Unsustainable Spending

Unsustainable Spending
Rich Tucker
8-7-10

Big government does few things well. But it’s excellent at protecting itself.

“No government ever voluntarily reduces itself in size,” Ronald Reagan put it back in 1964. “Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth.” The bureaucrats Reagan was chiding 46 years ago are all retired or dead, but their bureaus endure, larger and more intrusive than ever.

For example, the Department of Health, Education and Welfare was renamed the Department of Health and Human Services in 1979 when the Department of Education was created. The letters in the alphabet soup change, but the bureaucracy just keeps getting larger and more expensive.

In 1965, governments spent $17,440 per household. Last year that had doubled, to $47,000 per household (both numbers are in 2009 dollars).

Last year, President Obama insisted the country needed a “stimulus” plan to help it pull out of recession. That big-spending measure ($800 billion and counting) hasn’t helped with employment. It was supposed to “save or create 3.5 million jobs and keep unemployment below 8 percent.” It has done neither.

What it has done is help state and local governments.

The New York Times pulled together a list of how the stimulus money was to be spent. Funding included $87 billion to “help states with Medicaid costs.” $53 billion to “help states prevent cuts to essential services like education.” $27.5 billion to “provide money for highways and bridges,” which will, of course, be built by government employees. And so forth. The stimulus bill was, in large part, a massive bailout for state and local governments.

The need arose because in some ways, state governments are in even more fiscal trouble than the federal government. Washington, after all, can always print money. That would destroy the national economy in the long run, but politicians aren’t known for looking to the long run. Anything beyond the next Election Day may as well not exist for them.

But states are required to make ends meet year after year. Some, including California, are finding that almost impossible. In the Spring 2010 issue of City Journal, Steven Malanga explained why: “The unions’ political triumphs have molded a California in which government workers thrive at the expense of a struggling private sector. The state’s public school teachers are the highest-paid in the nation. Its prison guards can easily earn six-figure salaries. State workers routinely retire at 55 with pensions higher than their base pay for most of their working life.”

It’s not simply unionized state employees who’ve been getting rich at government expense, of course. Elected officials at all levels do very well, too.

Robert Rizzo, the chief administrative officer in Bell, Ca. recently quit his job after his constituents learned he was making more than $787,000 per year, roughly twice what President Obama pulls down.

City Council members were making almost $100,000 per year for part-time work. They were able to pay themselves so much because the city changed to “charter status” a few years ago. Rizzo, by the way, will be able to keep his $650,000 a year state pension. Good work if you can get it.

There’s clearly government fat to trim, but our leaders seem reluctant to get out the scissors. Last month, President Obama asked Congress for another $50 billion in aid for states. “Because the urgency is high -- many school districts, cities and states are already being forced to make these layoffs,” Obama declared, “these provisions must be passed as quickly as possible.”

Maybe, instead of starting with teachers, governments could find other places to cut.

After all, while private business has been cutting back in this recession, Uncle Sam has been hiring. The federal government has added 240,000 new employees while private employers have eliminated some 8 million net jobs. In June, the federal Bureau of Labor Statistics announced that the unemployment rate for government workers was 3.4 percent, roughly a third of the national private sector rate.

Government spending, at all levels, is simply unsustainable. That makes this a good year for our leaders to finally start trimming back the size and scope of some government bureaus.