February 8, 2007
It happens to a lot of families. Despite a nice raise, spending still exceeds income. The credit-card debt is piling up. Mom and Dad need to have "the big talk." It's time to decide where to cut their spending to make ends meet.
The first thing they'd try to do would be to eliminate waste. It wouldn't make much sense, for example, to turn the thermostat down if they leave the back door wide open; they'd want to close the door first.
Well, our federal government resembles this family.
Last year's federal deficit was $247.7 billion. That's smaller than experts had estimated because the Treasury reaped a big raise last year, taking in an extra $253 billion in taxes. Still, we're spending far more than we take in each year, piling up lots of debt we'll eventually have to pay off.
President Bush has just sent his five-year budget proposal to Congress, so now's the time for the president and lawmakers to have "the big talk" about how to get their finances in order.
For starters, they should find a way to slam the back door. It's wide open, and cash is simply pouring out.
In the Treasury Department's 2003 "Financial Report of the United States Government," the administration admitted it couldn't account for $24.5 billion it had spent that year. That waste alone equaled to about 5 percent of the year's deficit.
You'd think waste on that scale would spur some action, and it has: The government no longer explains exactly how much it wastes. Oh, it's still wasting billions -- it's just that these days these "unreconciled transactions" are hidden, so they're more difficult to identify. Instead of masking our wasteful spending, isn't it time to simply eliminate it?
And while they're cracking down on waste, this year, lawmakers also have a chance to make cuts in a wasteful and ineffective program: No Child Left Behind.
NCLB was enacted five years ago with four goals: increase accountability for student performance, focus on what works, allow flexibility for states and school districts, and empower parents with school choice.
Today, the federal government spends more than $66 billion on K-12 education. That's more than $1,400 for every public-school student in the United States. That investment, which actually represents less than 10 percent of all education spending in this country, lets the federal government dictate policy to states and local districts, creating a one-size-fits-all approach that stifles local innovation.
Not surprisingly, NCLB has fallen short of the mark on two of its stated four goals. The law has neither increased state and local flexibility (because federal bureaucrats call the shots), nor expanded parental choice. Meanwhile, the billions in additional spending (education funding for programs under No Child Left Behind has jumped from $17.3 billion to $24.4 billion) haven't paid off: Test scores are virtually unchanged.
Another wasteful program ripe for pruning: farm subsidies.
The agriculture industry is booming. Between 2003 and 2006 net farm income totaled $274 billion -- the highest four-year total ever. Yet, during the past decade, the federal government chipped in $25 billion in subsidies. And most of that went not to family farmers, but to corporate farms with average household incomes of $200,000. Worse, farm programs cost American households hundreds of dollars in taxes and higher food prices each year.
In the long run, entitlement spending is the major problem our government must solve. But fixing Social Security, Medicare and Medicaid will be easier if we also control federal spending and make the government smaller and more efficient. It's time to get started.
First appeared in the Chicago Sun-Times