer to its supposed goal. The Rural Housing Development Service has been providing home loans to farm areas since the Great Depression. The Agriculture Department continues to pay farmers to grow, and not to grow, crops. With the help of federal subsidies, the Tennessee Valley Authority has been providing cheap power to local residents for decades. The Economic Development Administration treats most of the country as depressed and robs taxpayers in one state to underwrite citizens in another. The Agency for International Development takes money from poor people in rich countries and transfers it to rich people in poor countries, subsidizing autocracy and collectivism along the way. The Corporation for National Service pays people to volunteer. All these survive, many with increased funding.

Lack of purpose is no bar to a big bureaucracy and generous budget. Two decades ago the United States suffered an “energy crisis.” It was, in fact, a problem of bad policy, not inadequate oil. Richard Nixon limited oil prices as part of his wage and price controls, and preserved the energy restrictions after he ended the rest of the program. The result was increased demand, decreased supply, and, paradoxically, higher imports, since firms with greater domestic reserves had to send checks to those that imported higher-priced foreign petroleum. (As humor columnist Dave Barry says, I’m not making this up—the government forced domestic producers to subsidize oil importers.)

The 1973 OPEC oil embargo caused problems, but far more destructive were the activities of the Carter administration, which created a genuine crisis with a “windfall profits” tax, gasoline-allocation rules, temperature controls in “public” buildings, draconian environmental restrictions, the $88 billion Synthetic Fuels Corporation, and limits on leasing of the Outer Continental Shelf and federal lands. So Congress created the Department of Energy, which not only managed all of the dumb old programs that weren’t working, but embarked on a host of dumb new ones—efficiency standards for refrigerators and toilets, research for high-cost renewable energy, and the like.

The Department Lives

President Ronald Reagan decontrolled the price of oil in 1981 but did little to kill the department. Now energy supplies are abundant, and the Republican Congress last year . . . voted $15.9 billion for the department, a $100 million increase. Real budget cutters would instead go on a turkey shoot, killing research expenditures that underwrite business, regulatory programs that micromanage consumer choices, and Power Marketing Administrations, which subsidize favored electricity consumers.

At least the Department of Energy is only 20 years old. President Franklin Roosevelt established the Rural Electrification Administration in 1935 to bring power to rural America. Once the agency got going, it, like the Energizer Bunny, never stopped. Virtually every home now has electricity, but the program—recently renamed the Rural Utility Service—continues to provide cheap credit to some one thousand cooperatives across America. Many of the communities being subsidized, like Hilton Head Island and Snowmass, qualify as needy under no one’s definition. Except someone living in Washington.

In 1996 the GOP Congress appropriated $2.7 billion for the RUS. Last year the Republicans approved a $300 million increase, including an extra $125 million in loans for distance learning and telemedicine, programs with nothing to do with the agency’s original purpose.

Cheaper, at $24 million a year, but no less illustrative, is the Selective Service System. In response to the Soviet invasion of Afghanistan, President Carter imposed draft registration and revived Selective Service. It failed in its purpose of impressing the U.S.S.R.—Soviet leaders could always tell the difference between a list of untrained 18-to-25-year-olds and a sophisticated active-duty force. Moreover, the world in which registration was created has disappeared: the cold war has ended, the Soviet Union has collapsed, and Poland is now a Western-leaning democracy set to join NATO.

Still, registration and Selective Service live on. The President touts the importance of maintaining “the link between the All-Volunteer Force and our society at large,” as if filling out a card at the Post Office generates patriotism. Clinton also fusses about sending “the wrong signal to our potential enemies,” though the latter are few and pathetic, and would be subdued by the active force before the first conscript emerged from basic training.

Finally, the agency is pushing a “Service to America” initiative. That is, explains Director Gil Coronado, “in our routine communication with all new registrants in America, we encourage them to serve America today;’ including “community service through the Corporation for National Service.” Half of the administration’s proposed increase for 1998 was to fund this program, which solicits support for another agency that shouldn’t exist. Agency materials speak of “shifting gears” and spokesman Lewis Brodsky admits that Selective Service “can no longer dwell upon its proud past or bet on the threats of tomorrow. The system must be of proven value to America today and every day.” Thus, the agency is dedicated to simultaneously preventing nuclear war and spreading voluntarism.

When the GOP gained control of Congress in 1994, it targeted some 300 programs. Only a handful have ended. The rest wastefully carry on. There are 342 federal programs devoted to economic development, 163 for job-training, and 131 involving juveniles. Most don’t work, but they persist nonetheless. Complains budget analyst Stephen Moore, “as in the Reagan years, Republicans have quickly retreated from the agenda of making government in Washington smaller and smarter.” Which is why taxpayers shouldn’t expect to ever see their share of the federal budget surplus.

  • Doug Bandow is a senior fellow at the Cato Institute and the author of a number of books on economics and politics. He writes regularly on military non-interventionism.