Commentary

Who Gets Your Tax Dollars?

Senator Tom Coburn (R-OK) and fellow reformers on Capitol Hill have so far met with limited success in their efforts to cut government waste, but they have garnered a lot of attention from popular websites and blogs. And that’s about to become the basis of their strategy. Mr. Coburn has proposed a bill to create an Internet database that would track hundreds of billions of dollars in federal contracts, grants, and other payments.

Though not as comprehensive as the database Coburn proposes, there are already tools available online to unearth wasteful spending. The Federal Assistance Award Data System provides state-by-state reports listing the recipients of subsidies from 600 federal programs.

The most recent FAADS report for California lists thousands of grants, loans, and other federal payments for motels, fast food franchises, and other companies. One guaranteed loan program for small businesses provided $1.5 million to a liquor store in Los Angeles, $1.4 million to a car wash in Anaheim, and $1.1 million to a pizza parlor in Hayward.

The California report also lists thousands of subsidies to non-profit groups, including the Wine Institute ($1.5 million), the San Francisco Symphony ($50,000), the California Strawberry Commission ($227,000), and the International Museum of Women ($298,000).

For subsidies that go directly to individuals, FAADS usually doesn’t reveal names, but we do learn that a certain George Peale of Orange County received $40,000 for a project titled “References to Spanish Baroque Theatre in the Royal Palace Archives.” Mr. Peale must find value in this obscure research, but I doubt many taxpayers would.

Another website for citizens concerned about excess spending is the Federal Audit Clearinghouse. FAC provides audit reports for state and local governments and nonprofit groups that receive federal subsidies. It tells us, for example, that Palm Beach County received $109 million in federal grants in 2004 from 53 programs including “citizen corps,” “rural business,” “nutrition services,” “job access reverse commute,” “bulletproof vest partnership,” and “outdoor recreation.”

FAC reveals that many groups with agendas opposed to taxpayer interests receive federal funding. The American Association of Retired Persons—which fights to preserve the tax-and-spend Social Security system—received $82 million from federal taxpayers in 2004. The Teamsters, the American Federation of Teachers, and other unions receive millions of dollars in federal subsidies as well.

One shortcoming of existing databases is that they often don’t show the ultimate recipients of subsidies. They may show that a city received federal money for “community development,” but not reveal which private groups ultimately received the cash. Coburn’s legislation would fix this problem and create a simpler and more comprehensive system.

A Coburn-style spending database wouldn’t guarantee greater federal budget restraint. But a big problem today is that politicians can get away with justifying subsidies on the basis of empty rhetoric— “we need to help struggling small businesses.” It might change the political dynamics if taxpayers could easily find out what that meant: giving subsidies to liquor stores and Quiznos sub shops.

Indeed, detailed data often reveal that the real-world effects of programs are different from the stated goals of policymakers. Data on farm subsidies, for example, show that the money often goes to wealthy landowners—many of whom don’t even farm—and not to hard-pressed small farmers, as politicians often claim.

A further benefit of a new spending database is that it would impress upon taxpayers the vast number of groups and businesses that are on the federal dole. People might think that small businesses are natural enemies of big government, but FAADS reveals that many of them are likely neutralized as opponents of budget restraint because they are feeding from the federal subsidy trough.

Mr. Coburn has the right idea: in order to cut wasteful spending, we need average citizens to become more involved in monitoring budgeting decisions. A new Internet database can enable taxpayers to do their own research and complain to Congress when they find dubious spending items. It may be that the new tools of the Internet age finally create the groundswell of support for Washington to reform its wasteful ways.

Chris Edwards is tax director at the Cato Institute and author of Downsizing the Federal Government.