February 13, 2003

February 13, 2003 | News Releases on Federal Budget

Heritage study identifies examples of wasteful government spending

WASHINGTON, FEB. 12, 2003-Federal lawmakers must restore fiscal discipline to the budget process if they hope to control deficits, Federal Reserve Chairman Alan Greenspan recently told Congress-and a new Heritage Foundation paper shows them the best way to do that: Apply the brake on runaway spending.

"Congress had the courage to cut spending during the mid-1990s, so we know it can be done," says Brian Riedl, the Grover M. Hermann fellow in federal budgetary affairs at Heritage. "But once we started running surpluses, lawmakers abandoned fiscal responsibility for bloated budgets loaded with record spending increases."

Indeed, Riedl says, Washington will spend $782 billion more from 2000 to 2003 than it did between 1996 and 1999-an increase of $5,000 per household. That brings per-household spending to $73,000 per household, making 2000-2003 the highest-spending four-year period in U.S. history, World War II alone excepted.

Riedl outlines 10 principles that lawmakers can use to achieve what he calls "a lean, effective government with low taxes." Among them:

Turn local programs back to the states
Washington bureaucrats can't know what policies are best for every state and locality. Lawmakers need to promote accountability and local control by allowing states to raise their own money and create their own programs, Riedl says. They should, for example, let states handle their own job-training and housing programs.

And the fact that states and localities view federal grants as "free money" means they have no incentive to ensure it's well spent. The result: Pork-barrel spending that includes such items as $1.5 million for a statue of the Roman god Vulcan in Birmingham, Ala., $489,000 for "swine waste management" in North Carolina.

End irrelevant programs and reform wasteful programs From the Rural Utilities Service to the Historic Whaling and Trading Partners Exchange Program, the list of cut-worthy programs is long. Riedl suggests that lawmakers confronted with obsolete and useless programs should ask themselves: "If this program did not exist, would I vote to create it?" They also need to work harder to prevent financial mismanagement, such as the $73,950 Air Force and Navy personnel spent during one recent 18-month period on exotic dance clubs and prostitutes.

Terminate corporate welfare
"Even if such wasteful spending didn't harm the economy, there's no justification for taxing waitresses and welders to subsidize Fortune 500 CEOs," Riedl says. Examples include eEmergency grant and loan programs, which encourage businesses to take irrational risks, knowing that taxpayers will cover any losses.

Taking steps such as the ones described above, the Heritage analyst says, will build a constituency for limited government and lower taxes. "Interest groups are always ready to defend their special- interest subsidies," he says. "Taxpayers rarely fight wasteful spending because they don'tdon't believe they will ever see the savings.

"Policy-makers can organize taxpayers in opposition to wasteful spending by linking specific reforms and spending cuts to specific tax cuts. They can, for example, reduce outdated and duplicative programs and use the savings to cut income taxes across the board."

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