In the wake of Hurricane Katrina, Congress rushed back to Washington to vote $10.5 billion in disaster relief. President Bush is calling for another $52 billion in relief and others are saying that Katrina's price tag will be even higher. But the longer-term response should be the opposite — cutting spending and reducing the size of the federal government.
Government failures before and after both Katrina and 9/11 illustrate a fundamental problem with the federal government: it runs such a vast empire that policymakers spend little time making sure that basic government functions work. There was a litany of failures in the intelligence agencies that prevented the government from averting 9/11. During the 1990s, policymakers put little effort into overseeing those agencies and they generally ignored the rising threat of terrorism.
With the disaster in New Orleans, Americans are angry that the government has again failed them. To zero in on one failure, experts knew that the levees in the city operated by the Army Corps of Engineers were inadequate, but the problem was not addressed. Louisiana was no doubt complacent because it assumed that the levees were Washington's responsibility.
But local infrastructure owned by the federal government gets upgraded based on political pull in Congress, not based on actual need. Congress has long used the Army Corps as a pork barrel machine and diverted funds to low-priority uses. While levee upgrades went unfunded, Senator Kit Bond (R., Mo.) has pushed a $1 billion project for the Mississippi River that government studies show is a waste of money. The Corps spends billions of dollars on projects that should be left to local governments or the private sector, such as port dredging and beach replenishment.
Aside from the misuse of budget money, Katrina and 9/11 highlight the misuse of lawmakers' time. As the federal government has expanded into state, local, and private activities, members of Congress are overwhelmed with minutiae on schools, roads, housing, and hundreds of other nonfederal issues. For members, each new expansion in federal power means more special interests to attend to, more groups to squeeze for campaign funding, more hearings to attend, and more bullet points to memorize. There is almost no time left for members to focus on more critical issues such as national security and disaster planning.
The federal government is like a bloated conglomerate corporation with 535 squabbling CEOs in Congress trying to run one-fifth of the nation's economy. The typical appropriator from, say, Michigan would have little knowledge on whether Army Corps money should be spent on beach replenishment in Maryland or flood control in New Orleans. In theory, politicians rely on cost-benefit studies done by the Army Corps, but the Corps has a history of rigging its studies to please the members who control its purse strings.
Each expansion in the federal government has stretched thinner the ability of citizens and the media to spot and correct such misuse of money. Government performance becomes worse as it expands: It does not enjoy "economies of scale" as businesses do. Coordination problems between proliferating and overlapping federal bureaus impede efficient decision-making, which is clearly the case with both intelligence and disaster response.
What to do? First, we need to guard against a flood of new spending and new federal power grabs in the wake of Katrina. The government's response to 9/11 was often wasteful and damaging. Billions of dollars of homeland security money was spent on failed border security projects and state grants for low-priority pork. The new Transportation Security Agency and its 45,000 bureaucrats have been plagued by scandal, and they do a poorer job at passenger screening than private airport security groups.
Second, Katrina should spur Congress to launch a top-to-bottom review of the federal budget. Our current fiscal path is unsustainable with new relief spending, huge deficits, ongoing spending in Iraq, and rising entitlement costs. The key to budget savings is to revive federalism and encourage privatization: That means cutting federal spending on hundreds of nonfederal activities.
That would unburden Congress from making thousands of local decisions that it is not qualified to make. How much should be invested in the New Orleans levees? Which highways should be expanded to relieve congestion? Which seaports should be dredged? Americans would be better off if such decisions were left to state governments and the private sector, and Congress focused on truly national issues. Modernist architects argued that "less is more" in building design. The same is true in the federal government's design.