Financial Reality Part II: Shrinking the Size of Government
by Robert Allen BonelliHenry David Thoreau in his essay Civil Disobedience wrote, “That Government is best which governs least.” Those particular words, written in 1849, summarize the simple truth that the power of the individual and self-reliance in our free society are what has driven the development of American Exceptionalism. Unfortunately in the 162 years since, our great nation has fallen prey to the dependency of entitlement programs administered by a suddenly powerful central government. The cost of all this government in our lives, programs that now approximately 50% of our population has become dependent on, has reached unsustainable levels and our liberty is in peril.
The major entitlements of Social Security and Medicare, which all workers pay for through payroll taxes, are only part of the problem. The future liabilities of these programs can be managed by restructuring the timing of benefits and the manner in which collected taxes are invested. Future installments in this series will offer some thinking on these matters. The other part of the problem is the combination of additional entitlement programs and the cost of the large federal bureaucracies to administer these other programs.
In 2011, we will pay out $385 billion in food stamps, $365 billion for the federal portion of Medicaid (with an almost equal amount due from the states), $200 billion in unemployment benefits and over $100 billion in aid to education. The total cost of these payments will exceed $1 trillion, but the cost of administering these programs will add approximately $300 billion in expenditures to the federal budget. The Department of Agriculture, the Department of Labor, the Department of Education, the Department of Health and Human Services and the Department of Housing and Urban Development are largely in place to administer the distribution of government aid. Excluding defense, these departments and their associated costs represent half of our entire non-military federal government.
Without questioning the necessity of the programs, it is reasonable to question why we need all the extra government to administer them. One solution is to consider localization of the management of these entitlements by transferring that authority to the states. Private sector experience has proven that more local operations and management results in lower costs and greater efficiency. Decisions made closer to the source of the need are made faster and by fewer employees. Recognizing that there will be a cost to localized administration, the net impact of eliminating these cabinet level departments and their hundreds of thousands of personal and the associated supportive infrastructure will be a significant reduction in overall costs.







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