Thursday, October 8, 2009

A place for everything

Enough tinkering at the margins, practicing the art of the possible, pussyfooting around. Here’s what I’d really like to do: cut the size (read “budget”) of the Federal government by at least 50%. I’d start by getting the Federal government out of areas that can be handled perfectly well by the States. This is not a complete list by any means but let’s start with:

Eliminate whole Cabinet departments: Education, gone; Agriculture, gone; Labor, gone; Housing and Urban Development, gone; Energy, gone. Then eliminate programs within the remaining departments: Medicaid, gone; welfare, food stamps, stuff like that, gone. Let’s take a look at all the parks, sites, monuments, and so on that are “national”. Sure some of them should stay that way but based on what I see just around here there are a number of them that would be better off under State or local control and responsibility.

The Federal government has no role in Education or Housing and Urban Development. If it has any role in Agriculture, Labor, or Energy it shouldn’t be a big enough role to justify an entire Cabinet Department. What needs to be done in these areas should be done at the State level not at the national level.

Programs like Medicaid and welfare are bizarre hybrids of State and Federal involvement that appear to either encourage the States to enroll more people in the programs or leave the States in financial hot water or both. These functions should go back to the States entirely; leave the Federal government out of it.

As the Federal government eliminates Departments and programs it should cut taxes accordingly. The Education Department has a budget of $13.4 billion (2006 number). We should eliminate that Department and cut Federal income taxes by $13.266 billion - 99% of the money saved at the Federal level. The States can then turn around and impose higher taxes on their residents to make up for the loss of Federal money if they want to continue to fund the eliminated programs. The one percent of taxes that isn’t cut will gradually help bring the deficit down.

If eliminating all the Federal Departments and programs that can be handled by the States doesn’t reduce the size of the Federal government enough, then we start across the board cuts. The first year we cut 5% from every remaining Department and program. Congress is free to decide on a different formula - perhaps preserving the entire Department of Defense budget while cutting more from the Department of State (or vice versa) - but if they fail to make sufficient cuts, then an automatic 5% across the board it is. The next year we cut 5% of the current budget and so on until we get to the size we want. Each cut in budget is accompanied by a corresponding income tax cut, again 99% of the money removed from the Federal budget.

Eventually we'll have a small Federal government, the deficit will be reduced, and each State can decide for itself what services it wants to provide.

There. I feel much better now.


Grim said...

Wow. I think I can endorse that wholeheartedly.

I would like to see a small Department of Agriculture moved in with USAID, for expeditionary purposes. The states and universities can handle things here, but abroad, many poor nations could use the expertise they bring to bear.

Elise said...

Okay when I'm Czaritza of Federal Government Rightsizing, you may keep a small Agriculture Department presence is USAID. Never let it be said that the Czaritza is not merciful

Philip said...

Even within the scope of the possible we can cut the size of the federal government by over a trillion a year: Social Security (not counting Medicare/Medicaid) and most means-tested assistance.

What makes it possible is that we don't eliminate the functions, we just replace them with something better. "Better" in this case means we actually keep our Social Security promises, we remove the perverse incentives of means-tested assistance, and about 80% of voters wind up with more after-tax disposable income. "Better" also means that when we cut more later, we all get paid.

But I don't suppose anyone would be interested.