Commentary

All Aboard the Gravy Train

When filling out your tax forms, you might want to think for a second about where all that money is going. After federal spending roughly doubled in the Bush years, it is growing by leaps and bounds under President Obama. What’s more, the federal government is increasing the scope of its activities — it is intervening in many areas that used to be left to state and local governments, businesses, charities, and individuals.

There are now a staggering 1,804 subsidy programs in the federal budget. Hundreds of programs were added this decade, and the recent stimulus bill added even more. The result is that we are in the midst of the largest federal gold rush at taxpayer expense since the 1960s.

The chart below reveals the government’s growing subsidy empire. It is based on my count of programs in the Catalog of Federal Domestic Assistance. The 2,205-page CFDA is an official compilation of all federal aid or subsidy programs, including grants, loans, insurance, scholarships, and other benefits.

Number of Federal Subsidy Programs

The CFDA was launched in the 1960s because members of Congress needed a guide to help their constituents access benefits from the hundreds of new Great Society programs. There were 1,019 federal subsidy programs by 1970; the number rose more in the late 1970s before President Reagan cut back in the early 1980s. It started growing again in the late 1980s, but leveled out in the mid-1990s as Congress briefly restrained the budget.

There are now a staggering 1,804 subsidy programs in the federal budget. ”

This decade, budget restraint vanished and the number of subsidy programs grew by 27 percent. The number of subsidy programs in the Department of Agriculture increased 56 percent thanks to bloated farm bills in 2002 and 2008. Transportation funding also saw a surge of federal involvement.

Another area of expansion is homeland security, grants for which subsidize state and local activities such as firefighting. Homeland security is important, of course, but local emergency services should be funded by local governments, not by Congress, because federal politicians often steer funds to projects that are wasteful or have little national-security relevance.

The growth in the number of subsidy programs illustrates the government’s increasing disregard for federalism — the constitutional principle that the federal government ought not to encroach on state, local, and private activities. State governments are becoming little more than regional divisions of the national government, nonprofit groups and businesses are becoming tools of the state, and Americans are becoming European in their tastes for cradle-to-grave handouts.

To illustrate the broad advance of the federal welfare state, here is a sample of large and small subsidy programs added since 2000 and their annual cost:

  • Medicare prescription-drug benefit ($62 billion)
  • Homeland-security state grants ($1 billion)
  • Local firefighter-staffing grants ($180 million)
  • Clean-diesel funding ($156 million)
  • Healthy-marriage promotion ($150 million)
  • Community abstinence education ($117 million)
  • Education-data-systems grants ($100 million)
  • Small-shipyards subsidies ($98 million)
  • Bioenergy-fuels grants ($80 million)
  • Anti-gang state grants ($45 million)
  • Laura Bush library program ($26 million)
  • Specialty-crop block grant ($49 million)
  • Seniors’ farmers-market program ($22 million)
  • EPA community-action grants ($2.4 million)
  • Drug-free-workplace grants ($1 million)

All these programs cost taxpayers money, but they also generate great deals of bureaucracy. Each requires armies of federal, state, and local administrators to handle grant applications, police eligibility, calculate funding formulas, and write stacks of reports that nobody reads.

These efforts don’t always work, so scam artists claim unjustified benefits. (The cost of fraud is in the tens of billions of dollars for large subsidy programs such as Medicare and Medicaid.) And each new subsidy program spurs the creation of lobby groups that set up camp near Capitol Hill to push for even higher federal spending.

It is very sad that, in the nation founded on individualism and limited government, more people than ever are suckling at the federal subsidy teat. Pres. Barack Obama has proposed new subsidies in energy, health care, and other areas. If enacted, they would take America farther away from the traditions of self-reliance, voluntary charity, and entrepreneurism that made it so prosperous in the first place.

Americans need to wake up and fight back before the addictive drug of subsidies puts individualism in a coma. People should start using new Internet tools, such as www.usaspending.gov, to research who gets all these subsidies and complain to Congress about the abuse of their tax dollars. There is no time to lose, because the spending increases President Obama envisions are truly frightening.

Chris Edwards is director of tax policy at the Cato Institute and co-author of Global Tax Revolution.