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Making the most of the government shutdown

Published 11:00pm Wednesday, October 9, 2013

Life often provides us with learning opportunities, if we pause to reflect on events. What insights can be drawn from the ongoing partial Federal government shutdown? Since I am an economist, I will stick to economics, as insights on political advantage for Republicans versus Democrats, or the Tea Party versus President Obama, are beyond my (rather limited) area of (still pretty limited) expertise.

Washington bureaucrats have, intentionally or not, provided guidance for cutting spending. The furlough of around 800,000 “non-essential” Federal employees has been the most reported aspect of the partial shutdown. Do we really need almost one million non-essential Federal workers?

The more than $2 trillion Americans pay in Federal taxes each year leave us with less money to buy things we need or want. Americans recognize the need to pay for government services of value, but bristle at waste. Perhaps more Americans could afford the health insurance being forced on us by Obama Care if we didn’t have to pay so much in taxes to support non-essential spending by the Federal government.

America simply can’t afford Washington’s profligacy. Our $17 trillion national debt is about equal to the annual output of our economy, a threshold which has set off debt spirals in other nations. On top of this debt, expenditures on entitlement programs like Social Security and Medicare will continue to rise as our nation ages. And the substantial unfunded pension and health care liabilities of state and local governments may be passed on to the Federal government at some point. We must cut spending soon to prevent a fiscal train wreck.

Over 90% of the employees of many department and agencies have been classified as “non-essential,” indicating where Federal spending can be cut. Certainly some of the employees bureaucratically defined as “non-essential” do important jobs we would want to preserve. Nonetheless, we should eliminate at least half of these non-essential positions over the next decade. The military underwent a significant reduction in force following the Cold War, and dozens of non-essential military bases have been closed over the past two decades. It is past time for agencies like the Departments of Education and Housing and Urban Development, where over 95% of employees are non-essential, to experience similar cuts. Moving people from non-essential Federal jobs into the private sector will also produce new tax revenue and help the Federal budget.

The closure of national parks and monuments has been strategic to make sure that people actually notice the shutdown. Many agencies in Washington could be closed for weeks before anyone outside of the government realized. This offers another guide for cuts: any agency that we didn’t know was shuttered should be on the chopping block.

Many services affected by the shutdown could be turned over to the private sector. National parks and monuments, for example, could be privatized. Inclusion of conservation or preservation easements in the deeds of privatized parks or sites would eliminate any danger of the private owners paving over Yellowstone Park. Purchase of parks or historic sites by philanthropic foundations and conservation groups could well ensure a more adequate level of funding than Congress currently provides. Privatization of air traffic control could improve service and reduce congestion delays. NASA, with 98% non-essential employees, is another prime target. Private companies like SpaceX already launch satellites, while the Mars One Foundation champions a manned mission to Mars.

The most important lesson from the partial government shutdown is that the nation has not stopped functioning. We currently ask government to do a lot for us, and have developed a government habit. One challenge in kicking this habit is imagining life with less government. Economists in favor of smaller government can explain how services can be privatized, but people have difficulty envisioning life with less government. Thanks to politicians in Washington, we now see that life goes on when government does less. Hopefully this will whet peoples’ appetites for much-needed permanent cuts.

 

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University. Respond to him at dsutter@troy.edu and like the Johnson Center on Facebook.

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