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Friday, July 22, 2011

We Need An Elimination Commission

"Society in every state is a blessing, but government, even in its best state, is but a necessary evil; in its worst state an intolerable one." — Thomas Paine

Our government has numerous commissions. We have deficit commissions, debt commissions, 9/11 commissions and federal communications commissions. While all of these commissions have served some useful past purpose the commission we really need today is an elimination commission.

The latest egregious example of the growth of government is the Consumer Financial Protection Bureau that has been allocated $481 billion dollars. This behemoth is intended to protect consumers, but is really a full employment act for government bureaucrats. Michelle Malkin writes in Human Events:

“Here is just a brief sample of "upcoming activity" on Dodd-Frank (with many rule-making deadlines still to be determined) published on the Securities and Exchange Commission website:

Section 342: Create and staff Office of Minority and Women Inclusion (pending reprogramming approval by appropriators)

Section 911: Create new Investor Advisory Committee (pending appointment of Investor Advocate)

Sections 915 and 919D: Create and staff Office of Investor Advocate (pending reprogramming approval by appropriators)

Section 919: Issue rules, as the Commission deems appropriate, designating documents or information that must be provided by a broker or dealer to a retail investor before the purchase of an investment product or service

Section 921: Issue rules, as the Commission deems appropriate, addressing agreements that require customers or clients of any broker, dealer or investment adviser to arbitrate disputes arising under the Federal securities laws

Section 932: Create and staff Office of Credit Ratings (pending reprogramming approval by appropriators)

Section 979: Create and staff Office of Municipal Securities (pending reprogramming approval by appropriators)

Section 967: Report to Congress describing actions to implement the regulatory and administrative recommendations contained in the independent consultant's report on the SEC's organization.

Now multiply that language by more than 400 rules total and tens of thousands of pages, scores of lobbying firms and legions of lawyers.

While disastrous bailout behemoths Fannie Mae and Freddie Mac get off scot-free, small businesses, small community banks and small broker-dealers have been hit hard by the vagueness, uncertainty and cost burdens created by the Dodd-Frank-enstein monster. Meanwhile, the Government Accountability Office estimates that the feds will need $1.25 billion for 11 different agencies to fund the rule-making racket by 2012 -- including $481 million for the newly created Consumer Financial Protection Bureau.”

Over the last few weeks and months the President and Congress have been arguing about the need to raise the debt ceiling before August 2, so the country won’t default on its financial obligations and have its American Excess card canceled.

Both are blaming each other over who drove the country into the ditch.

It doesn’t matter who drove it into the ditch. What matters is this: how are we going to get the car out?

Republicans say cut spending and Democrats say raise taxes.

The idea of raising taxes in this shaky economy is out of the question and would only be used to feed Congress’ spending addiction. No need to give the junkies in Washington more dope.

The first thing they need to do is cut spending. Just like most American families have already done.

But how much to cut?

Both parties and the president have been talking about budget cuts as high as $4 trillion over 10 years. Sounds like a big number right? But those cuts are puny in comparison to the magnitude of the problem.

The 2011 budget was $3.8 trillion meaning that the Federal government spends about $10.4 billion a day. So if my public school arithmetic is right the $400 billion is about 40 days’ worth of spending.

And with the national debt at $14.5 trillion and counting those cuts are chicken feed.

It’s like a family paying the monthly minimum on their credit card. Interest will still add up and it will be years before the debt is paid.

In February 2010 President Obama announced a Debt Commission whose mission was to offer a bipartisan solution. When they reported their recommendations to him in December 2010 he thanked them and then promptly ignored their plan.

To be fair both parties whined and complained about the recommendations and consequently they died a quiet death. No one even attended the funeral.

So if President Obama and Congress are either unwilling, unable or simply won’t cut the government down to size who will?

Maybe it’s time for the people to get a crack at solving the problem.

If I ever became president, I would introduce a new word to Washington. It is a word they never use when talking about reducing government or budget cuts. That word is: e-l-i-m-i-n-a-t-e. As in to get rid of completely.

One of my first acts as president would be the creation of an "Elimination Commission." It would be made up of regular folks from across America instead of the ex-politicians, lobbyists, lawyers and permanent political class that populate the 68 square miles surrounded by reality that is Washington.

The Commission’s job would be to eliminate entire departments, agencies and programs that are ineffective, unnecessary, or just cost too dang much for little or no return.

And unlike President Obama — who created a Debt Commission and then didn’t follow its advice — I would be guided by what the Elimination Commission says. If it’s good enough with the regular folks on the panel it’s good enough for me.

All cabinet departments, agencies and programs would have to appear before the Elimination Commission to justify their existence and convince the Commission why they shouldn’t be eliminated. They would have just 20 minutes to make their case. Why? Because as they say, time is money.

The model for the Elimination Commission would be the Base Realignment and Closure Commission (BRAC) that was formed in the late 1980’s in order to close military bases that had outlived their usefulness and realigned others to save money and make the military more efficient. And just like BRAC the Elimination Commission’s recommendations would be given to Congress for an up or down vote. No amendments, no changes and no special interest lobbying.

Ronald Reagan once said, “The closest thing we will ever see to eternal life on this earth is a government program”. He was right.

In 1898 Congress passed a 3% excise tax on long distance phone calls to pay for the Spanish American War. The war began and ended that same year but the tax lasted for 108 years until it was finally eliminated in 2006.

We don’t have 108 years to eliminate unnecessary government programs, agencies and departments.

We need to start right now.

You cannot reduce government spending without eliminating government departments and that means government employees. There are four reasons we want to do this. 1.) Government employees represent a cost, they are paid salaries; 2.) Government employees drain our future budgets with the cost for pensions and health care until they die; 3.) Government employees cause more harm than good. In many cases the fellow with a down stairs office hasn’t the slightest idea what the fellow on second floor is doing; 4.) Government employees belong to unions that coercively collect dues to give to politicians that will support the union and increase the benefits and compensation of the government employees — a vicious circle of plunder.

In most cases the needed functions performed by civil employees such as airport security, air traffic control, meat inspectors, secretaries, IT professionals, architects and engineers can be performed by contract employees, if really needed. Contractor employees do not bring liability to the taxpayer for pensions and life-time health care.

So, with this in mind I will be offering my suggestions to the Elimination Commission by focusing on seven U.S. government departments and the agencies, bureaus, subsidies, grants and other programs they spend taxpayers’ money with no real return in value.

In this blog post I will begin with probably the most worthless, overbearing, wasteful and unconstitutional department in the United States government — the Department of Education.

The Department of Education operates a range of subsidy programs for elementary and secondary schools. That aid is matched by rising federal regulatory control over the schools, but federal intervention has not lifted academic achievement. The department also provides subsidies to higher education through student loans and grants. Unfortunately, that aid has fueled inflation in college tuition and is subject to widespread abuse.

The department will spend $79 billion in 2011, or about $670 for every U.S. household. It employs 4,400 workers and operates 171 different subsidy programs.

In 1979, after much opposition, Congress narrowly passed legislation to split off a new Department of Education from the existing Department of Health, Education, and Welfare. The NEA and the American Federation of Teachers provide powerful lobbying support for the creation of the new department. The Department of Education began operations in 1980 with 6,400 employees.

In 1980, when campaigning for president, Ronald Reagan calls the Department of Education "President Carter's new bureaucratic boondoggle" and promises to abolish it. Reagan was right and due to a Democrat controlled Congress he had no chance of dumping this wasteful and useless department.

A basic effect of all federal programs is to redistribute income from taxpayers to the beneficiaries of programs. The more than $79 billion ($107 billion including stimulus dollars) spent on K-12 education programs could have otherwise been retained by families and used for education or other private purposes. The higher are taxes, the less income families have to spend on private schools, tutors, or saving for college. Without federal involvement, each state and local government could decide the best use of public education dollars, whether reducing class sizes or implementing choice programs to incorporate private schools.

Federal intervention has long been supported on “equity” grounds, or redistributing funds toward less-advantaged schools. But studies have found that the federal government is not very successful at such redistribution, even if it were a good idea. When you compare a ranking of the states based on poverty rates with a ranking of per pupil federal K-12 financing, it reveals only a weak correlation. In other words; states with high poverty rates typically get only slightly more federal funds than wealthier states.

Perhaps more importantly, federal funds are often offset at the state and local levels by reduced state and local funding. A statistical analysis by Nora Gordon of the University of California, San Diego, found that while Title I is supposed to steer money to poor school districts, the actual effect is quite different. She found that within a few years of a grant being given, state and local governments used the federal funds to displace their own funding of poor schools. Thus, poor schools may be no further ahead despite the federal grant money directed at them. Other studies have concluded that Title I has not reduced the education funding gap between higher- and lower-income states.

Aside from redistribution, the theory behind educational aid to the states is that federal policymakers can design programs in the national interest to efficiently solve local problems. But involving the federal government focuses the educational policy discussion on spending levels and regulations, not on delivering quality services. By involving all levels of government in just about every policy area, the aid system creates a lack of accountability—when every government is responsible for education, no government is responsible.

The Department of Education has no teachers and runs no schools. Its purpose is to oversee 146 education grant programs, which are described in a massive department guidebook that is 490 pages long. In 2008, the number of different grant and subsidy programs operated by the department included 34 for special education, 46 in its Office of Elementary and Secondary Education, and 8 in its Office of Educational Research. As discussed elsewhere on this website, the department also runs dozens of expensive grant and subsidy programs for higher education.

All these programs create intense bureaucracy at the federal, state, and local levels. One can look at budget data for particular programs to get an estimate of federal administrative costs. For example, the Safe and Drug-Free Schools program has administrative costs equal to about 8 percent of the value of grants handed out. Those costs stay in Washington, and do not help school students.

The larger educational bureaucracies are in the state and local agencies that comply with all the federal regulations. For example, in 2008 the Department of Education estimated that 7.8 million hours of work would be needed for state and local education agencies to comply just with regulations governing Title I grants. That figure had increased from 2.9 million hours in 2003, mainly as a result of the No Child Left Behind legislation.40 In many states, a majority of state-level education department workers are those administering federally funded programs.

Federal education programs have also generated large lobbying and litigation activities, which are a drag on the U.S. economy. Consider, for example, that the National Education Association has a staff of 555 and a budget of more than $300 million.42 The NEA influences federal policy through publications, conferences, meetings with legislators, and contributions to candidates.

Aside from the broad-based groups that lobby for overall spending increases, there are many lobby groups focused on particular education programs in the federal budget, such as the National Head Start Association. This organization, which as an annual budget of more than $5 million, pushes for increased Head Start spending every way it can, such as publishing a 16-page “Voter Participation and Lobbying Guide for Head Start Staff, Parents, and Friends.” The association even has its own Legal Advisory Service to provide legal training and legal guidance for the recipients of Head Start subsidies.

Over the decades, policymakers have argued that various state, local, and private activities need federal intervention because they are “national priorities.” A fact sheet from the Secretary of Education in 2005 begins: “The responsibility for K-12 education rests with the states under the Constitution. There is also a compelling national interest in the quality of the nation’s public schools. Therefore, the federal government provides assistance to the states and schools in an effort to supplement not supplant, state support.”

This logic is flawed because there are few activities that the federal government performs that are not also priorities of individuals and state and local governments. One can call education a “national” priority, but that does not mean that the federal government has to get involved. That’s because education is also a high priority of local governments and families. The states are free to learn new schooling techniques from each other, but there is no need for top-down control from Washington.

President Ronald Reagan made the following observation in a 1987 executive order on federalism:

“It is important to recognize the distinction between problems of national scope (which may justify federal action) and problems that are merely common to the states (which will not justify federal action because individual states, acting individually or together, can effectively deal with them).”

Having high quality K-12 education is a concern of many Americans, but that does not justify having a federal Department of Education. Canada provides an interesting comparison. Like the United States, Canada is a high-income federation with an advanced economy, yet it has no federal department of education. Public education in Canada is of sole concern to provincial and local governments. Interestingly, that decentralized approach has resulted in substantial experimentation and innovation, including school vouchers, charter schools, and competing public schools. International education achievement data suggest that children in several Canadian provinces, and the nation as a whole, outperform U.S. students in reading, mathematics, and science.

Federal aid to students and higher educational institutions is harmful on many fronts. It drives up tuition costs, encourages bloat and inefficiency, and is an unfair burden on taxpayers. It also poses a threat to the core strengths of American higher education, including institutional autonomy, competition, and innovation. All efforts to impose top-down federal regulations on colleges and universities should be rejected, and federal subsidies to students and institutions should be phased out and eliminated.

In the United States, the federal government has expended hundreds of billions of dollars on the schools, yet all it has to show for it is stagnant test scores, huge bureaucracies, and masses of federal regulations that smother local innovation. The federal government’s poor track record proves how wise the Constitution’s framers were to leave such local activities to the states. Federal meddling in education should be scaled down and phased out, and control should be returned to the states and, ultimately to the people.

Nowhere in the Constitution’s Article I, Section 8 does Congress have an enumerated power to fund education at a national level. Education is a state and local issue and the funding comes from local property taxes. Local communities have their own school boards to regulate the education is carried out in the community and the states have the responsibility to set basic standards for all schools, public and private. When a state of local school board, due to their fiscal mismanagement, accepts one penny from the federal government they accept $79 billion in rules and regulations.

It’s time to return the responsibility for K-12 education back to the states and local authority. Why should the people in Montana, Idaho or Nebraska be forced to subsidize education programs in California or Massachusetts? They shouldn’t.

With the abolishment of the Department of Education we will save $107 billion dollars and eliminate 4,400 federal jobs, pensions and life-time health care. This may sound harsh, but I am sure we can create a way to phase these employees into retirement or the private sector. Employees working in the private sector are faced downsizing and layoffs every day. The federal government should be no different.

In future posts I will deal with seven more departments that should be eliminated from the federal government I will propose we eliminate the departments of energy, agriculture, transportation, HUD, health and human services, labor and the EPA.

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