- The Washington Times - Monday, January 8, 2001

George W. Bush did not have much to say about wasteful federal spending during the campaign, even though it will be one of the biggest problems he and his Cabinet will face when they take charge on Jan. 20.

Ronald Reagan, Mr. Bush's presidential role model, made waste, fraud and abuse a big part of his agenda and had some limited success in privatizing, cutting and trimming wherever he could.

Although Mr. Bush has talked about limiting federal spending growth, he has not had much to say about the need to abolish or cut ineffective, outmoded and overlapping programs. In fact, he proposed increasing spending on education, health care, medical research and defense (as Mr. Reagan did).

Mr. Reagan ran against the government, saying it was the problem, not the solution.

Mr. Bush, who ran as a "compassionate conservative" in an era of unprecedented tax revenue surpluses (estimated to top $6 trillion over the coming decade), approached big government from a somewhat different direction. He called for $1.3 trillion in tax cuts over 10 years, and for letting workers put some of their payroll taxes (another $1.5 trillion) into their own personal investment portfolios.

Instead of using up precious political capital by fighting Congress over spending cuts that might save a few billion dollars here and there, Mr. Bush emphasized shrinking the size of government spending as a proportion of the economy by reducing the source of its revenue. That way, the economy gets bigger, stronger and healthier as a result of the increased money in the private sector, which in turn produces more income tax revenue to pay for the government's future needs.

As someone who has spent a good part of his reporting career writing about wasteful federal spending, I've come around to the idea that Mr. Bush's approach may be a better way to skin the cat, so to speak.

But this does not mean Mr. Bush cannot at the same time initiate a full-scale offensive against wasteful federal spending. There are a lot of places where he and his new Cabinet can save taxpayers hundreds of billions of dollars.

He can start by making the Heritage Foundation's latest budget book must reading for every department, agency and program executive he appoints. It is chock-full of examples of waste, inefficiency and redundancy, and has sensible proposals for change.

Start with the Department of Housing and Urban Development's massive $4.4 billion Community Development Block Grant program. It was aimed at combating poverty in depressed urban neighborhoods, but now the richest communities get CDBG funds. A Congressional Budget Office survey found that "15 of the 20 counties that had the highest per capita income in the country" received CDBG money, while poorer places got little or nothing.

For example, wealthy Greenwich, Conn., "received 5 times more funding per person in poverty in 1995 than that provided to Camden, N.J., even though Greenwich, with per capita income 6 times greater than Camden, could more easily afford to fund its own community development needs," the General Accounting Office reported.

Heritage suggests restricting CDBGs to truly needy communities. Five-year savings: $3 billion.

Many programs have simply outlived their usefulness because the private sector delivers the same services much more efficiently. Take the Federal Housing Administration, created in the midst of the Great Depression to revive the housing market. It led to the fixed-rate 30-year mortgage, but private lenders now account for nearly 90 percent of home mortgage loans.

The feds should not be in the mortgage business. Delinquency rates on FHA loans are 3 times the rate on conventional loans. One GAO audit found the FHA was losing $99 million a month. Heritage wisely suggests turning FHA into an independent government corporation "that could be privatized at some point in the future."

Since 1970, taxpayers have poured $23 billion into Amtrak, the money-losing passenger railroad. About $3.6 billion in subsidies have been sunk into it in the last three years alone. Another $664 million will be spent on it this year. But despite all this money, and a record number of traveling Americans, Amtrak's passenger volume continues to decline.

Heritage says to end Amtrak's subsidies and open up its routes "to competition from private passenger rail operators under the franchise/concession form of operation that has worked so successfully in Europe, Asia and Latin America."

There are hundreds of other programs throughout the government that Mr. Bush and Congress need to re-examine, reform or eliminate, from the $600 million a year Office of Educational Research whose "research laboratories have been a failure" to the $6.3 billion a year Head Start program that "has failed to improve the academic achievement of low-income children."

U.S. businesses have undergone revolutionary downsizing and other changes over the past two decades, becoming leaner, more productive, more efficient, more high-tech but not the federal government. Much of the federal bureaucracy continues to operate as it did 100 years ago. Over at the Agriculture Department, they still have offices in every county because of a rule they should not be more than "a day's horse ride away." It's time for that to end.


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