Revenue cuts deficit, but watch out

The Bush administration is rejoicing in what it says is a dramatic drop in the federal deficit, from $412 billion in 2004, to $333 billion in the current fiscal year. The reason, says the administration, is a larger than expected jump in tax revenue.

Sen. Jim DeMint, South Carolina Republican, believes the administration’s numbers are “misleading,” because “Congress is raiding Social Security to mask the true size of the deficit.”

Still, the deficit appears to be declining for the first time since the end of the Clinton administration, the onset of the wars in Afghanistan and Iraq, and costs associated with 9/11. Bush spokespeople say it is on track for being cut in half by the end of his second term, or possibly sooner. They credit the tax cuts for stimulating the economy, thus producing higher tax receipts.

Relying on unexpected revenue to keep deficits down is like hoping an unexpected arrival of alcohol will help a drunk toward sobriety. The availability of money encourages free-spending Republicans and Democrats to find new programs, or pad old ones, for the purpose of extending their political careers.

And when large surpluses are created through big tax increases – as is now the case in Virginia – Democrat (and not a few Republican) governors prefer to look for new ways to spend instead of cutting programs and refunding money to overtaxed citizens.

Accompanying the news of increased federal revenue was a welcome announcement of proposed legislation with the potential to curtail government spending – the real cause of deficits.

The Bush administration is asking Congress to pass the Government Reorganization and Program Performance Improvement Act of 2005. If approved (and citizens should lobby Congress to make sure it is, if they want to keep more of their money), the legislation would create two agencies that would place the interest of taxpayers before those of the politicians.

The Sunset Commission would review the effectiveness of each federal program. Programs and agencies would automatically cease unless Congress took specific action to continue them. The Results Commission would work to uncover duplication of services in government programs, of which there are many.

The fact that such commissions are needed is an indication of the problem. Government programs are the only sign of eternal life on earth. Once they are created, they attract often-large constituencies that are ready to complain loudly about their “essential” services should anyone try to reduce their funding or, worse, end them altogether.

Commenting on the proposed legislation, Citizens Against Government Waste President Tom Schatz said, “Federal programs that do not demonstrate measurable results are rarely scrutinized. Funding them is like forcing investors to buy shares in a business that is losing money.”

The long overdue need for these commissions should be evident when one considers that about one-third of the fiscal 2005 discretionary budget is unauthorized. Comprehensive reviews of federal spending might save taxpayers hundreds of billions of dollars. CAGW has done just that, saving taxpayers $758 billion by helping to implement findings from the Grace Commission, during the Reagan administration, as well as other recommendations.

The Sunset and Results commissions are needed now because federal spending is out of control. Spending must be properly monitored by an entity that places the interests of those who earn the money over those who didn’t earn it and can spend it with little accountability.

While the Sunset and Results commissions are good ideas, Congress will ultimately decide which programs and agencies get dropped and which remain. Since Congress has given us the deficit problem because Congress spends our money, it could be a conflict of interest to expect it to provide a solution. That’s why taxpayers must not only push for enactment of these commissions, but also monitor what Congress does with their recommendations.

If taxpayers want to keep more of the money they earn, they must also work to become less dependent on a government check. We look to government too often and to ourselves not enough. When that dynamic reverses, our need of government will be reflected in less government. That will benefit the economy and the government more than additional revenue.