Can the federal government shrink? Or is the situation like the waistlines that paradoxically parallel the growth of the diet and fitness industry?
Over a year ago, the White House announced executive order 13,781 on executive branch reorganization, targeting "where multiple Federal agencies interact in fragmented or duplicative ways." Reform proposals included "merging agencies, components, programs, or activities that have similar missions."
The campaign presented an important opportunity to discover that, if an agency is engaging in needless regulation, then perhaps we do not need that agency after all.
As my colleague Iain Murray noted about the plan, the impulse of better services for the citizen “customer” as opposed to the bureaucrat is commendable. There are important and worthwhile recommendations contained within, but this report does not quite herald the downsizing of government one might have expected, even if Congress were to enact all of it.
In its own way that’s alarming. After an administration like Trump's, who would propose a more "radical" restructuring agenda later?
There’s much worthwhile emphasis on reducing certain duplication and attendant bureaucracy. Training programs are a prominent example, since, as frequently noted, "[t]he Federal Government currently operates more than 40 workforce development programs spread across 15 agencies." And government statistical offices across the departments of Labor and Commerce get consolidated, and services like student aid processing streamlined.
The Department of Health and Human Services (DHS) would get renamed the Department of Health and Public Welfare as part of de-duping and streamlining food aid programs. Also, food safety functions at DHS would be merged with those of the United States Department of Agriculture. And meanwhile, USDA’s housing programs would be transferred to the Department of Housing and Urban Development.
The National Marine Fisheries Service (NMFS) would get merged with the U.S. Fish and Wildlife Service (FWS). Indeed, Office of Management and Budget Director Mick Mulvaney colorfully and hilariously described some of the dis-coordination of regulatory programs, using cheese vs pepperoni pizza, chicken vs. egg, hot dog vs. buns, and salt-water fish that head inland via rivers, as illustrations. This video is well worth a look.
There’s also intra-agency or internal reorganzations, and mission re-focus for some offices. These include the Office of Personnel Management, the Postal Service, and the Transportation and Energy Departments.
There is also important thinking taking place with respect to "Reform[ing] Federal Role in Mortgage Finance," important since GSE’s (government-sponsored enterprises) like Fannie Mae and Freddie Mac played a role in financial collapse. But that sentiment gets negated somewhat with a campaign to "Consolidate and Streamline Financial Literacy Efforts." The last place anyone should go for financial advice is a federal government that vaporizes retirement trust funds and runs a $21 trillion debt. It is unfortunate that "More than 20 Federal agencies have some form of financial education or literacy program," but these should be abolished, not treated as candidates to "Consolidate and Streamline." We have the Internet, anyway, for such education.
Speaking of government "sponsorship," my favorite element is the proposed privatization of certain governmental electrical transmission assets (something long called for). Better integrating large/mega-scale network assets into the competitive marketplace would be highly important in the ongoing (needed) rethinking of infrastructure rollout in such applications as 5G, smart cities and inter-sectoral network asset expansion in general. Federal real estate divestiture is another good proposal that could inform bolder and broader privatization.
But elimination of agencies and programs? Not so much. This is worrisome, given that much of what the federal government is doing should be happening at the state and local levels.
Some notable explicit Department-level consolidation is proposed, such as the case of Education and Labor. But a generation ago (in the 1990's "Contract with America" era) Republicans meant to abolish the Department of Education (and return such authority to states), and to ditch alongside it the Departments of Energy and Commerce. Secretary of Energy Rick Perry at one time wanted to abolish the Energy Department, but now runs it. Mr. Trump himself is a fan of the Export-Import bank, one of the primary candidates for this very kind of downsizing exercise.
The emphasis on the whole is more on operational efficiencies and digitizing agencies operations and services, and enhancing "cybersecurity." But a government more “efficient” at things it shouldn’t be doing in the first place would be a step back, not forward.
Even the proposed Bureau of Economic Growth may have a government-centric charter: "By coordinating and consolidating Federal economic assistance resources at the Department of Commerce (DOC), taxpayer dollars will receive a higher return on investment on projects that are transparent and accountable." But this Bureau could take an alternate approach. Federal interference and regulation have been mounting since the rise of the progressive era often justified by alleged "market failures." Ill-conceived regulation is highly dangerous for the economic frontier, and it is not too late for the "BEG" to reorient and actively disentangle regulation from our various economic sectors. Political failure, not market failure, is the issue.
Besides, taxpayer funding of your project means government regulation of your project. Furthermore, the fiscal enterprise and the economic regulatory apparatus are tightly intertwined. Government spending and its distortionary, non-market influences in major realms of human endeavor is one of our great unmeasured costs of regulation and interference.
For example, consider yet another of the reports proposals: NASA's "Agility" is being "improved"..."through Increased Use of Federally Funded Research and Development Centers." There is, alternatively, a case for "making space for free enterprise" (pun intended). I'm not singling out this iteration of steered investment. Long ago, I criticized former president Barack Obama’s research related “manufacturing hubs” as likely magnets for cronyism, corporate welfare, and less innovation.
Why? Because whether earth-bound ground-based federal economic assistance, or whether in outer space with NASA, more federal funding is going to mean more federal regulation, larger government, and a private sector that cannot act without government guidance at every turn. There is no need for this; this report represented a chance to have a vision presented, to have the case made for lightweight laissez-faire in areas that are not regulated yet. This is extremely important. It is still not too late
In Saving Congress from Itself: Emancipating the States and Empowering Their People, former U.S. senator and federal judge James L. Buckley described the vast degree to which federal limits on spending for the "general welfare" have been swept away, and how the important distinction between state and federal roles has been erased.
Buckley describes grants-in-aid to states and localities in categories like health, transportation, income payments, education, job training, social services and environmental protection. These are the very kinds of “services” that seem to dominate the new report.
But consider how these have expanded and consumed federal time and resources. Such programs have grown from 100 under President Lyndon Johnson, to over 1,100 now. Spending on them topped $700 billion in 2018. We have the opportunity to vocalize and legitimize a substantial downsizing, not just doing things “better” federally when they should be done locally anyway.
Other detailed proposals to reduce spending on redundancy and duplication, fraud and abuse have been available for years. These include the Heritage Foundation's many nominations for eliminations and consolidations; the "Wastebook" produced by former Sen. Tom Coburn; and the famous Citizens Against Government Waste "Pig Book."
My own organization (the Competitive Enterprise Institute) has called for scaledowns of the Commerce Department, the Federal Communications Commission, Export-Import Bankelimination (among other "soft targets for elimination" nearly 25 years ago).
In the federal government itself, before the Delivering Government Solutions report, much abuse, fraud, redundancy and overlap had already been thoroughly documented by the Government Accountability Office and the Office of Management and Budget. Congress has talked it to death over the years.
I noted last year how Mulvaney’s superb memorandum described the restructuring project's objectives:
- Create a lean, accountable, more efficient government that works for the American people;
- Focus the Federal government on effectively and efficiently delivering those programs that are the highest needs to citizens and where there is a unique Federal role rather than assuming current programs are optimally designed or even needed;
I added the italics to underscore an overlooked tension between the legitimate scope of federal government, and the common default perception of agencies as offering "services" to a public seen as “customers.”
If the reforms are taken seriously and expanded upon, there can be much synergy with Trump’s February 2017 executive order on “Enforcing the Regulatory Reform Agenda” (E.O. 13777) that set up "Regulatory Reform Officers" and "Regulatory Reform Task Forces" at agencies, in terms of streamlining what agencies do in years to come.
Whatever shortcomings exist, together these proposals present the most explicit linkages between the fiscal and regulatory realms seen in quite some time.
Democrats have no interest in aiding a Trump restructuring of this nature, and agencies are entrepreneurial in their own right, actively involved in undermining a presidential downsizing agenda, sometimes at the behest of former cabinet members. The #resist hashtag movement has ample media support.
Still, in contrast to the administrative state’s century spent legitimizing unelected central power, much of Washington goings-on are -- from the Framers' federalist standpoint -- not part of the legitimate function of a national government.
Ultimately the task of streamlining will need to extend beyond improving agencies as customer service entities and consolidation, and more deeply rethink the basic role of the federal government relative to the rest of society. Some remember hearing of President Ronald Reagan, in his inaugural address, saying "government is not the solution to our problem; government is the problem." Has that changed?