Wasteful spending needs to end

House Speaker John Boehner of Ohio (right) and House Majority Leader Eric Cantor of Va. have led the opposition to any revenue measures.
House Speaker John Boehner of Ohio (right) and House Majority Leader Eric Cantor of Va. have led the opposition to any revenue measures. (CAROLYN KASTER / Associated Press)
Posted: August 14, 2011

Steven Malanga

is a Manhattan Institute senior fellow and an editor at RealClearMarkets, where this first appeared

The prospect that Congress's 12-member super-committee might not do its budget-cutting job properly has provoked anxiety among the defenders of discretionary spending programs.

The budget deal provides that if this "Super Congress" can't agree on some combination of entitlement cuts, tax increases, and program reductions to slow the growth of the federal deficit, then spending cuts will kick in automatically, with half coming from nondefense discretionary spending.

I've already read how these mandatory cuts may gut a host of programs, from job-training initiatives to Head Start to federal education spending, and you can expect more such stories in coming months.

It's a local media specialty: Send out reporters to visit programs targeted for cuts and hear them tell us just how essential they are to the community. But what many media accounts inevitably fail to do is ask fundamental questions about these programs: What were they designed to do? And is there any evidence they accomplish their purpose? Those questions are significant because much of the discretionary spending that our government introduces is speculative in nature.

That is, there is little or no evidence when we begin this spending that the money will actually accomplish what we want it to. That's why we wind up funding antipoverty programs that don't reduce poverty, and job-training initiatives that don't get people jobs.

It's true that we won't be able to make a significant dent in the deficit with discretionary cuts alone. But it will say a lot about our political culture at this crucial moment if we can't eliminate discretionary spending that can't be justified by the evidence merely because that spending is protected by some powerful interest group.

Political campaigns are big enablers of this culture of speculative spending because politicians feel the need to woo voters with an agenda of prospective solutions to problems. Back in the 2008 presidential campaign, for instance, as the economy sank around us, candidate Barack Obama proposed expanding the Workforce Investment Act as the centerpiece of his effort to get people back to work. In doing so, he ignored studies by the Government Accountability Office and other watchdogs that WIA had joined a long list of failed federal jobs programs, with 60 percent of the money going to administration, not to retraining.

Some of the hyperbolic rhetoric we are now hearing about efforts to trim the deficit is coming from advocacy groups warning that much of our cutting will fall on the poor. These advocates frequently use the plight of the poor to inveigh against cuts in programs that don't accomplish anything.

We spend several billion dollars a year on community-development block grants that originated decades ago as naïve if somewhat well-intentioned efforts to restore declining neighborhoods. Over the years, however, Congress expanded the program to richer communities and gradually made it into a haven for member earmarks.

Some programs are so sacrosanct the media can't bring themselves to confront the evidence that they don't work. Head Start has been the subject of much study by academics who've found the program doesn't do what it is supposed to - that is, give lower-income kids a good educational head start.

The government keeps commissioning studies hoping to change that, but when the latest study sponsored by Health and Human Services was released in 2010, again showing there were no lasting educational effects of the program, the media virtually ignored it. And so, $100 billion later, we continue to fund a program that fails to accomplish its purpose.

We are perhaps even looser with our spending when we disguise it in the form of tax incentives designed to achieve something laudatory like energy independence. Our subsidies for ethanol producers date back to 1979, designed to support an industry that ramped up earlier in that decade but was already flagging within a few years.

Today there's ample evidence that the subsidies, which now encourage producers to devote 40 percent of the American corn crop to fuel, drive up the price of food but do little to reduce our energy independence. Yet, as Al Gore admitted this year, our politicians continue supporting it because corn-producing states like Iowa are an important stopover in the presidential primaries.

Politicians have justified all of these efforts and many more on the grounds that their goals are worthy. But the road to fiscal ruin is paved with good intentions.


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