Don’t spend your budget surplus before the check clears. Congress may have voted to balance the budget, but that doesn’t mean we are ever going to collect the promised surplus.
The much‐celebrated budget deal is a bust. Three‐fourths of the savings is supposed to occur in the year 2001 or beyond, two unlikely Congresses away. This year, the only one that really counts, discretionary spending, is up nearly $23 billion. That’s on top of a one‐third rise in domestic spending, adjusted for inflation, over the past decade — nearly four times the increase in family income. And then there’s the entitlement crisis, with both Medicare and Social Security set to go bankrupt in as soon as a decade.
The supposedly economy‐minded GOP majority failed to corral any of Washington’s most notorious sacred cows. There’s the Appalachian Regional Commission, a Great Society program that lives on, promising to bring economic development to Appalachia — some day. The Rural Housing Service and Rural Business Cooperative Service provide grants and loans to rural areas as if the Great Depression never ended. The Agriculture Department continues to pay farmers to grow, and not to grow, crops.
Decades after its creation, the Tennessee Valley Authority still provides cheap power to a lucky few. The Economic Development Administration robs taxpayer Peter in one state to pay businessman Paul in another. Foreign aid has failed for 50 years, yet the Agency for International Development continues to ship money abroad. The Corporation for National Service pays people to volunteer. Many of these programs are not only surviving, but thriving, with growing budgets.
Another leading bureaucratic immortal is the Department of Energy. Two decades ago, the U.S. suffered an “energy crisis.” It was a problem of bad policy, not poor geology. Richard Nixon restricted oil prices; the result was higher demand, lower supply and, paradoxically, increased imports.
No Washington politician, whether Republican or Democrat, really wants to shrink government.
The impact of the 1973 Arab oil embargo was minor compared to that of the Carter administration, which created the $88 billion Synthetic Fuels Corporation and imposed a “windfall profits” tax, gasoline allocation rules, temperature controls in public buildings, Draconian environmental regulations and limits on leasing of federal lands.
Congress established the Department of Energy not only to manage all of the dumb old programs that weren’t working, but to launch a host of dumb new ones — efficiency standards for refrigerators and toilets, research on high‐cost renewable energy, and the like.
Ronald Reagan ended the crisis by decontrolling oil prices. His effort to dismantle the department came to naught, however. Although energy supplies are now abundant, the Republican Congress voted a $100 million increase, to $15.9 billion, for the department this year. The only good news is that the House blocked the Senate’s bid to spend even more. Billions could be saved by killing power programs that subsidize favored electricity consumers, research spending that underwrites business, and regulatory systems that micromanage consumer choices.
President Franklin Roosevelt established the Rural Electrification Administration in 1935 to bring power to rural America. Virtually every home now has electricity, but the agency — renamed the Rural Utility Service (RUS) — goes on and on, like the Energizer Bunny. In fact, the RUS expanded into the telephone business and, briefly during the Carter administration, into cable television.
Only in Washington could the communities being subsidized, such as Hilton Head Island and Snowmass, qualify as needy. Today just a tenth of the agency’s beneficiaries are either farmers or ranchers. But the coops, well‐represented in Washington, have killed virtually every reform effort. In 1997 the GOP Congress appropriated $3 billion for the RUS, a 25 percent increase, including an extra $150 million in loans for new programs in distance learning and telemedicine.
Another agency with nine lives is the Selective Service System. In 1979, President Jimmy Carter imposed draft registration to punish the Soviets for invading Afghanistan. However, he failed to impress Moscow, which understood the difference between a list of untrained 18‐to‐25‐year‐olds and a sophisticated active duty force. Moreover, the world has changed: the Cold War has ended and the Soviet Union has disappeared. The Pentagon, which once wanted the first draftee in camp 13 days after mobilization, now says it can wait six months.
Still, registration continues, accounting for most of the agency’s $24 million budget. The president touts the importance of maintaining “the link between the All‐Volunteer Force and our society at large,” as if filling out a card at the Post Office generates patriotism. He also warns against sending “the wrong signal to our potential enemies,” though the latter are few and pathetic, and in any conflict would be subdued by the active duty military before the first conscript emerged from camp. Retired Gen. Maxwell Thurman suggests that the draft would “deter wrong‐headed despots from using weapons of mass destruction against our forces,” as if the possession of some 7,000 nuclear warheads would not.
So the agency has found a new job: the “Service to America” initiative. Explains Director Gil Coronado, “in our routine communication with all new registrants in America, we encourage them to serve America today,” including “community service through the Corporation for National Service.” Half of the administration’s proposed million dollar increase for 1998 was for this program.
Agency spokesman Lewis Brodsky admits that Selective Service “can no longer dwell upon its proud past or bet on the threats of tomorrow.The system must be of proven value to America today and every day.”
Thus, the agency will claim that it simultaneously deters nuclear war and promotes voluntarism.
When the GOP gained control of Congress in 1994, it targeted some 300 programs. Only a handful have closed. The rest cheerfully carry on. There are 342 federal programs devoted to economic development, 163 that provide job training and 131 that involve juveniles. Most don’t work, but that doesn’t matter. Like the Department of Energy, Rural Utility Service, and Selective Service System, they survive.
No Washington politician, whether Republican or Democrat, really wants to shrink government. Which means there’s never likely to be much of a budget surplus.