WASHINGTON, May 27, 2012 – A Congressional Budget Office Report warns that tax increases in 2013—the kind that would be caused by the expiration of tax cuts at the end of the year—could cause a double-dip recession. If there weren’t a presidential election coming, it would be called a depression. I call it Great Depression Deux.
There is no reason it has to be that way. Washington D.C. doesn’t have a tax problem, it has a spending problem. Cutting spending is easy if you refuse to buy into the wailing and gnashing of teeth by bureaucrats that always accompanies talk of cutting their budgets.
Take for example the proposal to cut the annual census questionnaire sent out by the Census Bureau.
The Constitution requires a census every ten years for the purpose of apportioning congressional seats among the states. Doing a census every year and for purposes other than apportionment is pretty clearly beyond the Census Bureau’s charter. It would seem a pretty safe bet to cut it. Nevertheless, the proposed cut drew hordes of protest and dire warnings from the director himself.
If we could afford the cost of an annual survey and if the people really wanted to be counted that often, there would seem to be little harm in the annual survey. But in fact when we are borrowing 42 cents of every dollar we spend we cannot afford it—and people are rebelling against the long and intrusive nature of the questions. Some of my more libertarian friends answered the 2010 census “one” or “two,” as appropriate, but I took a more moderate stance. I answered all the questions my great grandparents answered in 1910.
The interesting thing about the census is that every one, without exception, asks for a little more information. Although not the only resource, the censuses are good resource for genealogy—and that’s the problem. The annual tally is being supported by the director and business groups because they rely on it for demographic information they use in advertising. Like barnacles on a ship’s hull, every government program attracts adherents who begin to rely on it for reasons that have nothing to do with its original purpose.
Let me pose the question in a different way: how do you, the taxpayer, like funding marketing data for business so they can more effectively target you for advertisements?
Then there is the Export-Import Bank. The bank was first established in the 1934 to finance exports to the Soviet Union—an interesting story in itself. Sallie James has written extensively on the topic at Cato, beginning last summer. Today it is just more corporate welfare. It even goes by the nickname of “Boeing’s Bank.” Does Boeing really need the taxpayers to fund a bank for it? Yet instead of closing it down, the Obama administration wants to enlarge it. Cronyism at its finest—and I might add that the issue of closing it has been around for a decade so both parties are playing the same game.
In both of these instances we see the phenomenon of bureaucracy in action. I experienced it first hand in the 1990s while helping to downsize the military to reap the peace dividend following the fall of the Soviet Union. The experience is hardly unique.
When threatened with extinction or even modest budget cuts, bureaucracies all react the same way: both as organizations and as individuals in them. The reactions are much like the stages of grief. The first stage is denial: This couldn’t possibly happen to us. We’re far too important to downsize/cut/close (pick the appropriate verb). The director’s defense of annual community survey is exactly this.
Then there’s the anger stage: They wouldn’t dare! This is all just political! The media and affected clients are sounding that tune for the Census Bureau and the ExIm Bank.
When that fails to convince, the next step is to come up with a new mission—which the Obama administration did proactively almost a year before the ExIm Bank’s charter was set to expire—or simply to point out the wonderful things that the organization does, like the fact that business relies on census data. That’s bargaining. When bureaucracies bargain, they try to pull in as many allies as possible.
If the decision to cut is top-down, as it was in the military restructuring I was involved in, people get depressed (the next stage) but organizations don’t and the cuts go forward. If the transition is handled well, people get over the depression and even begin to see the silver lining. Eventually they accept their fate, adjust and move on. Although the transitions can be painful in the short run, people usually end up better off in the longer run.
Unfortunately, in politics things seem to get stuck in the bargaining phase. The cuts and threatened cuts alternate with boosts in funding or relative quiescence. The Department of Education is a great example if this. Conservatives have been talking about eliminating it almost as long as it has been in existence, yet it is still alive and kicking.
There’s a huge lesson here and it’s not just about how bureaucracies resist budget cuts. If we are serious about reducing the size and scope of the federal government, half measures won’t do. Don’t just trim the branches of government: pull them out by the roots. Use the Constitution and the principles of free market capitalism as your guide.
It’s easy if you’re really serious.
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