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Steps to Limited Government
Posted by: Jon Henke on Monday, October 17, 2005

In 1994, Republicans were swept into office on a promise of "the end of government that is too big, too intrusive, and too easy with the public's money". How'd that work out? About as well as public choice theory predicts it would...

Today, a few Republicans are reconsidering that 4th helping of dessert.
House Republican leaders have moved from balking at big cuts in Medicaid and other programs to embracing them, driven by pent-up anger from fiscal conservatives concerned about runaway spending and the leadership's own weakening hold on power.

Beginning this week, the House GOP lawmakers will take steps to cut as much as $50 billion from the fiscal 2006 budget for health care for the poor, food stamps and farm supports, as well as considering across-the-board cuts in other programs.

That's very nice, but—like Porkbusters—it's the tip of the iceberg. Without structural reform, they're merely playing at the corners of the budget. As Steve Verdon wondered, "Where was this kind of drive a year ago, or for that matter from the day Bush opened up the Federal coffers and started spending like a heroin junkie with a major jones? I'll tell you where, nowhere. Nobody cared. Nobody will care in a few more weeks". John Cole wrote of Porkbusters, "it is a short-term gimmick, when what is needed is a long-term shift in attitudes about spendings, taxes, and priorities".

The problem today is that our political system is geared towards rewarding spending and tax cuts, but without reflecting (internalizing) the costs of each. As Jane Shaw writes....
...because legislators have the power to tax and to extract resources in other coercive ways, and because voters monitor their behavior poorly, legislators behave in ways that are costly to citizens.
A solution—something more permanent than Porkbusting and temporary budget cuts—is three-fold: (1) transparency, (2) a price mechanism, and (3) consequences. Here, then, are some policy proposals:

Transparency:
  • The text of all budgetary/spending legislation should be published on the internet at least Seven (7) days prior to a Congressional vote, giving citizens and legislators the time and opportunity to actually read each bill—and to express an opinion to their representatives should they so desire.


  • All specific expenditures will be voted on independently; riders are prohibited. If Congress wants to load up a spending bill with Pork, then each Congressman will have to vote up or down on each individual item. If a majority of Congressmen/Senators believe that a $233 million bridge in Alaska is a worthwhile use of public money, let them vote accordingly—individually, specifically and publicly.

    If there are 6000 similar earmarks—as there are in the Transportation bill—they can repeat the process 6000 times. It's not terribly difficult to mark each expenditure with a "yea" or "nay" vote. At the end of the day, any earmark with majority approval can go on the budget; an earmark that cannot get the approval of a majority of Congressmen on its own merits does not deserve approval as part of a larger spending bill.

The advantage here is that individual Congressmen would be held responsible for individual votes. Instead of arguing that, on balance, passing the Transportation bill was better than not doing so, Tom Delay would be obligated to explain why he voted for $233 million dollars worth of deficit spending on an Alaska Bridge. As Russel Roberts observed in the WSJ 10 years ago of such diffused-cost spending decisions, "Self-restraint goes unrewarded". This policy could begin to correct that.

UPDATE: Jason Pappas of Liberty and Culture leaves another good idea in comments...
I’d have every bill given a unique decimal priority number. Thus, an Alaskan bridge to nowhere would be given a priority of .57 and food stamp expenditure given a priority of .72, for example. If the budget exceeds limits the lowest priority items are dropped. Congress can pass any expenditure but only the top ones are funded. This would have to be combined with your independent expenditure itemization.

Congress may have to explain to their voters why a useless bridge in Alaska was given a higher priority than veteran’s benefits, if the benefits aren’t funded while the bridge is. The numbering can be a simple average of each senator’s numerical assignment. Thus, a vote of zero means "don’t fund" while a vote of one means "fund first."

Now, every tax cut will be a spending cut.


Price Mechanism:
  • A Flat Tax, national sales tax or some form of user-fee based tax system would be necessary to introduce the price mechanism to taxpayers. Failing that, the transparency and consequences proposals would at least introduce the price mechanism to public officials.


Consequences:
  • Should the federal budget run a deficit higher than 1% of GDP in any fiscal year, automatic budget cuts will apply equally to every federal expenditure at a rate equivalent to the deficit as a percentage of the budget. (i.e., if proposed spending is 10% higher than independently projected revenue, every federal program and agency will be forced to cut their proposed budget by 10% for that fiscal year)


Porkbusters, Citizens against Government Waste and short-term budget cuts are laudable measures. But without structural reform—without a fundamental change in political and economic incentives—we won't make the slightest dent in leviathan.

Limited government is a process, not an event.
 
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Previous Comments to this Post 

Comments
I think transparency would make things change pretty quickly. It makes absolutely no sense that things are not that way now. I like the other two options as well, but truly feel that transparency would change a lot of attitudes about spending in a heart beat.
 
Written By: meagain
URL: http://
The automatic budget cuts are the key. I’ve considered an alternative measure instead of an equal 10% across all programs.

I’d have every bill given a unique decimal priority number. Thus, an Alaskan bridge to nowhere would be given a priority of .57 and food stamp expenditure given a priority of .72, for example. If the budget exceeds limits the lowest priority items are dropped. Congress can pass any expenditure but only the top ones are funded. This would have to be combined with your independent expenditure itemization.

Congress may have to explain to their voters why a useless bridge in Alaska was given a higher priority than veteran’s benefits, if the benefits aren’t funded while the bridge is.

The numbering can be a simple average of each senator’s numerical assignment. Thus, a vote of zero means "don’t fund" while a vote of one means "fund first."

Now, every tax cut will be a spending cut.
 
Written By: Jason Pappas
URL: http://libertyandculture.blogspot.com/
I think your alternative and the transparency by themselves, even without the Price Mechanism (but even moreso with it) would fix a hell of a lot. Heck, even the transparency would help a lot. My priorities would be the Transparency, then the Consequences As Proposed By Jason Pappas, then the Price Mechanism.
 
Written By: Dave
URL: http://
The total transparency would also lead to another vastly important change in the budgetary process. Congress would have to focus on fewer items, meaning that it would be impossible for bills to grow to 6000 line items. Congress would be able to accomplish less in a Congressional session thereby resulting in a net gain for the American people due to the passage of fewer inane pieces of legislation.
 
Written By: David Earney
URL: http://www.daves-not-here.net
Should the federal budget run a deficit higher than 1% of GDP in any fiscal year

Is there any particular reason why we don’t have a "collect the money first, then spend it" budget process instead of the current "let’s guess how much we are going to have and then spend even more" ’process’? Congress is dividing up the pie before they even know how big it will be.

Then require a national state of emergency to spend more than the amount collected; if we actually managed to spend less than we collected in taxes, the overage goes into a fund. You can even state that anything more than some percentage of the amount collected would have to be given back as a rebate.

 
Written By: Mark A. Flacy
URL: http://
Re: Transparency. Seven days is not enough time for interested folks to read, analyze, and, if necessary organize to pressure our elected representatives. A more reasonable period would be 21-30 days. Some of us recognize a bad idea immediately but need the time to inform the rest of us as to why it should be voted down. The power of the blogs is cumulative.
 
Written By: Harry Taft
URL: http://
Re: Transparency. Seven days is not enough time for interested folks to read, analyze, and, if necessary organize to pressure our elected representatives. A more reasonable period would be 21-30 days. Some of us recognize a bad idea immediately but need the time to inform the rest of us as to why it should be voted down. The power of the blogs is cumulative.
 
Written By: Harry Taft
URL: http://
How about computing the per capita federal spending in each state or congressional district and assessing a tax surcharge or granting a tax credit to taxpayers based on the spending level in their state or district? Might need a constitutional amendment to do this, but it would be a disincentive to profligate home spending by the likes of Don Young.
 
Written By: Attila (Pillage Idiot)
URL: http://pillageidiot.blogspot.com/
The text of all budgetary/spending legislation should be published on the internet at least Seven (7) days prior to a Congressional vote, giving citizens and legislators the time and opportunity to actually read each bill—and to express an opinion to their representatives should they so desire.


Say, this sounds a little bit familiar...

That stood out to me as very interesting.

Excellent post in general.
 
Written By: zach
URL: http://zra.livejournal.com
Good news - there is no need to worry the debt is under control. The current borrow and spend regime is providing GDP growth at a greater rate than the growth of debt. Meaning the Debt to GDP ratio is falling, your economy is getting stronger.
 
Written By: Unaha-closp
URL: http://
Little bit of faulty math there, with the automatic budget cuts. If GDP is 1, spending is 1.1, a ten percent cut would give 1.1*.9 or .99, if the budget is 10% over you would need a 9.1% cut. (Although I have no problems with a 10% or even 50% cut, but hey that’s me) Otherwise great stuff. Especially the line by line voting thing.
 
Written By: Joe_canadian86
URL: http://
You are my hero sometimes.
This may be one of those times.
 
Written By: Adam
URL: http://sophistpundit.blogspot.com
All new multi year spending should have a sunset provision in 5 years. It must then be reauthorized at that time or is automatically cancelled.
 
Written By: Abu Qa’ Qa
URL: http://
If any of this is to work, another necessary component is Civil Service reform. You have to be able to effectively eliminate positions when budgets are shrunk. Currently, that is next to impossible. Apart from a failure of nerve, why have the Republicans not eliminated the Departments of Education or Energy? Because (as far as I know) there is no way to actually end the civil service jobs of the department employees, and there are too many to shift into other departments (which wouldn’t do anything towards reducing govt spending anyway).
 
Written By: Dan
URL: http://
I’ve been noodling around with the idea - which requires some more thought as to why it might not work - of amending the Constitution to prohibit (perhaps with a few clearly-delineated exceptions) (1) the federal government from giving federal revenues to states or localities, or (2) creating mandates that require states or localities to spend their own revenues. Basically, accountability is defeated when decisions about spending public money slosh back and forth between governmental entities, or when the federal trough is seen as a means to launder taxpayer funds back to local officials who couldn’t justify spending the same money locally, but can justify it on the grounds that the funds were being held hostage in Washington and have been liberated for local use.
 
Written By: Crank
URL: http://www.baseballcrank.com
I know you guys are trying to be serious and such but without another revolution or civil war we will never get the pols to consider your suggestions, let alone do anything about them.

The U.S. is a republic but the people can’t seem to figure out how to get rid of their representives that don’t do good and find ones that will and elect them.

Everybody is stuck on stupid.

Papa Ray
West Texas
USA

 
Written By: Papa Ray
URL: http://
I really like Pappas’ idea, if not for the mere fact that it would make C-SPAN exciting. Can you imagine how senators like Voinovich and Kennedy would act if their pet projects were pitted against one another to avoid being cut?
 
Written By: intelrupt
URL: http://
America has a growing economy that is expanding your GDP faster than your borrowing is growing (debt/GDP ratio is decreasing) - this is a very good thing. It means the level of debt is becoming more and more manageable all the time under the present policy.

Saying small government is better is not enough reason to change. Less Keynesian borrowing & spending may mean less growth (reduce debt growth but reduce GDP growth = higher debt/GDP ratio) - a very bad thing.

Provide a clear indication that the current growth is unsustainable or there is no reason to change policy.
 
Written By: Unaha-closp
URL: http://
Excellent ideas Jon, though I have one more I think you might like to see. This is the kind of stuff we need to be talking about if we’re going to get serious about the size of the federal government.
 
Written By: Matt McIntosh
URL: http://conjecturesandrefutations.net
Nice ideas. Especially the transparency. I love it. Making the text available is huge, as is the vote on each earmark. If they were forced to do that, not only would those disappear as a matter of accountability, but as a simple matter of convenience/getting the thing out the door.

Harry Taft-
I hear ya, but there is no way that would ever work. Even asking seven days will be a near impossibility. As it is right now, members of Congress themselves often have to vote without reading it first. It is commonplace for the leadership to produce one copy of legislation (often hundreds of pages long), keep it in the chamber where everyone’s staff will be forced to share it, and introduce it so late in the game that no one gets a chance to even have aides pore through it.

Then they vote in the middle of the night and hold that vote open ’til the vote goes the way they want. They pulled this stunt again just last week.

If this process can be exposed for the bullshit that it is and made transparent and accountable, it will be the biggest step all by itself. No more posing and preening for your constituents about what you brought home for the district, without having to answer for what you sent to Alaska (or wherever).

As for the rest of the suggestions—all valid, but I’m not going to favor a flat or consumption tax over a progressive income tax that targets unearned income over earned payroll income—I am after all a liberal. More on the tax side than the spend side.
 
Written By: Mr Furious
URL: http://misterfurious.blogspot.com/
I’ve found WashingtonWatch.com to be a useful resource about where all the money goes.
 
Written By: T. Gordon
URL: www.washingtonwatch.com
One of my accounting profs suggested this simple prescription for reducing the size of government: abolition of state and federal payroll deductions. Asking the average joe to write the IRS a check for several thousand dollars every April 15 would encourage a majority of the population to angrily demand spending cuts on all levels. Ending payroll deductions would be the blunt instrument needed to accompany your very effective suggestions for greater transparency.
 
Written By: Leonidas
URL: http://
Re Transparency, I would vote in a heartbeat for the Presidential candidate who said that he would veto any bill (spending or otherwise) that exceeds 25 pages in length (12 point TNR font, double spaced). I used to intern on the Hill and it appalled me how legislation got passed, and even then that wasn’t necessarily the final product until things got horsetraded again in conference committee.

Anyhoo, the page limit is not quite like the line item veto (which I think could be used by the executive in an abusive manner), but you don’t have the single massive bill either. Also, much easier to read 25 pages in 7 days than 500+.

Oh, and I would also have a 10-year sunset clause for every Federal Agency. If they fixed the problem, no need for them to go finding "new" problems to fix. If they haven’t shown their continued relevance after that point, such that Congress wants to reauthorize them anew, they’re gone. If they haven’t fixed the problem they were supposed to address, useless government agency, so might as well let it expire. If there is a new problem, let that be separately authorized by Congress. Won’t have the same civil service problems either, b/c everyone will flee in the face of the 10 year deadline, not knowing if they will be reauthorized or not.

Also, no argument on limiting government can be complete without figuring out ways to reign in the Federal Agencies and their ever-proliferating rulemaking capacities. (Stat I saw the other day suggested that the cost of regulatory burdens is now about equal with income tax costs). Only new approach that I can come up with is limiting agencies to setting standards only (i.e., EPA can set clean water standards, FDA drug quality standards, OSHA healthy worker standards) but then eliminate their right to enforce standards (or, let coming into compliance with standards be an absolute bar to liability for Superfund, product liability, workman’s comp. claims, etc.).
 
Written By: Dee G.
URL: http://
Harry Taft: You don’t want it too long. The big money large media organizations and lobbing groups can put together a slick advertising campaign within a month. But you can get a swarm of email/letter/phone campaign going within a week. I would go as high as 14 days but not over. Most Americans don’t have the time to have an attention spanned beyond that. The first week all the partisan people will have made up their mind and will be stirred up with battle cry’s and talk. By the second week normal people will have time hear the jibber jabber on the radio and internet and will have had time to think it over. By the third week someone will be there to tell them how to think. I’d stick with faster the better.

My biggest concern is how micro management do we get. Does congress have to allocate each and every hammer used by the army? What about bullets? What about Javelin missiles? If they just bundle all bridges in the country into one “Bridge Bill” does that mean that the Alaska Bridge-To-Nowhere can get funded within along with other bridges that really are needed? Or do they have to specify each and every bridge that needs to be built or repaired.
 
Written By: Ryan
URL: http://
Just a note there Simon... if you lay off the drugs you might be able to spell "drug" correctly.
 
Written By: Ryan
URL: http://
These are some great ideas. The current crowd is never going to stand for it though. We need to change the rules. We really need to vote them all out. If the next group doesn’t make progress we vote them out too. Rather than incumbency being an advantage we need to make it a disadvantage. All too often we get hung up in the dem vs rep thing. History has shown us that they are all the same. They just lie to different constituencies
 
Written By: cindy
URL: http://
Ryan, I think if we reached the point in the process where we were able to worry about over-managing vs. some slush in the budget, we might be able to declare victory. No government budget will ever be perfect, but your concerns are something we have no need to worry about just yet. The first step is to prevent the horrific sort of nonsense we are seeing right now (6,000 earmarks added to the transportation budget).
 
Written By: Eric
URL: http://grumbles.mu.nu/
We already have the text of bills available on the internet at each stage of the process. Just go here: http://thomas.loc.gov/.
 
Written By: Charles D. Quarles
URL: http://spaces.msn.com/members/cdquarles/
What about term limits for congressmen? If we can’t make them behave, at least we should be able to get rid of them over time. I think 3 terms are enough for the senate and 7 terms for the house...enough to make sure congressmen have incentive to get reelected, but short enough to keep them in congress for only one generation of incompetence.
 
Written By: tom cuddihy
URL: http://
Tom Cuddihy is a fan of term limits.

I suggest instead a ban on consecutive terms. No has the benefit of incumbency, but a good legislator can run on a good record.

Yours, TDP, ml, msl, & pfpp
 
Written By: Tom Perkins
URL: http://
"No has" /= "No one has" Arghh! TDP, ml, msl, & pfpp
 
Written By: Tom Perkins
URL: http://

 
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