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A Budget Cutting Fantasy

April 9th, 2011 by Myrhaf · 23 Comments · Politics

Downsizinggovernment.org stunned this blogger with how much useless government can be cut — while Congress is haggling over less than 1%. Let’s see how much I can find to cut in less than an hour. This is, of course, an exercise in fantasy; somehow politicians don’t think like you and me.

Take the Department of Agriculture. When I blogged about this department in 2007 the budget was $20 billion. Now it spends $142 billion! Most of this explosive growth comes in food subsidies (but even if you don’t count food subsidies, the department’s budget has doubled in four years). The DOA now gives out food stamps, school meals and WIC. If you tried to stop these programs, leftists would wail about starving po’ folk. Do we want to take the milk from babies’ mouths just to give money to greedy corporate fatcats? (How many people are still moved these days by such arguments?)

How about the Department of Commerce? Of its $17 billion budget, $1.9 goes to the census, which we’ll assume is legitimate since it’s in the Constitution — although I suspect it could be done cheaper. 45% of the department’s budget goes to subsidies, meaning the state takes money from some people and gives it to other people. Is this just? Why don’t we let the free market decide what businesses get money?

Department of Education: $109 billion.

Department of Energy: $38 billion.

Health and Human Services, which includes Medicare and Medicaid: $869 billion. You could cut the National Institute of Health alone and save $33.2 billion. Why not privatize health care? The market is more efficient than the state, even in medicine.

Housing and Urban Development: $63 billion. $15 billion for community development? Do we need to take money from Peter to develop Paul’s community? Let’s get the government out of real estate.

Department of Transportation: $91 billion. Let’s sell all the federal highways to the highest bidder and let the market determine transportation costs. Somehow I think it would work out to less than the current $770 per U.S. household.

If we got rid of all this, we’d cut $1.33 trillion a year in federal spending, but the benefit to the economy from getting rid of regulations and introducing competition would be far greater. Not only would we be a richer nation, we would be a freer and more moral nation because the state would not be dictating every individual’s life so much.

Right now Congress is arguing over the equivalent of an accounting error: do we cut $31 billion? $39 billion? We need a radical rethinking of the role of government. The protection of individual rights should be the only standard, and the rest should be repealed. Obviously, the current politicians — “Socialists of all parties,” as Hayek put it — lack the correct premises. The spread of those premises depends on the spread of Ayn Rand’s philosophy.

23 Comments so far ↓

  • JimWoods

    One additional issue related to the Dept of Ed, without adding to the fiscal deficit, DOE is increasing the national debt as it has become the sole originator of federal student loans.

    Unfortunately, dishonest accounting hides future losses associated with programs to facilitate non-repayment of these loans. Elimination of DOE would requiring selling these loan assets at a substantial discount, which will result in a net increase in debt because of a true accounting of these loans value.

    I would not be surprised if the elimination of DOE would actually increase the deficit as hidden future costs would be realized all at once.

  • Myrhaf

    The corporation I used to work for laid off 10% of its workers in the last four years and instituted a company-wide hiring freeze. The bookkeeping numbers forced them to do this. In this same period the Department of Agriculture, setting aside food subsidy programs, doubled its budget. This illustrates the lesson of Mises’s little book, Bureaucracy: the private sector is efficient because it follows the purpose of making a profit; the government has no numbers to guide its actions, so it just follows its purpose of acquiring power at any cost. This is held by statists as being more compassionate than allowing individuals to trade in a free market.

    I should note that the budget cutting ideas above are incomplete. I didn’t even get to Social Security, the Department of Labor, EPA or the Postal Service, all of which must go if we are ever to live free again. Death to Leviathan.

  • madmax

    Reisman makes the argument that it is Social Security and Medicare that are the two biggest elements of our welfare state. He just blogged about a way to phase them out. He made a good point in the process: the government should be constitutionally barred from offering any pension plans. These are the programs that bankrupt nations.

    Its amazing just how strong altruism’ grip on our culture is. Republicans can’t even make a budget proposal that actually cuts government. All they can do is propose to slow its growth (ala Reagan). Government growth is just assumed; its untouchable.

    Once again we see that without challenging altruism there can be no challenge to the welfare state. And how could Conservatives challenge altruism when that would mean questioning Christianity. And of course we know that without Christianity there would be no morality and we would be at the mercy of Godless Liberals.

    And there in a nutshell is the treadmill our culture is riding; riding to its doom.

  • Michael

    what is wrong with choosing a middle ground between egoism and altruism? why not have a mixture of both?

  • c andrew

    In any compromise between food and poison, it is only death that can win. In any compromise between good and evil, it is only evil that can profit.

    http://aynrandlexicon.com/lexicon/evil.html

  • Myrhaf

    Michael, a mixture of egoism and altruism is what he have. The mixed economy is part state control and part freedom. This system has gotten us in the current crisis.

  • Narra Gansett

    @Michael-

    Let’s assume for the moment that I believe altruism of any type is a positive thing…

    If you choose to sacrifice your income / time / life for the sake of another, i.e. if you’d like to perform an altruistic act, that is your choice and neither I nor anyone else has the right to prevent you from doing so.

    If a group of politicians, or an unelected bureaucrat, forces others to make that same sacrifice, regardless of their own beliefs regarding whether or not the person or people are worth sacrificing for, he / she / they are acting immorally under the color of law and should be resisted.

    If you decide to vote for a politician who will vote for the above, or appoint / hire a bureaucrat who will do the same, you are just as guilty as the politician or bureaucrat, and are to be regarded as part of the problem.

    Just as an act can only be considered moral or immoral said act is freely chosen, so to with altruism. A forced act of altruism is not altruism – it is simply a forced act. Don’t tell me that taking my money by threat of force, then using that money for something others define as “good”, is anything other than what it is – theft.

  • OliverH

    I read “Privatization” and “let the market decide…” a lot in this article. I have my concerns with the idea of ‘let the corporate world decide’ ideology. Corporations have one goal and that is profit. This is fine and that is the way it should be, but greed needs to be controlled. There needs to be rules and regulations so we can prevent Enron, Global Crossing, Bernard Madoff, AIG…and many other corporations that put greed wayyyy above humanity.
    Now to Gov. running efficient. …I know, it is an oxymoron!!! I agree 110%. My theory is that after WWII and during the cold war, the inefficiency and overlaps of agencies started and became the norm. Since, there was USSR (The great excuse!) and we did not have any considerable recession just till recently, it was never challenged or questioned. Consequently, the norm has become the rule and changing it now will take an enormous effort. (Just my theory! Rebuttal me, don’t shoot me!!!)
    One thing needs to be clarified, I hope we can distinguish the difference between inefficiency and helping the weak.

  • c andrew

    Oliver,
    The StagFlation of the 1970’s was rather considerable and was during the Cold War. As far as Enron, Global Crossing, etc., those all happened under a highly regulated regime. In fact, one of the reasons that Enron garnered as much money as they did was that the California energy market was “de-regulated” on the wholesale level but highly regulated on the retail level. Enron arbitraged the difference – the Economist had a long article on the topic – and made money hand over fist. Then they thought they could do the same thing globally without the artificialities that characterized the California situation. It didn’t work because there was no over-arching regulatory regime that they could game. Thus, game over.

    Enron etal shouldn’t have been prosecuted for regulatory violations, but for defrauding their investors. The irony is that the Sarbanes Oxley measures, particularly mark to market have intensified the financial crisis. For instance, regional banks on solid capitalized footing because they didn’t play the sub-prime game are now being targeted by FDIC enforcers under SarbOx. Their balance books are deficient because of the general depression of the market so they are declared insolvent and handed, at bargain basement prices, to politically connected banks like Chase whose capitalization wouldn’t be any more robust than their victims were it not for the infusions of taxpayer cash.

    Generally, if you go looking for root causes of economic crises you will find a regulatory trigger at the bottom of it. The Savings and Loan Scandal of the 1980’s was triggered by the Tax Reform Act of 1986 which, at a stroke, devalued commercial properties by as much as 50% by changing their treatment under the tax code. StagFlation and oil crises of the 70’s had their roots in Johnson’s Great Society, Nixon’s Wage and Price Controls and his closing the gold window as well as pumphead price controls on American oil wells that made it more profitable to drill a new oil well than it was to pump more oil from existing wells.
    Regulation is sold to the public under the facade of controlling the corporations when, in fact, it is the means whereby the corporations control the market by raising barriers to entry against their competitors. The latest USDA regulations are a case in point; they treat family farms with 5 slaughterable animals the same way the treat a 20,000 head CAFE. Who do you think has the advantage in that economic/regulatory tradeoff? Take a look at the ec0nomic concept, “Regulatory Capture” and you’ll get a rough idea of what I’m talking about.

    http://en.wikipedia.org/wiki/Regulatory_capture

    Your viewpoint is a fairly standard one and one that is increasingly exploited by the statists. Most people don’t realize the roots of regulation and how it is used in exactly the opposite fashion that people assume. Another concrete example is the CPSIA http://en.wikipedia.org/wiki/CPSIA
    where the lead paint in toys from China were the threat being targeted. The two biggest offenders were Mattel and Hasbro and arguably the reasons presented for the necessity of the regulation. Guess who have CPSIA exemptions?
    Yep!
    http://hotair.com/archives/2009/08/28/mattel-gets-a-cpsia-waiver/

    All of the small mom and pop stores and used book and toys stores get hammered with the full weight of the regulation and the two biggest offenders get an exemption. This isn’t and outrage. This is what is supposed to happen. In programming parlance, this is a feature, not a bug.
    Similarly, look at the McDonalds exemption from Obamacare. Or the ADM exemptions from a multitude of USDA/FDA regulations. That’s why regulation is always a bad idea and why civil and criminal courts should be used for redress against the rights’ violations committed by coporations. Or any other organizations for that matter.

  • L-C

    What, exactly, do you think should be done about “greed”, Oliver?

  • OliverH

    @L-C:I have a feeling your question is rhetorical (!) but I still will try to give you my version of an answer! This topic deserves over a month worth of discussions, but here is the Cliff Note version!
    There are two fixes, one is the utopian version and another one that Ayan Rand won’t like.
    1- Utopian solution: Change the mindset of at least 75% of humans into accepting that we all are an extension of each other and implement the rule of “All for one – One for all”. Without having to explain this too much, let me use a reference. Have you ever watched the Star Trek series? The newer version (The Next Generation series)? They research and create products and medicine not for money or glory, but for the betterment of their piers/society. Greed does not have a place there. But I am not naive; this is not going to happen anytime soon!!!

    2- Rules & Regulations: the two dreaded words for every corporation and business. There needs to be a counter balance or what I like to call a “Greed Leash”. (i.e.: You cannot dump your waste into nature just because you want to save some money by not investing in filtration or recycling. You cannot mix good rated home loans with bad rated ones and sell the package of polish turd to another institution as a good loan! You cannot monopolize a section of an industry and kill competition….etc.)

  • c andrew

    Oliver,
    Your first solutions sounds a great deal like the “New Soviet Man.”

    http://en.wikipedia.org/wiki/New_Soviet_man

    And while I am something of a Star Trek fan, I also recognize that a society organized along military lines is rarely as benevolent as Star Trek is portrayed to be. And, like the Soviet Union, the creators of Star Trek thought they could gloss over the question of economic calculation by vague mutterings about material needs no longer exist or the problem of production having been solved.

    Your second solution I’ve addressed at length previously. But to answer the concretes you’ve cited:
    Common law had a way of dealing with nuisances like pollution or dumping your waste on someone else’s property. It was called a tort. It was obviated by government regulations that exempted certain people and industries from that check on bad behaviour.
    Under normal circumstances, mixing good and bad loans and passing them off as other than what they were – a mixture of good and bad loans – would be fraud. But when you have a QUasi Autonomous Non Governmental Organization (QUANGO) operating under regulatory immunity, then you don’t get prosecutions for fraud. Once again, the regulators exempt themselves, cause havoc, and then point in all directions to lay blame. And the easiest way to monopolize an industry is to use the force of government regulation to shut down your competition. It’s very difficult to do without the government. And that, too, is a form of regulation.

    You want to have a society where people can initiate force so long as they do it for the right reasons. You think that it will create a benovolent society. Numerous iterations in history indicate that you will disappointed in that desire.

  • OliverH

    @C Andrew: Thank you for your insightful comments and references, especially regarding the toy manufacturers!! Didn’t know. Things like this sickens me. It also sickens me to know that we bailed out the very organizations that were at the center of the whole scandal. I have to say that I also question what would have happened if we didn’t?!
    Most of examples you brought regarding regulations causing more harm are the ones that I like to call ‘Tainted by corporations Regulations’. These are regulations that corporations bought through lobbyists and/or with good connections. (The appearance of Scalia and Thomas at a Koch brother’s event before their decisions on “Citizens United” case raises a lot of questions. I don’t care if they only talked about baking cookies, they should not have gone there. These brothers who are handing big checks to elected (loosely put!) officials will for sure taint some regulations. Interestingly their first target is the EPA by trying to defund them!!!)
    I am talking about clean regulations. Regulations made in the interest of all not only some. Can we get that out of today’s purchased legislative branch, I highly doubt it. Can the judiciary branch hold corporations accountable? I am not a lawyer, but I don’t think so. They would need the clean regulations to do so…right?!
    It is funny you made the connection between Star Trek and the “New Soviet Man”. I have always said that Gene Roddenberry either had a little Lenin in him or just perhaps wanted to be optimistic about our future.
    My ultimate dream is not to have to initiate any force on anyone to do the right thing, but that it comes instinctively. If that doesn’t happen, we will always have 2% winners and 98% losers! Even that does not work; we will always have empires that rise and ultimately fall.

  • Inspector

    Oliver,

    You may want to note the part where c andrew talked about it being a Feature and not a Bug.

    Truth be told, laws that prevent companies from acting to breach contracts and cause harm to third parties are called LAWS and not “regulations.” What you call “tainted regulations” are what we call, simply, “regulations.” Because there is no such thing, and can be no such thing as an “untainted” regulation.

    Because what we need aren’t regulations at all, but simply Laws, fairly and evenly enforced, which nobody is above.

    The main problem with your line of thinking is that in modern times, there has been a great deal of effort to obliterate the meanings that words have. Ask yourself: can you clearly define what a “regulation” actually IS? The reason it is unclear is because the real definition is “give us power and we’ll use it to do good, we promise.”

    I think your best course of action would be to do some research about what the difference between laws and regulations are. I’m sure some of the nice folks here can expand on this point.

  • Inspector

    (more specifically, by laws I mean the same laws which govern interactions between people as individuals, no more and no less. After all, a corporation is merely a number of individuals, and should enjoy no restrictions and also no special privileges before the law that an individual doesn’t)

  • Inspector

    (And by regulations I mean rules which are either imposed upon or gifted to corporations which are above and beyond those laws which apply to individual behavior. When the definition is given this clearly, you can see easily how ALL regulations are bad – corporations do not need to be needlessly favored or punished over or under every other citizen. Of course modern corporations would be the first to tell you this is wrong, since they are practically built around taking advantage of either the restrictions or gifts!)

  • Mike N

    Laws are supposed to be based on the Constitution’s requirement of protecting individual rights. They consist of the retaliatory use of force only and are used only in retaliation against the initiatory use of force.

    Regulations employ the initiatory use of force against those who have violated no one’s rights. They are based on the principle that people are guilty before they do wrong and must be compelled to meet someone’s (bureaucrat’s) preconceived idea of the good.

    The free market is the best regulator and punisher of greed if by greed we mean irrational, rights violating quest for wealth. Market regulations if allowed to work, would do just fine.

  • Michael

    The sad reality is that the regulatory state almost always ends up in the hands of the people it was set up to regulate. There is a species of businessmen who long ago discovered that they can increase profits more through manipulating the political process, and skewing markets, than they can do in markets that are not open to political manipulation. Right at the birth of the Progressive Era, when these regulations were created, this sort of manipulation was taking place. Big Business was a major funder of efforts to regulate Big Business, because they knew they would effectively write the regulations.

    Left-wing historian Gabriel Kolko did an exhaustive study of the origins of the regulatory state in America and says most people view the period as if it were a mirror image of itself. For instance, “it was not the existence of monopoly that caused the federal government to intervene in the economy, but the lack of it.” He wrote: “It is business control over politics (and by ‘business’ I mean the major economic interests) rather than political regulation of the economy that is the significant phenomenon of the Progressive Era.” The reason for that is not hard to understand, “regulation itself was invariably controlled by leaders of the regulated industry, and directed toward ends they deemed acceptable or desirable. In part this came about because the regulatory movements were usually initiated by the dominant business to be regulated.”

  • North bridge

    c andrew: Very nice observations. Someone once said that capitalism does not favor business, it favors the market — which is a very different thing.

  • madmax

    Right at the birth of the Progressive Era, when these regulations were created, this sort of manipulation was taking place. Big Business was a major funder of efforts to regulate Big Business, because they knew they would effectively write the regulations.

    If anyone wants proof of this, I suggest that they read Murray Rothbard’s history of the origin of the Federal Reserve Bank. It was created entirely through the efforts of the nation’s biggest businessman of the era most notably J.P. Morgan. Every major banker pushed for its creation. In fact, you get the impression that the politicians of the day had to be coaxed to create it as they were defending the status quo which, at the time, was for state control of banking and not federal control.

    This is actually a history very similar to what Rand gave in ‘Atlas’ except that some of the villains were really good business men; like Morgan for example (he strikes me as a Midas Mulligan type but with a really bad philosophy – pragmatism).

    The reason for that is not hard to understand, “regulation itself was invariably controlled by leaders of the regulated industry, and directed toward ends they deemed acceptable or desirable.

    Rothbard, in his book went into the people who were responsible for the creation of the Fed, but he did not go into the reasons for its creation so much. The myth of market failure is *always* involved in regulatory policy. But I am willing to bet that altruism is also involved in the creation of every regulatory agency; whether is is the Fed or the EPA. Another good project for an Objectivist historian is a book about the rise of the regulatory state and what philosophical arguments drove it.

  • Antacid

    I can’t speak as much about philosophy as the others here, but I can speak from a practical “real-world” point of view on this. I currently work as an Environmental Engineer (really more of a junior/field engineer position), and as you can imagine, we have to deal with the EPA and state equivalent agency quite frequently.

    I recently ran across a state regulatory standard for allowable toxaphene concentrations in water discharges from private industry into ephemeral rivers (rivers that only flow when there’s sufficient rain in the surrounding area) of 0.0002 micrograms per liter. I did a few calculations, and folks, that’s approximately 8 molecules of toxaphene per every one thousand trillion molecules of water (toxaphene is a mixture of different chemicals with various molecular weights, so the mean weight was used for this calculation). In another illustration of one rule for the ruled and one for the ruler, if discharging treated wastewater (typically a government 0wned plant) to the same river, the standard is more than 5 orders of magnitude (100,000 times) more lenient. The drinking water standard (also typically a government owned facility — but more frequently this is being done by private industry) is more than 4 orders of magnitude more lenient. That’s right folks, the state agency in question cares literally ten thousand times more about the wildlife in ephemeral rivers than it does about people.

    Of course this is a bit of an exaggeration. The truth is that this is a way to make life more difficult for industry, which this particular state agency seems to hate.

    There’s more to say, but it’s really late.

  • Jim May

    Don’t tell me that taking my money by threat of force, then using that money for something others define as “good”, is anything other than what it is – theft.

    It IS theft — morally sanctioned under color of altruism. That’s how it works, and that’s the whole point of it. It exists for the purpose of morally disarming you in the face of your own subjugation. Once you grant the premise, you no longer have a moral leg to stand on to defend yourself against the ever-increasing, limitless needs of others.

    “Forced altruism” is not a contradiction, it is an irrelevancy — in the same manner of whether a robber wore a suit instead of a t-shirt, or stole on behalf of the government instead of himself.

    Altruism is not, and never was, about helping others. It’s entirely about the sacrifice, including the force.

    I find it endlessly and drearily amusing how people faced with Objectivist views invariably think that they were the first ones to think of their canned argument, and that there’s no way that their target might have already heard and refuted it ages ago, and many, many times. I really need to get off my ass and build the web site of canned Objectivist refutations of canned mainstream “arguments” like this one.

    But hey, if you aren’t going to bother reading our previous refutations of this fundamentally meaningless distinction between forced and unforced moral surrender, at least consider the plain words of the man who coined the thrice-damned word itself, August Comte.

  • Lovie

    AKAIK you’ve got the awnser in one!