Command Center

National | Washington is all about spending money, so it stands to reason that any reform administration would require an energetic budget office to spearhead its agenda. Here's how to put that office back to work for good

Issue: "How shall we then govern?," Oct. 28, 2000

Twenty years ago, Ronald Reagan was elected to cut marginal income tax rates across the board, to rebuild America's national defense, and to reign in runaway government spending and regulatory costs. He recognized then that the Office of Management and Budget (OMB) could be the command and control center of his "Reagan Revolution." The very first budget OMB presented to Congress contained the blueprint for many of President Reagan's most ambitious reforms. Mr. Reagan faced the growing threat of the Soviet Empire, double-digit inflation, an explosion of regulatory costs, and excessive wasteful government spending. Mr. Reagan rebuilt our national strength and defeated the Soviet Union without a war, and government stopped printing money to cover its overspending. Inflation fell. But the progress in rolling back the heavy hand of government regulations and government spending has been lost in the last eight years. An energetic OMB, supported by the president, can lead the way to relief from heavy regulation and spending. The first order of business is to draw up a budget that includes the elimination of the death tax, the abolition of the marriage penalty tax, and across-the-board rate reduction. Here OMB must take on the special interests that will always argue that "we" cannot afford a tax cut. The fuzzy math of the Washington establishment works like a bad TV game show. The answer, whatever the tax cut in question, is always "we cannot afford it." Under Bill Clinton the OMB went silent. Its pronouncements were recognized as political rather than serious work. The next OMB must rebuild its credibility by putting out real economic analysis and working with Congress to restore credibility to government budgeting. Second, the OMB must move quickly to embody positive priorities. Reforming Social Security and Medicare, providing school choice and accountability in education, and deploying the Strategic Defense Initiative to defend America against missile attack must all show up in the very first budget, or the inertia of the Washington Establishment will delay new policy initiatives to death. Third, the OMB must restore the Reagan campaign to root out waste, fraud, and abuse in government spending. OMB should create a second Grace Commission, the Reagan-appointed commission led by J. Peter Grace that identified several hundreds of billions of dollars of wasteful spending. But the Democrat-controlled Congress ignored many of the Grace Commission's recommendations; the Clinton administration's "Reinventing Government" effort was a smoke-and-mirrors attempt to pretend to be reforming government waste while actually protecting the status quo. With a Congress willing to root out waste, OMB should create a new Grace Commission revising those recommendations not yet adopted and updating the commission's ideas with new recommendations. Government programs and spending that are wasteful, fraudulent, or destructive once identified must be abolished or dramatically reformed so that those tax dollars can be returned to families that paid them. Fourth, the OMB should make itself accountable by explaining to all Americans how to judge success or failure. For the past 40 years the figure OMB officials and politicians told us to look at was the deficit. How did the deficit become the one number to watch in Washington? Well, years ago, conservatives concerned about the growth in government spending criticized deficit spending by the federal government. They didn't feel strong enough to make the case against too much spending, so they attached "deficit" to "spending" to strengthen their public case against big government. In doing this conservatives were not completely honest. They would not have been happy if every penny of government growth had been fully funded by high taxes. Their real concern was the growing size and cost of government. On the other hand, liberals took the position in the 1960s and '70s that deficit spending was okay. We owed the money to ourselves, the argument went. And the clever British economist John Maynard Keyes had a theory that "proved" that deficits would stimulate the economy, since government spending somehow was better for the economy than spending by individuals. Then in the 1980s liberals decided that they could use the threat of deficits to oppose tax cuts supported by President Reagan. So the liberals announced that they too were against deficits. They dropped the word "spending" from "deficit spending" and the focus went to "deficits" as bad. Now that the Republican Congress has slowed the growth of government spending and the economy has increased in strength since the November 1994 GOP victory convinced the markets that there would be no Hillary Clinton takeover of health care or massive tax increases, the federal budget has come into balance and is running annual surpluses that are beginning to pay down some of the national debt. But the real difference between liberals and conservatives was their conflicting view of the proper size and cost of government. Not the deficit. Even with growing surpluses, Mr. Clinton and Mr. Gore opposed and vetoed tax cuts for Americans. And on the other hand, even with surpluses, conservatives oppose massive new spending programs. The OMB must become the honest broker to keep track of the real cost of government in total government spending and the cost of regulations. OMB should put out an annual report on the cost of government-not only how much the federal, state, and local governments spend, but also the costs imposed by regulations. During the Reagan years, OMB insisted that before any new regulation could be imposed on the American people a cost/benefit analysis had to be calculated. President Clinton dropped this requirement. It should be reinstated. OMB should also restore the paperwork reduction requirements imposed during the Reagan years and dropped by Mr. Clinton. We must demand honesty from our government. The government should tell us exactly what a new regulation will cost us as consumers and what benefits we are supposed to gain from the regulation. This will create accountability. We can check to see if the actual costs of regulations are greater than the real benefits. OMB should expand its understanding of measuring the true cost of government beyond mere money. When government becomes too large, one of the costs imposed on citizens is a loss of privacy. The OMB should present a "privacy impact statement" of new laws and regulations. Before any new regulation takes effect, there should be a period of public comment after the OMB has highlighted the costs to our privacy of the new rule. Many well-meaning laws in the past have created terribly intrusive government. OMB should also reinstate the requirement that new laws and regulations be examined for their impact on families. OMB should also demand that all new regulations be studied for their impact on state and local government, and on private companies and nonprofits. When the federal government acts, it often harms the legitimate powers of state and local government or imposes costs on private firms and nonprofit corporations. We should demand that the OMB be as demanding in examining the possible side effects of new regulations as the FDA is for new drugs. Even very important and valuable drugs are required by the FDA to undergo years of study. And yet today we allow regulations with little benefit to be imposed without serious study or thought on their side effects on the body politic. The Office of Management and Budget is one of many agencies and departments that must be depoliticized and restored to its original purpose: to provide competent and limited government that helps protect the life, liberty, and property of all Americans.

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