Commentary

Ending Immortality in Government

After its embarrassing support of the $190 billion farm subsidy bill, the Bush administration needs to find ways to regain its fiscal conservative credentials. The president can reach into his Texas budget experience for one idea that could provide lasting benefits for federal spending control. Texas Republican Kevin Brady has introduced a bill (H.R. 2373) to “sunset” or automatically terminate most federal programs every 12 years. About 20 state governments have sunset procedures, and Brady has drawn on the successful Texas law for his federal legislation.

Brady’s legislation would establish a commission to review government programs on a rotating basis and make recommendations prior to each program’s sunset date. Poorly run, wasteful, and unneeded programs would be slated for overhaul, privatization, or elimination. The administration supports the idea. But the president needs to move such proposals to the front burner to show that he is serious about reforming government.

In the late 1970s there was strong bipartisan support for a federal sunset law introduced by Sen. Ed Muskie (D-Maine). Supporters of that legislation ranged from Jesse Helms (R-N.C.) to Ted Kennedy (D-Mass.). While gaining broad support in the Senate, the legislative effort failed in the House. Twenty-five years later, the need to reform and abolish federal agencies and programs is much greater.

Congress has been eager to add new programs to the $2.1 trillion federal empire in recent decades. But Congress rarely cleans its house of programs that do not work. By contrast, private sector firms are routinely put out of business, or “sunset,” by new firms that better serve the public. For example, Montgomery Ward was recently sunset by consumers when more efficient retailers, such as Target, arrived on the scene. In fact, about 10 percent of U.S. firms go out of business each year, and roughly 10 percent of all private sector jobs disappear each year due to business contractions and failures.

Unlike the private sector, there is no structured method to sunset government agencies when they fail or when better alternatives become available. Consider Amtrak. The Bush administration’s budget notes that Amtrak has “utterly failed” to wean itself off subsidies and is a “futile system.” Policymakers need a process to sunset Amtrak and the many other failed and futile programs.

The Bush administration has proposed virtually no program terminations or privatizations yet, although it is trying to bring private sector management practices into government. That was also one of the goals of Al Gore’s “reinventing government” initiative. Unfortunately, such initiatives will not work without an enforcement mechanism. A federal sunset process could help ensure that programs actually lose funding unless they are truly reformed.

A successful federal sunset process may require changing numerous procedural rules of Congress. For example, creating enough time for members to consider sunset commission recommendations has been an issue raised with regard to sunsetting in the past. One possible solution would be to move to a two-year budget cycle with alternate years devoted to sunset commission proposals. Congressional rules could also be changed to build on the administration’s new program-effectiveness ratings. For example, programs that the administration grades as “ineffective” five years in a row could be made to trigger an automatic review by the sunset commission.

Such reviews could study how agencies and programs may be transferred to the private sector. A sunset commission could drawn on the experience of dozens of countries which have implemented successful privatization programs in recent years. For example, the Bush budget rated the U.S. air traffic control system “ineffective.” Meanwhile, Canada’s privatization of air traffic control has won rave reviews. The new Canadian private system has invested in technology superior to that used in the United States, and flight delays have been substantially reduced.

Aside from increases in service quality, privatization is valuable simply because it moves economic activities off the federal budget. This is crucial because with the coming budget pressures of entitlement programs set to explode when baby boomers retire, the next generation will be crushed with taxes unless Congress starts to terminate and privatize as many government programs as possible. The Bush administration should step up to the plate and support a federal sunset procedure to help Congress make those needed reforms.

Chris Edwards is director of fiscal policy at the Cato Institute.