This article appeared in the Washington Times on October 23, 2014.
Public confidence in government is at or near all-time lows. According to Gallup, a mere 28 percent of the nation has a “great deal” or “fair amount” of trust in the legislative branch, while the executive fares only marginally better.
It’s hard to have faith in a government that every day seems to inspire a new story featuring gross incompetence, malicious corruption or some unsavory combination of the two. Americans are increasingly disenchanted with their government because of — rather than in spite of — the fact that it is spending more money and involved in more aspects of their lives than ever before.
Fresh in the mind of the public is the most expensive information-technology failure in human history when the White House bungled the rollout of its signature health care legislation, an Internal Revenue Service hostile to certain taxpayers and incapable — or conveniently unwilling — to keep its hard drives containing important communications in working order, a Veterans Affairs system incapable of caring for our nation’s heroes, a National Institutes of Health that stumbles upon live samples of smallpox that have unknowingly been left lying around in a storeroom for decades, and a Secret Service that toned down excessive security measures to try and imitate Disney World in appearing more friendly, but that couldn’t keep an armed fence-jumper from running loose in the White House.
To make matters worse, government agencies that fail in such spectacular fashion are far more likely to be rewarded with budget increases than to be shut down or otherwise punished.
Agencies incapable of doing their jobs see their budgets balloon in the mistaken belief that more money will lead to better performance. We see that occurring right now with the Centers for Disease Control (CDC), where Democrats have blamed nonexistent “austerity” for its uninspiring handling of Ebola and are calling for funding increases. The reality is that although there have been smaller-than-expected increases in recent years, the organization saw its budget triple from just 1996 to 2014. Rather than focus on its core mission of preventing outbreaks of deadly communicable diseases, it wasted those funds on politically motivated forays into gun violence, obesity, playground safety, motorcycle helmet use, and other topics unrelated to its founding purpose.
The CDC — like the rest of government — struggles from being too big, rather than too small.
It’s easy enough to find examples where government has seemingly grown too large, but how can we measure the problem objectively? There are, after all, government institutions and services that provide positive value. How do we compare the good that government does with its costs? One way is through the economy, which we can quantify. While economic performance does not and cannot capture the totality of costs and benefits of government, it is the best tool available. As it turns out, economics tells us that the U.S. government is far too big.
The interaction between government spending and the economy can be described through the Rahn Curve, named after economist Richard W. Rahn, which postulates that while some government spending helps create prosperity, too much turns into a net negative. In other words, there exists an amount of government spending beyond which the economy is harmed rather than helped by additional expenditures.
To be sure, the specifics of any particular program tell us more about its worth than the sum total of all other spending, but what tends to happen is that government first picks off the low-hanging fruit — such as ensuring the rule of law and enforcement of rights to life, liberty and property — then new spending is more likely to take the form of wealth transfers and wasteful handouts designed primarily to benefit politicians and special interests.
Likewise, government agencies such as the CDC start with a focused mission to provide what is at least arguably a useful public good. As the organization grows, though, the mission inevitably morphs into the preservation and expansion of the bureaucracy for its own sake.
An analysis by Livio Di Matteo of Canada’s Frasier Institute suggests that the growth-maximizing level of government — across the spectrum of small to large — is approximately 26 percent of gross domestic product. Since there are many more large nations to measure than small ones, that figure might be high. Federal, state and local governments combine in the United States to spend closer to 40 percent, leaving significant room for productive downsizing, regardless of whether the optimum rate is 26 percent or even less.
Eliminating wasteful and unnecessary spending, and refocusing government agencies on their primary missions will not only help restore Americans’ faith in governmental institutions, but also raise their standard of living as well through a growing economy.
