Category Archives: Spending

Unemployment, Taxes, and Spending

Alongside Charles W. Baird, whose writing I have enjoyed since my high school and college days in FEE’s The Freeman magazine (then called Ideas on Liberty), I am quoted in a Heartland Institute piece on unemployment and how to keep it low.


USA Act Increases Accountability, Restores Congress’ Power of the Purse

Separation of powers is one of the United States government’s most basic principles. But for several decades, presidents from both parties have gradually concentrated more and more power in the executive branch, at the expense of Congress and the judiciary. A new bill from Rep. Cathy McMorris Rodgers (R-Wash.), the Unauthorized Spending Accountability (USA) Act of 2016, seeks to rebalance a tilted scale.

Only Congress has the power of the purse, yet a long list of unauthorized executive branch programs continue to operate—256 in all, at a cost of more than $310 billion. The USA Act would automatically cut a program’s budget to 90 percent of its previously authorized level in its first unauthorized year, and to 85 percent in the second year. Programs would sunset altogether after a third unauthorized year.

As the executive branch becomes more overbearing with each successive administration, Congress becomes more and more of a wallflower. Congress has not seen fit to authorize entire cabinet-level departments, such as the State Department, since 2003. The Justice Department was last authorized by Congress in 2009. Other departments, such as the Bureau of Land Management, have now operated for twenty years without congressional authorization. The USA Act would require Congress to own up to its budgeting responsibilities, while simultaneously making the executive branch more accountable.

There is more. The USA Act’s automatic budget cuts and sunsets apply only to programs classified as discretionary spending. But two thirds of federal spending is classified as mandatory, including major programs such as Social Security and Medicare. While Congress has the power to change these programs at any time, they do not require congressional reauthorization, and can continue indefinitely on autopilot.

The USA Act would create a Spending Accountability Commission to examine mandatory spending programs and make them more accountable to Congress, which apparently prefers to avoid making them more efficient or fairer—a clear abdication of responsibility, given the coming entitlement crunch. The Commission would also assist Congress in creating a schedule for sun-setting unauthorized discretionary programs.

Restoring a proper separation of powers is a tall order. The USA Act is no panacea for all of government’s ills, but it would mark an important step in a crucial area of reform.

What Hollowed Out Military?

Politico ran a story earlier this week with the headline “How Congress Is Hollowing Out the Military.” Congress is forcing the Pentagon to pay for many expensive weapons programs it neither wants nor needs. This leaves less funding available for defense-related defense spending. Sequestration is putting further pressure on military finances. In fact, the winding down of Iraq and, one hopes, Afghanistan, have led to actual cuts in the DOD’s budget. The authors worry about how this could affect military readiness if an actual defense-related conflict were to arise.

To put this hollowness in context, I looked up a historical table (Excel format) of agency spending. It turns out the military has more than doubled its spending since 2000, from $290 billion to $586 billion in 2014. This is down from a 2010 peak of $695 billion, when Iraq and Afghanistan (and everywhere else the last two adminstrations have ventured) were more fiercely contested than today. The current defense budget is hardly austere.

I would be delighted to see Congress scrap unneeded weapons programs, though public choice problems probably preclude it. Regardless of political developments going forward, defense hawks need not worry about the Pentagon’s budget. Its long-run growth is practically assured, regardless of who is in power.

Unfunded Mandate Reform in the House

This week, the House is considering a dozen reform bills as part of Stop Government Abuse Week. The centerpiece bill, sponsored by Rep. Virginia Foxx, would add transparency to a shady practice called the unfunded mandate. The bill’s full title is the Unfunded Mandates Information and Transparency Act, or UMITA for short, and it will receive a floor vote today. It is expected to pass.

The goal of UMITA is to add teeth to the dentally-challenged Unfunded Mandate Reform Act of 1995 (UMRA), passed in the excitement of the Republican Revolution during the Clinton years.

Unfunded mandates were a problem back then, and they are an even bigger problem today, due in part to Presidents Bush and Obama’s record-setting deficit spending. Why do large deficits drive unfunded mandates? Suppose the federal government wants to enact a new job-training program. If it runs the program itself, it adds to the deficit, and runs the risk of making voters angry. But if it instead requires state governments or private companies administer and pay for the program, the federal balance sheet is unaffected. Unfunded mandates are a sneaky way to grow government.

The old 1995 UMRA bill made for great press conference fodder, but little else. One reason is that an unfunded mandate has to be very expensive before it triggers any UMRA actions. It would have to cost more than $100 million to state and local governments, so a $99 million unfunded mandate could slip through the cracks. Private sector burdens have to reach $146 million before drawing scrutiny.

If a mandate does reach the thresholds, the Congressional Budget Office (CBO) investigates and discloses its findings to Congress, which then has the option of striking down the mandate.

The trouble is that few unfunded mandates cost that much; their strength is in numbers rather than in size. And Congress rarely strikes down mandates that do meet the threshold for review. UMRA also exempts disaster aid and national security-related spending.

It gets worse. There are more than 60 federal agencies that issue regulations, but UMRA only covers the 17 cabinet-level agencies. The remaining three quarters of the regulatory state, called independent agencies, are exempt from this basic transparency measure.

Enter the new UMITA bill. It would expand UMRA’s disclosure requirements to cover independent agencies. It would also move mandate review from CBO to the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA), which specializes in regulatory review, and is better suited to the task.

UMITA also closes another UMRA loophole. UMRA only applies to rules that enter the rulemaking pipeline via a Notice of Proposed Rulemaking (NPRM) in the Federal Register. If an agency wants to avoid review of an unfunded mandate, all it has to do is avoid that step of the regulatory process. In that sense, UMRA actually reduces transparency. UMITA would fix that by making all rules subject to review, regardless of whether agencies skip the NPRM.

UMITA is not an earth-shaking reform, but it would improve transparency in both government spending and the regulatory process. Wayne Crews and I wrote about UMITA in 2012 here, and The Hill wrote about the bill here.

Downsizing the Federal Government

You may have seen Cato’s excellent Downsizing the Federal Government project. They have just produced a series of quick-hit videos, each just a few minutes long, going over various federal departments’ excesses and offering reforms that would bring them back to earth—or abolish them outright. Each one is well worth watching:

Department of Agriculture

Department of Education

Health and Human Services

Department of Energy

Department of Labor

CEI Podcast for December 5, 2013: Ending Corporate Welfare

corporate welfare
Have a listen here.

Stephen Slivinski, a senior economist at the Goldwater Institute, discusses solutions to the seemingly intractable problem of corporate welfare.

CEI Podcast for October 10, 2013: CEI Files FOIA Requests Over Park Closures

Have a listen here.

During the government shutdown, the National Park Service has barricaded and even closed numerous open-air memorials and parks – including, in some cases, privately owned parks. CEI has filed a series of Freedom of Information Act requests to find out who made the decisions and why. Senior Attorney and Counsel for Special Projects Hans Bader discusses the case.