Prune, Redistribute Federal Agencies

While the White House and congressional Republicans seem to agree that taxes should be reduced and government made smaller, there has been little discussion about what the federal government ultimately should look like. Here are some guidelines:

First, the federal government should not engage in any activity that is more appropriately handled by state and local government.

Since World War II, Washington has assumed hundreds of functions that were once exclusively within the jurisdiction of state and local governments.

Congress should declare in its fiscal year 1996 Budget Resolution that the first responsibility of the federal government is national defense. It then should examine every other program to determine whether it is truly national in scope and can be carried out only on a national scale and only by the federal government.

Funding for all agencies and programs that fail to meet this test, such as many educational, welfare, health and transportation programs, should be transferred to the states or returned to the people as federal tax reductions.

For example, the Congressional Budget Resolution should call for the “devolution” of all Department of Education functions to the states. Then the Department of Education should be shut down. Washington also should consolidate more than 70 federally funded, “means-tested” antipoverty programs into a single block grant and limit the overall growth in spending for this new grant to 3 percent annually. State and local governments could then experiment with their own approaches to assisting the poor and ending dependency.

The second principle for reorganizing federal spending is that the government should cease activities that are more the responsibility of the private sector.

An intensive privatization, or denationalization, effort to reassign essentially private functions to the private sector is long overdue in this country. Governments throughout the world, from Russia to Mexico and from Japan to Great Britain, have been redefining the role of government in a private economy. The U.S. government, meanwhile, continues to control hundreds of private activities and functions such as public utility management, railroad services, small business loans, printing and publishing and oil extraction and storage.

Privatizing commercial functions can yield considerable short-term revenues while greatly improving the efficiency of services. Candidates for sale to the private sector include the government’s $200 billion direct loan portfolio, Amtrak, the Power Marketing Administration, part of the Postal Service, many federal buildings and real estate holdings, and some public lands.

The third principle is simple: The government should terminate programs that do not work, that have become outmoded or obsolete, that duplicate other programs, or that do not involve legitimate government functions.

Most taxpayers would be stunned to learn how old many federal programs and agencies really are. Large segments of the federal bureaucracy were created decades ago for purposes long since forgotten.

It is time, for instance, to strip out of the budget such pre-World War II programs as the Rural Electrification Administration, the National Helium Reserves, and the Interstate Commerce Commission.

Many relatively new programs also have seen their missions made obsolete by technological and social changes. The Corporation for Public Broadcasting, the Low-Income Home Energy Assistance program and the Department of Energy are all outmoded or irrelevant because of technological and market changes.

Last year, Vice President Al Gore’s National Performance Review identified a staggering degree of duplication throughout the federal bureaucracy. For example, some 14 separate government departments and agencies spend $24 billion a year on employment and training programs. Washington also has “created at least 340 separate programs for families and children administered by 11 different federal agencies and departments,” costing about $60 billion a year, the Performance Review found. Congress’s auditing arm, the General Accounting Office, notes that “The Department of Commerce shares its missions with at least 71 federal departments, agencies, and offices.” It is time to expose these outmoded, inefficient, or duplicative programs and get rid of them.

Now that the White House and congressional reformers seem to agree on the need to shrink the size of the federal government and return to taxpayers their hard-earned money, it is time to outline what the federal government should look like after its “reinvention” has been completed.

Once the Clinton budget has been submitted to Congress in early February, the House Budget Committee will begin work on its own version of the fiscal 1996 budget. Each of these documents should describe what functions should be carried on by the different levels of government and which ones government should shed completely.

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