WHY FEDERAL PROGRAMS WON'T DIE THE BUDGET BATTLES HAVE BEGUN, AND SOME OF THE SAME BOONDOGGLES YOU'VE BEEN READING ABOUT FOR 15 YEARS WILL SURVIVE. HERE'S WHY.
(FORTUNE Magazine) – Promising to cut the federal budget has become one of the regrettable rituals of autumn in America. In almost every year since Ronald Reagan incited the modern revolt against "waste, fraud, and abuse," citizens have been subjected to endless articles and speeches about the need to shrink government--often followed by a list of cuttable agencies and programs so bizarre that it's hard to believe they weren't axed decades ago. You may recognize a few, just from repetition: rural electrification, the helium program, the strategic petroleum reserve. What's most appalling about such lists isn't the wastefulness and uselessness they conjure up; it's that the programs still exist at all, even though budget reformers have targeted them for extinction over and over and over again. This year will be different, promises the new Republican majority in Congress. We'll see.
Why can't these programs be killed? There's a branch of economics designed to answer that question. Called public choice theory, it takes one of the central and somewhat controversial propositions of economics--the idea that people act rationally to benefit themselves--and extends it to government officials.
Now we all know from personal experience and observation that people are not solely motivated by self-interest. Only the most callow and doctrinaire economist would disagree. But assuming that everyone is utterly selfish, it turns out, allows you to predict pretty well how people in general will act in a given situation. Likewise, in public choice, assuming that politicians and civil servants are only in it for themselves provides a useful model of the way bureaucracies behave. To put it another way, while it may indeed be "a sin to believe evil of others," as H.L. Mencken observed, "it is seldom a mistake."
Public choice provides a solid framework for understanding why bad old federal programs refuse to die. Look at rural electrification. Set up in 1936 during the dark days of the Great Depression, the Rural Electrification Administration was charged with the mission of running power lines out into the needy countryside. By the Fifties it had pretty much succeeded in wiring rural America, but the agency lived on, making subsidized loans to increasingly less poverty-stricken and less rural customers, including those in locales like Hilton Head, South Carolina.
The REA has escaped repeated assassination attempts and last year was combined with some other rural development programs into a new agency, the Rural Utilities Service (RUS). This spring, Wyoming's Alan Simpson--a Senator so tough he likes to brag about fistfights he's been in--tried again to cut it back. He got beat up. This year's budget bill will likely authorize an increase of $165 million in rural electric lending for a total of $1.1 billion. The federal subsidy adds up to $89 million. The RUS shows every sign of surviving into the 21st century. Ever mindful of the need to remain up to date, it now promises to build an "on-ramp to the information superhighway in rural America."
Making sure the REA and now the RUS stay in business is one of Washington's primo powerhouse lobbying organizations, the National Rural Electric Cooperative Association. With a $43 million budget, crack lobbyists, and a big PR operation, it rewards politicians who vote for rural development. Public choice describes this kind of activity as "rent seeking"--in which individuals or groups use the political system to plunder the wealth of others, the others in this case being you and me.
Many programs are just as bad. There's the Federal Helium Program, started in 1925 to keep our blimps aloft and today sitting atop 32 billion cubic feet of the buoyant gas in Amarillo, Texas. The Strategic Petroleum Reserve: 592 million barrels of oil pumped into holes in the Gulf Coast since 1975, just in case the Arabs launch a new embargo. "You could multiply the famous examples by a factor of 1,000 and still not cover all the wasteful and redundant government programs," says Robert Tollison, director of the Center for Study of Public Choice at George Mason University.
If you've never given all this much thought, don't worry. Public choice economists have an explanation for your behavior: the rational ignorance effect. It says you're right. It's not worth your time and effort to immerse yourself in the budget process, since your vote or outraged letter won't really affect the course of anything.
But if you want to defy the economists and assert your citizen's prerogatives, channel-surf over to C-SPAN some night and listen in on the budget battles. This year you'll see a stark choice between the status quo and smaller government. You may even decide to sound off about the RUS.