Time to get serious about government waste

With John McCain as the Republican party’s nominee, government waste is sure to become an issue in this fall’s presidential election.

On the one hand, this is good news. Whether you are a Democrat or Republican, you should know that government waste is bad for America.

Conservatives know that wasteful government spending distorts the economy and forces taxes upwards. Studies indicate that corporate taxes could be slashed significantly if corporate favoritism were cut.

Liberals know that the biggest recipients of government spending are not needy citizens, nor wise infrastructure investments, but favored corporations. In 2006, a select group of corporations were handed $92 billion of direct and indirect subsidies from the Federal government and up to another $60 billion in tax breaks. This is equivalent to 26% of all Federal corporate tax dollars collected.

Despite this glaring waste, it’s hard to be hopeful. Americans have complained about government waste since before the Constitution was ratified, and yet pork-barrel government spending seems to grow steadily. In the last 15 years, over thirty-five bills and dozens of amendments have been introduced by Republicans and Democrats, ranging from John McCain and Ted Kennedy to Nancy Pelosi and Pat Toomey, calling for various programs to eliminate corporate favoritism. The size of government even grew under President Reagan, who made attacks on government "waste, fraud, and abuse" a central part of his administration. And as for President Bush’s personal record on pork-barrel spending – well, the less said, the better.

The problem is that every time government waste gets attacked, government waste fights back. The individual businesses that benefit from corporate favoritism, and the individual politicians who benefit from the legalized bribery of campaign finance, fight in the darkness of committee rooms and legislative fine print to preserve their privileges. And the rest of us pay the bill.

For better or worse, the only time America has ever succeeded in cutting back wasteful government spending is when Congress passed a structural solution. Structural reforms that made a difference include the Hoover Commissions championed by Presidents Truman and Eisenhower, and the Base Closure Commissions developed by Representative Dick Armey. In each case, Congress created a commission to identify and eliminate waste, and then approved the commission’s recommendation on an up-or-down vote.

With massive government debt and major domestic and international challenges, we need a streamlined government. The time has come, once again, to adopt a structural solution to government inefficiency. We propose a three part-solution to: 1) identify all corporate subsidies and similar wasteful programs (whether funded through cash grants or tax breaks); 2) recommend a package to Congress and the President to eliminate such programs; and 3) commit to using the proceeds to lower taxes, so that the overall economy would benefit. This proposal would allow small businesses to unite with fiscal conservatives and liberal/libertarian groups to take on the big businesses and politicians who perpetuate the status quo.

Fortunately, the national mood is ripe for change. Democratic front-runner Barack Obama is campaigning on change, and this is a classic issue that could serve his call to unite Democrats and Republicans against the status quo. For her part, Senator Clinton’s campaign platform includes a "comprehensive plan to reform government" which specifically calls for tracking and elimination of corporate welfare. And Senator McCain has been perhaps the most consistent and courageous foe of government waste in all of Congress.

The time has come for a fresh start in making government effective and putting it to work for America.

- Dmitri Mehlhorn and Kristi Riordan, Hope Street Group

For a more detailed proposal, visit: Ending Corporate Favoritism