Recommendations of Foreign and Domestic Policy Armey Accepts Cato Handbook at Capitol Conference

March/​April 1995 • Policy Report

The Cato Handbook for Congress, which provides the 104th Congress with a blueprint for meeting the voters’ demands for smaller government, was released February 6. Cato president Edward Crane and executive vice president David Boaz, coeditors of the 350‐​page, 39‐​chapter volume, presented the Handbook to House Majority Leader Dick Armey at a news conference on Capitol Hill. “Cato is a forward‐​looking organization,” Armey said, as he accepted the Handbook. “I have no doubt that this book is going to spawn some new initiatives in public policy.” A copy of the Handbook was delivered to each member of Congress.

On the day the Handbook was released, the Washington Post wrote, “Forget the flurry over these first 100 days of the 104th Congress and the Republican ïContract with America.’ The Cato Institute has much bigger things in mind… . In a new ïhandbook’ for Congress … Cato’s authors outline a soup‐​to‐​nuts agenda to reduce spending, kill programs, terminate whole agencies and dramatically restrict the power of the federal government.” Freshman Rep. J. D. Hayworth (R‐​Ariz.) said, “The Cato Handbook is a godsend!”

The book is divided into several sections — on fiscal policy, domestic policy, regulation, ecology, foreign and defense policy, and international economic policy. An introductory section outlines the broad themes that underlie the rest of the chapters. “The 20th century has been marked by a grand experiment in government. There has been virtually no aspect of society in which social scientists, politicians, and bureaucrats have not presumed to use the levers of government power to better the human condition,” write Crane and Boaz in the opening chapter, “The Revolt against Big Government.” “From Social Security to farm acreage allotments, from transportation regulation to employer‐​employee relations, from covert foreign operations to social engineering through the tax code, the statists have forged ahead, seemingly indifferent to the costs involved and disdainful of the individual liberties trampled underfoot. We believe that on November 8, 1994, the American people finally concluded that the experiment in big government was a failure. And they said so in no uncertain terms.”

The second chapter is “The Moral State of the Union” by James A. Dorn, vice president for academic affairs, who calls for a “return to the voluntary principle, the principle of freedom [that] would do more to bring about economic and social harmony than continuing on the path of servitude under the illusion of welfare‐​state liberalism or the allure of social conservatism.” In “A Government of Limited Powers,” Roger Pilon, director of Cato’s Center for Constitutional Studies, urges the new Congress “to affirm, as clearly and unequivocally as possible, that despite the extraordinary growth of government over this century, the Constitution remains a document of delegated, enumerated, and thus limited powers.” Accordingly, he says, “The new Congress should candidly admit that much of what the federal government does today is done without genuine constitutional authority.”

The Handbook goes on to provide specific recommendations for reducing the size and scope of government over two years. It calls for the elimination of eight cabinet departments — Veterans Affairs, Energy, Education, Commerce, Labor, Agriculture, Housing and Urban Development, and Transportation. To balance the budget by 2000, while cutting taxes by $400 billion, it recommends a 5 percent across‐​the‐​board rescission in all federal programs except Social Security for the second half of fiscal year 1995 through the end of FY96, termination of more than 100 federal programs and agencies, and a reduction in military spending. In the short run, a flat tax would replace the progressive income tax, but eventually the income tax would give way to a national sales tax. Other tax changes would include abolition of the capital gains tax, the end of withholding, and a supermajority requirement for raising taxes.

The section on foreign and defense policy proposes a phaseout of U.S. Cold War era alliance commitments before the end of the decade, avoidance of any new security commitments in Europe, a prohibition on U.S. troops’ serving in UN military operations, and withdrawal of the U.S. nuclear umbrella from allies and clients.

The section on international economic policy suggests termination of U.S. contributions to the International Monetary Fund and the World Bank; abolition of the U.S. Agency for International Development; an end to the international phase of the drug war; and repeal of the Smoot‐​Hawley Tariff Act of 1930, the Buy American Act, and other laws that interfere with free trade.