A Leaner Leviathan

By Jacob Sullum (Archive) · Wednesday, December 8, 2010

Before it began its work eight months ago, one of the main knocks against the National Commission on Fiscal Responsibility and Reform was that it could do no more than recommend changes to Congress. In the end, it could not even do that, falling three votes shy of the 14 needed to officially submit its plan for congressional consideration.

Still, the commission's report, which was endorsed on Friday by a bipartisan majority of 11 out of its 18 members, is well worth a look. In addition to suggesting some much-needed reforms, including changes to the budget process and simplification of the tax code, it clearly shows, despite its talk of "painful" choices, that eliminating the federal deficit and reining in the national debt does not require radical change. Which is too bad, because even if Congress implemented every cut suggested by the report, the federal government would still be far too big, rife with programs that are unnecessary, unconstitutional or both.

The report paints an appropriately dire picture of the nation's fiscal outlook. The annual deficit, currently more than $1.4 trillion, amounts to 9 percent of gross domestic product, while federal debt held by the public, currently 62 percent of GDP (up from 33 percent in 2001), is expected to exceed the size of the entire economy by 2025, with interest alone topping $1 trillion. "America's long-term fiscal gap is unsustainable," the report says.

Despite that daunting description, the solutions proposed by the commission are mild and gradual. It suggests, for example, that Congress "hold spending in 2012 equal to or lower than spending in 2011," "return spending to pre-crisis 2008 levels in real terms in 2013" and "limit future spending growth to half the projected inflation rate through 2020."

Even this sort of modest spending restraint, of course, will provoke squeals of protest from the affected interest groups. Honeywell International Chairman David Cote said some of his fellow commission members used words like draconian and destroyed in discussing "something like a 5 percent increase over 10 years becoming a 4 percent increase over 10 years." The expectations embedded in such complaints go a long way toward explaining the cowardly profligacy that got us into the current mess.

The commission's report does not really challenge those expectations. To the contrary, it argues that the federal government should spend a little less today so that it can spend more tomorrow. The commission worries that escalating interest payments "will hamstring the government, depriving it of the resources needed to respond to future crises and invest in other priorities," such as "education, infrastructure, and high-value research and development" -- not to mention a "robust, affordable, fair and sustainable safety net."

Although the report says Congress must "eliminate waste and excess in bloated agency budgets," it repeatedly stops short of demanding an end to pernicious programs. It's all well and good to reduce federal education spending, cut farm subsidies or trim the Department of Housing and Urban Development's budget. But a legislature that was serious about setting fiscal priorities (not to mention respecting constitutional limits on federal power) would abolish these programs altogether.

Likewise, to illustrate the "alarming proliferation of federal programs," the commission notes that "the government funds more than 44 job training programs across nine different federal agencies, at least 20 programs at 12 agencies dedicated to the study of invasive species, and 105 programs meant to encourage participation in science, technology, education and math." But the report never raises the possibility that the proper number of such programs is zero.

Given the scope of the commission's mandate, it is perhaps not surprising that it did not delve into such questions. But unless we are comfortable with a federal leviathan that consumes more than a fifth of the economy, which it would continue to do forever even if the commission's plan were enacted unchanged, we need to go beyond demanding that the government do more efficiently things it should not be doing at all.

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