Ask the Scholar
Document scope · 1 page
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory.
For page-specific OCR and visual context, open one of the page chats.
Scholar Source Context
Document identity
localId
323151951
label
Old House Chamber - [Reform Speech] 4/3/92 [OA 6100] [4]
core
doc
dtoType
document
citationUrl
pageCount
1
Source metadata
id
323151951
contentType
document
title
Old House Chamber - [Reform Speech] 4/3/92 [OA 6100] [4]
citationUrl
identifierLocal
13614-010
collections
Records of the White House Office of Speechwriting (George H. W. Bush Administration)
Speech Draft Files
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
naId
323151951
levelOfDescription
fileUnit
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
mediaId
b13c69c6a0b882cd
ocrText
Originally Processed With FOIA(s):
FOIA Number:
S
S
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection:
George H.W. Bush Presidential Records
Collection/Office of Origin:
Speechwriting, White House Office of
Series:
Speech File Draft Files
Subseries:
Chron File, 1989-1993
OA/ID Number:
13614
Folder ID Number:
13614-010
Folder Title:
Old House Chamber - [Reform Speech] 4/3/92 [OA 6100] [4]
Stack:
Row:
Section:
Shelf:
Position:
G
26
18
1
1
THE WHITE HOUSE
WASHINGTON
APRIL 1, 1992
MEMORANDUM FOR SAMUEL K. SKINNER
HENSON MOORE
CLAYTON YEUTTER
DORRANCE SMITH
DAVID DEMAREST
BOYDEN GRAY
FROM
TONY SNOW TS
SUBJECT
FRIDAY'S SPEECH
Tom Foley and Co. have decided to take the offensive on the
reform issue by raving about executive branch perks. They have
enjoyed mild success so far: The press really ripped into Judy
Smith yesterday about perks, and we didn't have good answers
prepared in response.
We shouldn't take the bait. Perks aren't the problem in
Washington. The problem is that we're not doing the people's
business, and we seem to be wrecking our system of government in
the process. Americans want action, not finger-pointing.
This memo covers two topics: I) a recommendation that we add
performance standards to our policy mix for the speech; and 2) a
brief discussion of the special possibilities Philadelphia offers
as a speech site.
I) A POLICY RECOMMENDATION: PERFORMANCE STANDARDS.
Friday's speech gives us an opportunity to lift the reform
discussion to a higher plane. If we simply try to exploit the
Democrats' problems on the Hill, we'll prove that we, like the
Democrats, don't understand life outside the Beltway.
Americans don't think that their government works, and it's
hard to blame them. Taxes and spending continue to rise. Key
problems -- lackluster schools, streets increasingly torn by
crime, a sluggish economy, feelings of competitive inferiority,
etc. -- go unaddressed. We don't pass important legislation; we
just set deadlines and argue.
Congress suffers historically low approval ratings (18
percent, according to a recent Washington Post/ABC survey)
because of scandals, perks, and performance: It never seems to
pass really important legislation, but it always manages to find
2
time to finance pork-barrel projects. Many people believe that
government works for the special interests, not for them. Jerry
Brown, Ross Perot and Pat Buchanan all have feasted upon this
combination of voter discontent and suspicion of powerlessness.
This year's battle cry: When in doubt, throw all the bums out.
If we want to distinguish ourselves from the bums, we must
prove that we understand the problem. Here's the problem: The
people feel that they've been excluded, and that they're getting
ripped off. Jim Payne recently analyzed budget hearings on the
Hill and discovered that 82 percent of the people giving
testimony either worked for government, or have government
backgrounds. A significant portion of the remaining 18 percent
work for interest groups that receive federal funds. In short,
the budget process -- and hence, the government -- caters to a
small, elitist corps of lobbyists and government lifers -- not
for the working stiffs who pay most of the taxes.
As I understand it, we're now prepared 1) to submit
legislation applying to Congress the same laws it applies to the
executive branch, 2) to take another whack at campaign finance
reform; and perhaps to promote term limits, through a
constitutional amendment or other vehicle.
These items turn up the heat on Congress, but they don't
address the fear that government has become a private preserve
for the high, mighty and well-connected.
We can answer this fear adding one other reform to our list,
performance standards. The President should recommend submitting
all laws to a simple test: If programs work, we support them
(Head Start, for instance). If not, we eliminate them (as we
have with some Defense programs). We might even wish to consider
adding sunset provisions to laws, along with designated criteria
for success or failure. An attached excerpt from a Peter Drucker
book lays out the case for such legislation.
The pitch is simple: We don't want to waste people's hard-
earned money. We will measure programs by their results: Do they
work? Not: Do they cost really impressive sums of money?
In this way we protect the wage earner from the predations of the
special interests.
Performance standards also lay a foundation for more
ambitious reform proposals. If we decide at some later date to
take on bureaucracy or talk in more sweeping terms of government
reforms, we can rely on the only measure that counts: Does it
work? We could call it the "Truth in Legislation Act. At any
rate, this reform embraces common sense and appeals to George
Bush's appreciation of basic honesty.
3
A final benefit: Bill Roth already has submitted legislation
advocating performance standards, and our administration has
signed off on it -- at least in theory. We could endorse the
bill if we have no problems with it. At the very least, we could
work with Roth to draft a bill that makes all of us happy.
By adding performance standards to the mix, we take the
debate away from the Hill and back to Main Street. We
acknowledge people's basic suspicion that they're getting ripped
off, and that their government has been seized by staffers and
lobbyists. To those people we say: We will give government back
to you. Such a statement alone would be powerful, since a simple
admission of truth would shock most voters. But we also must be
serious. We can't use performance standards as a toss-off line.
We should be prepared to offer them up as parts of our standard
presentation of legislation.
As a general proposition, we come not to destroy Congress,
but to save it. After all, our system depends on three healthy
branches of government, each balancing the others. A weakened
Congress hurts us all. We should note that we do not regard
reform as a stalking horse for Republican candidates. We want
reform because it's the right thing to do.
PAC reform, Congressional reform, term limitations, and the
other measures send a powerful message -- but they have far more
resonance in Washington than elsewhere. We need one element to
fulfill the "Damn right!" test. If we say: "The government too
often pours your money into programs that don't work, and it's
time we put an end to it," half the viewers will slap themselves
on the forehead and say, "Damn right!"
Furthermore, performance standards would make government
submit to the same scrutiny workers endure when they get their
annual performance reviews. By making government accountable,
and setting deadlines for results, we tear government from its
lofty perch, and return it to the world in which most of our
voters work and struggle to build good lives.
Voters and C-SPAN junkies will watch the House
investigations of executive-branch perks with interest, and they
may conclude that everyone in Washington is on the take. In the
end, however, voters don't care much about the your-perks-are-
bigger-than-mine debate. They think of a more basic question:
What have we (in government) done for them lately? Wouldn't it
be nice to demonstrate that we hear their message -- and we have
something to offer?
II) PHILADELPHIA POSSIBILITIES
4
This section may be completely gratuitous, and the
suggestions may already be incorporated into the draft.
Nonetheless, here goes:
Philadelphia offers spectacular possibilities for the
speech. Jefferson drafted the Declaration of Independence here.
The founders hammered out the Constitution in the City of
Brotherly Love. And in every generation, Americans return in
their hearts to Philadelphia by asking: What does the
Constitution mean? What kind of government do we want? We have
reached such a point again. The entire world has changed in
three years, and most nations now look back out our Founders with
awe. They want to capture the spirit of Philadelphia -- and so
do we.
The speech basically argues for the restoration of checks
and balances -- an energetic executive branch; a Congress that
represents the will of the people, and an independent judiciary.
It would make sense to mention in passing the President's
commitment to a judiciary that interprets laws, rather than makes
them. That's standard Federalist Society stuff -- and all four
founders of the Federalist Society have worked for this
administration. We also should mention Clarence Thomas, who is
much beloved by the Federalist Society. Clarence is a guaranteed
applause line, and adds another nuance to the address.
If we incorporate a philosophical element -- a return to
Philadelphia, checks and balances, a government of, by and for
the people, etc. -- we can impart a sense of history and weight.
That's important. Never underestimate the idealism of the
American people, especially when it comes to our Constitution.
During last year's Desert Storm euphoria many people believed
that America had finally lifted itself from the doldrums, and had
restored its higher sense of itself. Americans believe deeply in
the goodness and destiny of our country, and much of today's
discontent arises from the fact that we seem to have violated
that precious heritage.
George Bush travels to Philadelphia to save that system of
government, to reclaim the founders' legacy -- and to restore
people's rightful claim to power. The President's populism would
stand in dramatic contrast to the elitism of the House, and of
the Democratic party. It also would provide grist for columnists
-- Broder and will, particularly -- who yearn for such stuff.
If we combine real news -- Congressional reform to restore
our system of checks and balances, and performance standards to
demonstrate that we understand the source of public discontent -
- with the loftier ideals of a government of, by and for the
people, we can hit a home run, and establish a basic theme for
this election year.
6
THE LIMITS OF GOVERNMENT
For almost two centuries, we hotly discussed what government
should do. We almost never asked what government can do.
Now increasingly the limits and function of government will be
the issue. And government is no longer, as political and social
theory still postulate, the only power center. In the developed
countries both society and polity have become pluralist again,
in startling reversal of the trends that prevailed since the end
of the Middle Ages. These new pluralisms are very different
from anything known earlier. The pluralism of society is one of
apolitical, performance-focused, single-task institutions. The
pluralism of the body politic is that of the new "mass move-
ments": small, highly organized minorities, single-cause or
single-interest in their focus, and totally political.
These new realities make new and different demands on
political leadership. To try to satisfy them through "cha-
risma," as so much popular discussion seems to ask for, can
only result in misleadership and non-performance.
From Omnipotent Government to Privatization
Very few books in history have had greater impact than
Adam Smith's Wealth of Nations (1776). It is still the one eco-
59
The Limits of Government
GOVERNMENT AND POLITICAL PROCESS
over running the prisons to private contractors. Even tradi-
deep trouble in most countries. Fred Smith, the founder and
tional "progressives" no longer doubt that there are limits to
CEO of Federal Express, the multinational courier company,
was asked in a meeting in Paris why his company does not
what government can do.
There are three reasons for this dramatic change. One is
operate in Switzerland. "It is the only Western country," he
the failure of government programs and government opera-
said, "in which the postal service still functions." The nation-
tions since World War II. The second is that we have learned
alized railroads of Europe are running horrendous deficits, as
there are limits to what taxation and spending can achieve.
did the Japanese National Railroad before it was split up and
Finally, we now know there are limits to government's ability
privatized in 1986. Yet despite the enormous sums the tax-
payers of Europe and Japan have been pouring into their
to raise revenues.
railroads, only the non-governmental American railroads
What Can Government Do?
have remained effective freight carriers. No nationalized rail-
Most government activities of the nineteenth century
road in the non-Communist world carries more than one
worked beautifully. The Post Office, for instance, the national-
tenth of its country's freight. The American railroads carry
ized railroads of Europe, the health-insurance programs of
two fifths-and make money doing so.
Imperial Germany, or workmen's compensation first devel-
We now understand why there are some things govern-
oped in Imperial Austria around 1900 (with Franz Kafka, the
ment, by its very essence, cannot do. And even for the things
great novelist, as one of its most competent administrators).
government can do, conditions must be right. A government
The social programs of Franklin D. Roosevelt's New Deal in
activity can work only if it is a monopoly. It cannot function
the 1930s were successes-at least there were very few failures.
if there are other ways to do the job, that is, if there is compe-
But the only country in which government programs
tition. The Post Office in the nineteenth century was a true
enacted after World War II have still been successful by and
monopoly. And so were the railroads. There were no other
large is Japan. In every other country-and in democratic
ways of sending information or of moving freight and people
countries just as much as Communist ones-most post-World
over land. But as soon as there are alternative ways to provide
War II government programs have been disasters. If they
the same service, government flounders.
achieved any results, these were often the very opposite of
Governments find it very hard to abandon an activity even
what they were enacted for. This goes for the frantic efforts
if it has totally outlived its usefulness. They thus become
in the Soviet Union since Khrushchev's day to improve farm
committed to yesterday, to the obsolete, the no longer pro-
production and farm productivity; when the Chinese, how-
ductive. And government cannot give up either when an activ-
ever, "privatized" their farms, production and productivity
ity has accomplished its objectives. A private business can be
shot up almost overnight. But just as ineffectual was Lyndon
liquidated, sold, dissolved. A government activity is "for-
Johnson's "War on Poverty" or the attempts of successive
ever." There are now Sunset Laws which prescribe that gov-
American administrations to stamp out drug abuse or to put
ernment activities after a given time lapse unless they are
re-enacted. But legislatures rarely refuse to renew an activity,
welfare mothers to work.
Worse, the very programs and activities that did so well in
no matter how obsolete or futile it has become. By that time
the nineteenth century, and up to World War II, are now in
it has become a vested interest.
63
62
The Limits of Government
GOVERNMENT AND POLITICAL PROCESS
nomics book that even the least educated have heard about.
as the one compelling argument against government interfer-
ence with the economy.
And yet Adam Smith's main point was virtually forgotten a
few decades after the book had come out-and remained
When the question of the limits of government was first
raised two hundred years after Adam Smith's book, it was
virtually forgotten until quite recently. Smith had little love
dismissed as irrelevant, if not as silly. As it happened, I was
for businessmen and even less for self-interest. He did not
the first to do so, in my 1969 book The Age of Discontinuity.
argue that government does a poor job running the economy.
There I also coined the new term "privatization" for the
He argued that government, by its very nature, cannot run the
divestiture by government of nationalized companies and in-
economy, not even poorly. He did not, so to speak, agree that
dustries which I anticipated. But when The Economist reviewed
elephants are poorer flyers than swallows. He argued that
the book, it derided the very thought as perfect nonsense and
government being an elephant can't fly at all.
as something that could not possibly happen.
But soon-no later than the end of the Napoleonic wars-
Only eight years later Margaret Thatcher became prime
the argument, even among Smith's followers, turned from
minister of Great Britain and immediately started to privatize.
what government can do to what government should do. Smith
Since then, privatization has not only become the program of
argued from the nature of government. The nineteenth cen-
Conservatives like Mrs. Thatcher in Great Britain or Jacques
tury argued politics.
Chirac when he became prime minister of France in 1986.
Even the most uncompromising advocates of the free mar-
The French Socialists, regaining the prime ministership in
ket did not question government's competence in the nine-
France in 1988, vowed to continue privatization; indeed, they
teenth and twentieth centuries. They argued government's
decided to privatize the biggest of all French nationalized
legitimacy. The most extreme opponent of government pro-
industries, the Renault Automobile Company, despite stiff
grams, government controls, and government activism in the
opposition from the labor movement. Privatization has
late nineteenth century was the English philosopher Herbert
become the official policy of Communist China. And it has
Spencer, the last of the great Liberals. He even opposed pub-
been pushed furthest by a Labor government in New Zealand,
lic education as interference with personal liberty. Yet Spen-
which is even privatizing the postal service.
cer never questioned the ability of government to carry out
Another form of privatization is moving faster still: letting
programs. He denied government's legitimacy to do so. Simi-
private contractors take over public services with govern-
larly, the father of neoconservatism, F. A. Hayek, in his anti-
ments paying them on the basis of competitive bids. First
government tract The Road to Serfdom (1944), did not argue
started in the 1970s in Minneapolis-St. Paul, Minnesota, by
government incompetence. On the contrary, he viewed gov-
a political scientist and city administrator, Ted Kolderie, this
ernment as only too potent. He argued the threat to liberty
practice has also spread worldwide. The state of Florida
paroles criminals first sentenced to a jail term-about 25,000
*Almost fifty years later, Hayek, in his 1989 book The Fatal Conceit: The Errors of
at any one time-into the care of the Salvation Army. In many
Socialism (New York and London: Routledge)-published while The New Realities was
at the printer's-came to the conclusion that the nature of information makes it
cities, even big ones, street cleaning, fire fighting, even police,
impossible, both in theory and in practice, for government to manage or even to
are now "farmed out." Some American states have turned
control the economy.
61
60
The Limits of Government
GOVERNMENT AND POLITICAL PROCESS
Moral or Economic?
The region is now neither poor nor rural; and the TVA's rates
for electric power are among the highest in the nation. The
Above all, any government activity almost at once
whole system is in shambles. Yet when a new general manager
becomes "moral." No longer is it viewed as "economic," as
recently dared to hint at privatizing it, there was a storm of
one alternative use of scarce resources of people and money.
outrage and moral indignation. What started as a utility and
It becomes an "absolute." It is in the nature of government
a tool to get cheap electricity had become a symbol, and
activities that they come to be seen as symbols and sacred
"sacred."
rather than as utilities and means to an end. The absence of
Just as government can rarely abandon, it rarely innovates.
results does not raise the question, Shouldn't we rather do
Facsimile transmission does electronically and very fast what
something different? Instead, it leads to a doubling of effort;
the Post Office has been doing very slowly by shipping heavy
it only indicates how strong the forces of evil are. Economic
paper over great distances. Facsimile will probably be the
matters are judged by a cost/benefit ratio. In moral matters,
Post Office of the future. But it has not been invented by the
this is a dirty word, a "sellout," an "abandonment of princi-
Post Office nor introduced by it.
ple." There are of course truly moral matters, in which any
Governments can do well only if there are no political
compromise is indeed betrayal. But even in a moral matter
pressures. The Post Office and the railroads did well as long
one should always question the effort if there are no results.
as they had a simple purpose. But very soon, perhaps inevita-
By 1917, for instance, both the Germans and the Allies should
bly, the pressure builds to misuse such services to create
have questioned the insane trench warfare of World War I
employment, and especially employment for people who oth-
with its fruitless human sacrifices. But by then the war had
erwise would find it hard to get jobs, for example, blacks in
become moral for both sides, with "total victory" the only
the U.S. Postal Service. And as soon as a governmental activ-
acceptable goal. This gave us communism in Russia, Hitler in
ity has more than one purpose, it degenerates.
Germany, the Great Depression, and World War II.
Government services also will not perform if the basic
Drug abuse is horrible and an evil. But if after twenty years
assumptions under which they originated change. When
no results are achieved by governmental campaigns against it
workmen's compensation was introduced in the late nine-
(and in the U.S. things are only getting worse), one might
teenth century, it was based on the assumption that industrial
question the moral approach. It might be more productive
work is inherently dangerous. To be sure, workmen's com-
then to do the one thing we can do: take the profits out of the
pensation from the beginning aimed at encouraging employ-
traffic in drugs by eliminating criminal penalties on drug
ers to make work safer. Employers paid premiums based on
use-"immoral" though this sounds.
their safety performance, which greatly encouraged them to
While drug abuse is indeed evil, and therefore a moral
improve their operations. But the basic assumption was still
matter, electricity surely is economic. Yet in American politics
that industrial work, especially work around machinery, car-
today it is being treated as moral and a matter of principle.
ries with it the risk of accident. Hence, workmen's compensa-
The Tennessee Valley Authority (TVA) long ago outlived the
tion did not ask who was at fault. Its purpose was to make sure
objective for which it was set up in the thirties: to provide
that the worker would be compensated no matter who or what
cheap electric power to what was then a poor rural region.
was at fault. We no longer accept this assumption-except in
65
64
GOVERNMENT AND POLITICAL PROCESS
The Limits of Government
Japan (where, therefore, workmen's compensation still works
are hard if different constituencies expect and demand dif-
well). In the West we assume that industrial operations should
ferent things and have different values and expectations. Most
be safe. If there is an industrial accident, somebody is to
of the government programs since World War II-in the
blame-and this usually means the employer. Where work-
United States but in many other Western countries as well-
men's compensation awards in the past were aimed at en-
either promised different things to different people or at-
couraging both employers and employees to improve safety,
tempted to make one group in society benefit at the expense
they now are seen as punishment. The result is distortion of
of another. Thus they became mired in controversy, and soon
the whole system, with expenses going up steadily and satis-
lost focus and the ability to perform. They were "hard" pro-
faction and performance going down steadily.
grams.
These are stringent constraints on a government activity:
This distinction also explains why government-owned
that it remain the only way to do a certain task; that it not
businesses will only work if run as moneymakers pure and
outlive its usefulness and not be continued once it has at-
simple, as were the Crown monopolies of the eighteenth cen-
tained its objective; that it not be made to serve political ends,
tury (the tobacco monopolies on the continent of Europe, for
however laudable, but remain narrowly focused on specific
instance). Government-owned enterprises stop performing as
performance for the public; and finally that the assumptions
soon as political or social values interfere with the single-
on which it is based remain unchanged. But these rules admit
minded pursuit of profit. They become hard. An example are
of no violation. The moment they are not being followed, the
the huge money-losing and mismanaged companies owned
activity becomes "politicized." That invariably means fast de-
by the Italian government today and run in part as businesses,
generation of the service.
in part to employ workers, in part as patronage for politicians
and their friends.
"Easy" Activities and "Hard" Activities
We are beginning to understand, though in crude outline
There also are activities that government cannot do well,
only, the lessons of the post-World War II period in respect
and perhaps cannot do at all, even though they seem to meet
to government activities.
all conditions for governmental effectiveness. Government
will malperform if an activity is under pressure to satisfy dif-
There are functions that are clearly governmental which
ferent constituencies with different values and different de-
no one but government can be allowed to perform, and which
mands. Performance requires concentration on one goal. It
only government can perform. Among them is the govern-
requires setting priorities and sticking to them.
mental monopoly on defense and arms. There is also the
Ted Kolderie who, as noted earlier, first advocated the
governmental function of maintaining law, order, and justice
farming out of municipal services to private contractors, talks
so that. citizens can sleep peacefully at night and walk the
of "easy" and "hard" government activities. Hard ones gov-
streets without fear-something governments a century ago
ernment cannot do, and certainly cannot do well. The differ-
did a good deal better than most governments do today.
ence between the two is in their politics. In an easy activity,
There is a far more complicated and far more controver-
all constituencies want the same performance-as they did
sial government function: to maintain what we today call a
with respect to the nineteenth-century Post Office. Activities
"level playing field." Government can set ground rules that
66
67
GOVERNMENT AND POLITICAL PROCESS
The Limits of Government
are equally binding on everybody. The Securities and Ex-
What Money Can't Buy
change Commission in the United States is effective precisely
As important as the realization that there are limits to what
because it is in everybody's interest to have clear rules which
government can do is the realization that there are limits to
enable the honest, whether buyers or sellers of securities, to
what government money can buy. In fact there are whole areas
do their business, and which keep out the crooks (or at least
where spending government money can only make things
make it a little harder for them).
worse. Can government money, for instance, change soci-
We know, in other words, that government can and should
ety-and how?
be a good deal more activist than the nineteenth-century Lib-
Compassion is a legitimate function of government, and
erals such as Herbert Spencer preached and wanted. The role
so is the protection of the poor and oppressed. Government,
of government has to be much closer to the beliefs of the
the Old Testament prophets preached, should be a shepherd
nineteenth-century Conservatives, who imposed limitations
to its people. And the medieval king swore at his coronation
on government precisely because they wanted a strong and
to be "Father and mother to the poor." The most successful
effective government.
government programs in all history were programs to help
the poor: the nineteenth-century "public works" to give the
We know that not everything government does is for-
poor what only the very rich could afford in earlier times—
ever. Yet to abandon a government activity is difficult and
sewers, clean water, public transportation, schools, medical
always bitterly resisted. Whatever government does always
becomes "morality." Government activities therefore need to
care. These expenditures created, most successfully, an envi-
ronment in which even the poor could hope to lead a decent
be organized as temporary from the outset. A new program,
life.
a new agency, should be enacted for a limited-and fairly
short-period of time, with a clear statement of the results it
In the twentieth century we have been spending much
is expected to achieve within that period, and with explicit
larger sums of government money to change the social condi-
commitment to abolishing it if it should fail to produce the
tions of the poor. The results have been almost uniformly
promised results.
disappointing. And in some areas, the conditions of the poor
Whatever non-governmental organizations can do bet-
have become worse as a result. The two worst fiascos among
ter, or can do just as well, should not be done by government
the government programs in the post-World War II period
at all. What matters is not whether the activity is organized as
are two extremely expensive American ones: low-income
a "business," with profit as an aim or at least as measurement.
housing and welfare. A good deal of the low-income housing
What matters is that it not be run by government. One way
the United States built at enormous cost has been abandoned.
is privatization. Another way is to switch from government as
What's left is often worse than the slums it replaced: crime-
a doer to government as the provider, with the work being
ridden, fear-ridden, vandalized, dirty, rat-infested. And de-
done by outside contractors to government-set standards.
spite ever larger and constantly growing expenditures, the
"welfare mess" in the United States is getting steadily worse.
In fact, a strong case can be made-and has been made-that
68
69
GOVERNMENT AND POLITICAL PROCESS
The Limits of Government
the poor in America, and especially the black poor, have
ists" in the early 1900s. Opposed equally to capitalist exploi-
become the poorer, the more helpless, the more disadvan-
tation and Marxist class war, these men-mostly economic
taged, the more welfare money is being spent to help them.
historians-advocated income redistribution through the tax
American welfare spending encourages dependence. It para-
system as the "third way." It was an English politician, David
lyzes rather than energizes:
Lloyd George, who then turned this into government policy
In glaring contrast to these failures is what is probably the
in his budgets before World War I. After 1918 it became
most successful government program of the last forty years:
government policy everywhere. At the very time however that
Prime Minister Thatcher's privatization of England's low-in-
Lloyd George introduced his first budget, the Italian mathe-
come public housing, the English council estates. Buying
matical economist Vilfredo Pareto formulated what is known
their flats turned renters into owners. Almost overnight both
as Pareto's Law. After a lifetime of studying income distribu-
the spirit and the physical appearance of these slum tene-
tion, Pareto concluded that government cannot effectively
ments changed. They will never be an aesthetic delight. But
change the distribution of incomes. Modified only marginally
they have become self-respecting, well maintained, and safe;
by prevailing local customs and values, distribution is deter-
they have become communities.
mined by the economy's productivity. The less productive an
Should we abandon the idea of social change through
economy, the greater the inequality of incomes. The more
government spending? Most of us would be reluctant to do
productive, the less the inequality.
so considering how great the needs are. But how much longer
All our experience has validated Pareto's Law and has
should programs be maintained that are unsuccessful and
shown that the policy started by Lloyd George is ineffectual.
may well be doing harm rather than good?
To be sure, taxes can shift income and wealth. Lloyd George's
inheritance tax has largely expropriated the very rich of 1900
What Taxes Cannot Do
England, the great landowners. But it has only shifted wealth
Not even a further grace period should be given to the
to another group of the very rich-financiers, industrialists,
other, even less successful government attempt to change
businessmen. Insofar as Britain today is less unequal in re-
social conditions: the attempt to change income distribution
spect to incomes and wealth than it was in 1900, it is so
through the tax system.
because it is far more productive. Because Britain today is
Oliver Wendell Holmes, the American legal scholar and
however a good deal less productive than West Germany, its
judge, is widely remembered for his saying: "The power to
income distribution is a good deal less equal-despite a far
tax is the power to destroy." But Holmes only put into a pithy
more redistributive tax system. Inequality in Soviet Russia is
phrase what had been known all along. Confiscatory and pu-
probably as great as it is in Mexico-that is, very great. Offi-
nitive taxes have a very long history. What was new and a
cially there is, of course, egalitarianism in the Soviet Union.
product of Holmes's time was the idea that taxes could be
But as everybody knows by now, especially the Russians, the
used to reward. Taxes could be used to redistribute income,
two million "bosses" in the nomenclatura-1 percent of the
especially from the rich to the poor, and thus to further social
total population-enjoy perks of all kinds: special stores, spe-
justice and economic equality.
cial schools, special hospitals, special housing, special vaca-
This was first proposed by Germany's "Academic Social-
tion dachas, reserved transportation, and so on. This gives
70
71
GOVERNMENT AND POLITICAL PROCESS
The Limits of Government
them the standard of living and real income of the very rich.
demic. It would also, as he pointed out, undermine the politi-
In Mexico similarly the very rich account for about 1 percent
cal system. Since revenues had been limited throughout his-
of the population. The Soviet Union and Mexico-in industry
tory, policy makers always had to make choices. They had to
and agriculture-are today on roughly the same level of pro-
say no. With this limitation removed they would become un-
ductivity. And only Pareto's Law can explain why income
able to resist demands, especially if based on appeals to need
distribution in all developed countries is remarkably similar
or to conscience. Thus the ability of government to raise
despite tremendous differences in tax rates and tax structure.
revenues would increasingly misdirect the flow of income
In fact only one governmental policy seems to be capable
from productive spending-for example, investment in
of changing the distribution of incomes and wealth: inflation.
wealth-producing facilities and new technology-into unpro-
It expropriates the middle class. But it does so in large mea-
ductive governmental spending aimed at redistributing in-
sure by destroying productivity.
come.
Income redistribution through the tax system is still widely
considered-by politicians as well as by voters-the most ef-
By now we know that Schumpeter was right. We also know
fective tool of social policy. But maybe the time has come to
that, contrary to Schumpeter, there are still limits. They are
return to the old precept: the purpose of taxes is to produce
less restraining than the limits of a century ago. But they are
revenue, and to do so with the fewest social and economic
real. There are limits to what government can actually raise.
side effects.
There are even narrower limits to what government can raise
without damaging the economy seriously or undermining the
The Limits of the Fiscal State
cohesion of the body politic. The first to point this out, twenty
In the waning months of World War I, a great economist
years after Schumpeter, was an Australian economist, Colin
of the period, Joseph Schumpeter, published a short essay:
Clark. Clark asserted, just before World War II, that govern-
Der Steuerstaat (The Fiscal State). In it, Schumpeter, reflecting
ment could not take more than around one quarter of a coun-
on the experience of the war, predicted a new era in govern-
try's gross national product or gross personal income without
ment finance and government policy. Before World War I, he
creating irresistible inflationary pressures. Whether 25 per-
pointed out, there were no absolute governments. No gov-
cent is indeed the threshold, we do not know; the evidence
ernment could raise, either through taxes or through borrow-
would indicate that it might be closer to 40 percent. But there
ing, more than a very small percentage-perhaps 5 percent-
is such a limit. Above it, increased government revenue will
of a country's national income. During World War I, however,
not stimulate the economy. It will either depress it and create
every belligerent government raised, year after year, far
what we now call "stagflation," or it will create mounting
larger sums-with the governments of the poorest belliger-
inflationary pressures. And in all developed countries except
ents, such as Austria and Russia, converting so much of their
Japan, the limit has been reached beyond which government
country's wealth into war bonds that their take in several years
expenditures become a threat and an affliction. Raising the
had been greater than the country's total income. This,
share that government takes of the country's income above
Schumpeter predicted, would create a new and different
this threshold does not even produce increased revenue. Rev-
economy in which inflationary pressures would become en-
enue may actually go down.
72
73
GOVERNMENT AND POLITICAL PROCESS
The Limits of Government
The Silent Tax Revolt
The post-World War I inflations in Europe, especially in Ger-
There is another, perhaps more serious restraint on the
many, amply bore out Schumpeter's warning. But the silent
fiscal state. Once the government take, especially if collected
tax revolt of the gray economy is also a corrosive poison,
through taxes, exceeds a certain percentage of gross national
albeit a slow one.
product or gross personal income-the figure seems to be
Are we thus at the end of the period in which government
around 35-40 percent or so-a silent but highly effective "tax
acknowledged no limits-either in respect to its activities, or
revolt" starts. People stop working; what is the point if the
in respect to its ability to change society, or in respect to its
additional income is being taxed away? Worse, people begin
revenues? There are some first signs. At least politicians know
to cheat. In all countries in which the tax take approaches or
that no one believes their promises any more. We may thus
exceeds 40 percent of gross personal income, a "gray econ-
be approaching the end of the "spending state"-to para-
omy" develops. In the United States there was almost no tax
phrase Schumpeter's term.
cheating before 1960. How big the gray economy in the
Will we again accept limitations on government's ability to
United States has now become we do not know-there are of
raise money, whether by taxes or by loans? Will we learn to
course no figures on it-but estimates range as high as 15
start again with the available resources in budgeting and in
percent of the official economy. In countries like Sweden it is
policy decisions rather than with the desirable expenditures?
more like 30 percent. In Communist China, government
Will we again learn to say no? To make decisions is risky; it
economists put it at one third to one half of the total. In Italy,
is indeed unpopular. But perhaps we are now ready to accept
as everyone knows, the "gray economy" is the truly dynamic
that to make decisions is what politicians are supposed to be
doing.
one-to the point that there have been labor shortages in
Northern Italy for most of the last twenty years while the
official statistics report unemployment ranging up to 20 per-
cent. The same thing is happening in Spain. The official
unemployment rate is well above 20 percent. Yet the figures
for consumer spending would indicate an actual unemploy-
ment rate even below 10 percent.
Attempts to stamp out or even to curtail the gray economy
are ineffectual as long as tax rates remain high. In fact, while
everyone loudly condemns the gray economy, most people
not only participate in it but consider it morally justified and
even "clever." But this undermines the moral cohesion of
society. It produces a dangerous political poison, cynicism.
Seventy years ago Schumpeter warned that inflation would
destroy free society (a warning he repeated twenty-five years
later, in his 1942 book Capitalism, Socialism, and Democracy).
74
75
IN-
from: Gene Schour
11
stopping the abuse that results from spreading around what's
called "soft money" -- I asked for full disclosure of "soft
money" expenditures by all organizations as the only way to clean
up the system.
Fourth, spending reform. I have already proposed to freeze
domestic discretionary spending in federal employment next year.
I have proposed to curb as well the growth of mandatory programs
without touching Social Security. I call again for the American
people to demand that the Congress pass the same measure that 43
governors have: the line-item veto. In the absence of that
important tool I will continue to use whatever means are legally
at my disposal, including the line-item-rescission, to protect
the taxpayer from the spending excesses of Congress. I will
resist any attempt by the Congress to dismantle the only defense
the taxpayer has against Congressional overspending -- those
budget caps implemented in the 1990 Budget Act. Finally, I again
call for a Balanced Budget Constitutional Amendment.
Fifth, regulatory reform. I have put a ninety-day
moratorium on new government regulations. We are revising and
eliminating regulations that impede our ability to compete, and
we are accelerating regulations that enhance our competitive
(already uninerous
taid Game dramatrialy
edge. We have cut back XXX OP regulations,
pages in the Federal
the
under
Register by XX% just in the last XX months years # Today I am
new
of
announcing an extension/new review process
I
sublight regulated
( Eame for end
3
I am not
curare that
See OMB
90- day nemer)
such a count
was been made
CLOSE HOLD
Document No. 319350
WHITE HOUSE STAFFING MEMORANDUM
04/01/92
DATE:
ACTION/CONCURRENCE/COMMENT DUE BY: 10:00a.m. 04/02
SUBJECT: CONGRESSIONAL COVERAGE LEGISLATION
ACTION FYI
ACTION FYI
VICE PRESIDENT
HORNER
SKINNER
MCBRIDE
SCOWCROFT
MOORE
DARMAN
PETERSMEYER
BRADY
PORTER
BROMLEY
ROGICH
CALIO
ROLLINS
DEMAREST
SMITH
YEUTTER
FITZWATER
FINDLAY
GRAY
HOLIDAY
LIBERMAN
REMARKS:
Please provide any comments directly to Lee Liberman, x6257,
Rm. 115, no later than 10:00 a.m. on Thursday, 04/02, with a
copy to this office. Thanks.
RESPONSE:
CLOSE HOLD
PHILLIP D. BRADY
Assistant to the President
and Staff Secretary
Ext. 2702
Withdrawal/Redaction Sheet
(George Bush Library)
Document No.
Subject/Title of Document
Date
Restriction
Class.
and Type
01. Memo
C. Boyden Gray to POTUS, re: Congressional Coverage
04/01/92
P-5
Legislation. (7 pp.)
Collection:
Record Group:
Bush Presidential Records
Office:
Speechwriting, White House Office of
Open on Expiration of PRA
Series:
Speech File, Drafts
Subseries:
(Document Follows)
WHORM Cat.:
By SN (NLGB) on 4/5/2005
File Location:
Old House Chamber [Reform Speech] 4/3/92 [4]
Date Closed:
9/21/2004
OA/ID Number:
06100
FOIA/SYS Case #:
Re-review Case #:
2004-2249-S
P-2/P-5 Review Case #:
MR Case #:
Appeal Case #:
MR Disposition:
Appeal Disposition:
Disposition Date:
Disposition Date:
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P-1 National Security Classified Information [(a)(1) of the PRA]
(b)(1) National security classified information [(b)(1) of the FOIA]
P-2 Relating to the appointment to Federal office [(a)(2) of the PRA]
(b)(2) Release would disclose internal personnel rules and practices of an
P-3 Release would violate a Federal statute [(a)(3) of the PRA]
agency [(b)(2) of the FOIA]
P-4 Release would disclose trade secrets or confidential commercial or
(b)(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
(b)(4) Release would disclose trade secrets or confidential or financial
P-5 Release would disclose confidential advise between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
(b)(6) Release would constitute a clearly unwarranted invasion of
P-6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
(b)(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed of
(b)(8) Release would disclose information concerning the regulation of
gift.
financial institutions [(b)(8) of the FOIA]
(b)(9) Release would disclose geological or geophysical information
DRAFT
THE WHITE HOUSE
WASHINGTON
April 1, 1992
MEMORANDUM FOR THE PRESIDENT
FROM:
C. BOYDEN GRAY
SMG
COUNSEL TO THE PRESIDENT
SUBJECT:
Congressional Coverage Legislation
As you know, on many occasions you have called on Congress to
subject itself to the laws it imposes on others. To date,
Congress has not acted in any serious manner on this suggestion.
The draft of your Friday speech accordingly takes the next
logical step. It states that you are transmitting to the
Congress legislation that would cover Congress by the same laws
as everyone else, and (on the assumption that Congress will just
ignore your freestanding bill and continue business as usual)
that you will veto future legislation extending special treatment
to the Congress unless it is amended to remove the special
treatment.
Before putting a draft bill into circulation among the agencies,
I wanted to outline for you the general scope of what we are
thinking about and the pros and cons of each proposal, so as to
enable you to decide whether to go forward in each of these
areas.
I. Freedom of Information Act
The Freedom of Information Act presently covers the entire
executive branch except for the White House Office and the Office
of the Vice President. The draft legislation proposes to expand
FOIA to cover the Congress itself, its instrumentalities (such as
GAO), and its Committees, but not the personal staffs of the
Members of Congress. Analogously, it leaves intact the present
White House and OVP exemptions.
Pros
O
Creates parity between the branches.
o
Encourages more accountability on the part of
Congress's instrumentalities.
Parallel treatment of Congressional Committees and
Executive Departments and agencies (which are covered) and
White House and Members' personal offices (which are not)
should prevent the White House exemption from becoming a
major issue.
2
o
Your March 20 speech referenced FOIA as one of the laws
from which Congress has exempted itself.
Cons
o
Legislative Affairs is concerned that the Members view
their Committee and personal staffs as interchangeable,
will not accept our argument that the right analogy is
between Committees and agencies, and will push to repeal the
White House's exemption.
Options
1.
Approve present proposal covering Congress's
instrumentalities and Committees but not Members' personal
offices.
2. Also cover the White House and the Members' personal
offices.
3.
Leave the law unchanged.
I recommend option 1.
Option 1
Option 2
Option 3
II. Privacy Act
The Privacy Act requires agencies that maintain systems of
records on individuals such as information pertaining to their
education, financial transactions, medical history, and criminal
or employment history to refrain from disclosure of those records
except under specified circumstances. It allows individuals to
review their own records and request that they be amended if they
are inaccurate. It allows them to bring suit to challenge a
refusal to amend, and makes it a misdemeanor punishable by a fine
of up to $5000 for any officer or employee to disclose records
improperly to third parties.
The Privacy Act presently applies to the entire executive branch
except the White House Office and the Office of the Vice
President. It does not apply at all to the Congress. (That is
why a Congressional leak of the Anita Hill affidavit and/or FBI
report probably would not be a crime.)
The draft legislation proposes to extend the Privacy Act's
coverage to the White House Office, the Office of the Vice
President, the Congress, its instrumentalities, Committees, the
Members' offices, and the Members themselves. It does not
3
propose to extend it to the President or Vice President
personally.
Pros
o
The problem of improper leaks of private information
from the Hill, including by Members of Congress is quite a
genuine one. If enacted, this legislation would help deter
them.
O
This law, along with the civil rights laws and the
independent counsel law, can be applied to the Members
personally with relative ease. The others addressed in the
legislative proposal would cover the staff or some portion,
but not the Members. We need a critical mass of laws being
applied to the Members personally to be credible in saying
that Congress is being covered.
o
Members would retain the right to raise any issues on
the floor, since the Constitution's speech or debate clause
would shield them from criminal liability in that context.
O
Compliance with these provisions should not be
excessively onerous for the White House staff, since staff
members should not be disclosing this type of information
anyway.
Cons
o
It may be difficult to defend covering Members and
exempting the President and Vice President. I do not
believe it would be catastrophic to cover the President and
Vice President as well, since I believe you or the Vice
President would not disclose such information in any event.
But I am reluctant to recommend exposing you or the Vice
President to any kind of new potential criminal liability,
particularly as long as the Independent Counsel statute is
law.
O
The Privacy Act's scope has historically mirrored the
Freedom of Information Act's scope. Expanding the Privacy
Act to cover the White House could create new pressure to
expand the Freedom of Information Act as well.
Options
1.
Approve present proposal covering the White House, the
Office of the Vice President, the Congress, committees,
instrumentalities, Members' personal offices, and Members.
2.
Cover the President and Vice President as well.
4
3.
Approve the present proposal without coverage of
Members personally.
4.
Leave the law unchanged.
Recommendation
I recommend option 1.
Option 1
Option 2
Option 3
Option 4
III. Independent Counsel Act
The Independent Counsel Act presently applies to the President,
Vice President, certain campaign officers, the Cabinet and other
principal officers of agencies, the CIA Director and Deputy
Director, the Commissioner of Internal Revenue, and Department of
Justice officials from the Attorney General down through the
Assistant Attorneys General and anybody else paid at Executive
Schedule III. The draft legislation proposes to apply it in
addition to the Members of Congress, the Comptroller General, and
the elected officers of Congress (such as the sergeant-at-arms)
Pros
o
Members and officers of Congress are at least as likely
to exert improper pressure on the Justice Department in
order to avoid prosecution as the covered executive branch
personnel.
O
Conversely, where the Department does bring a
prosecution, there can be an appearance that it is
politically motivated.
Cons
O
This could be viewed as lending legitimacy to the
Independent Counsel Act when it is up for reauthorization,
which is quite soon. (It would not in fact have that
effect, since it would not extend the Act but would merely
add to its scope until it expires on December 15, 1992.)
Recommendation
I recommend approving the present proposal.
Approve
Disapprove
5
IV. Conflict of Interest Laws
Present law prohibits all members of the executive branch except
the President and Vice President from participating in particular
matters in which they have a financial interest on pain of
criminal sanction. It also prohibits supplementation of the
salary of any officer or employee other than the President or
Vice President for performing his official responsibilities.
Your Ethics Commission recommended extending the first provision
to Congressional staff, although not to Members of Congress, and
your 1989 ethics package included that recommendation, but
Congress rejected that proposal.
The draft legislation proposes to extend both the anti-conflict
and anti-supplementation provisions to Congressional officers and
employees other than Members. It does not cover Members because
it seems absurd to have Members obliged on pain of criminal
sanction to remove themselves from voting on legislation that
affects their financial interests, because your Ethics Commission
recommended against covering the Members, and because the
exemption for the President and Vice President seems appropriate.
Pros
Creates parity between branches.
Addresses a problem on the American people's mind.
Cons
The exemption for Members could be criticized.
O
Members will argue that because of the nature of the
legislative process, it is their staff's responsibility to
represent special interests, and that criminal liability of
any sort will chill their ability to do SO.
Recommendation
I recommend approving the draft proposal.
Approve
Disapprove
V. Civil Rights Laws
Present law treats all executive branch employees other than
officers of the United States and those on the White House and
Office of the Vice President payroll quite similarly to the
private sector with respect to protection against discrimination
on the basis of race, color, sex, national origin, religion, age
6
and disability. In particular, it allows them to have a court
determine whether they have been discriminated against and
entitles them to jury trials where compensatory damages are
sought. The one distinction is that they may not ever obtain
punitive damages.
In provisions that the Administration opposed, last year's civil
rights bill gave very phony protection to House employees, phony
protection to Senate employees, and somewhat less phony
protection White House employees, and officers of the United
States. House employees cannot bring suit at all, but instead
are left to the House's Fair Employment Practices Office. Senate
employees are bound by the results of an internal Senate
grievance adjudication unless they are "arbitrary and
capricious," or not based on substantial evidence, in which case
they can get relief from the Federal Circuit Court of Appeals.
White House employees and officers of the United States are bound
by the EEOC's determinations unless "arbitrary and capricious" or
not based on substantial evidence, in which case they too can go
to the Federal Circuit.
With two exceptions, the proposed legislation would give full
protection to all Congressional and White House employees,
including the right to have a court determine their claims, the
right to jury trials where compensatory damages are sought, and
the right to punitive damages in appropriate cases. For
constitutional reasons, the legislation would not protect
officers of the United States and elected officers of Congress.
It also would not protect employees in the White House Office,
the Office of the Vice President, or on the personal staff of a
Member, who report directly to the President, the Vice President,
or a Member and who are paid at E.S. 1 or above ($87,000), or
members of the uniformed services.
Pros
o
This would give serious civil rights protections to
most Congressional employees.
o
It would create close parity between the private
sector, the Congress, and the executive branch.
Cons
o
Could lead to politically motivated frivolous civil
rights suits against the White House or the Members.
Recommendation
I recommend approving the draft proposal.
Approve
Disapprove
7
VI. The Hatch Act
Under present law, all executive branch employees other than
persons appointed with Senate confirmation and persons on the
payroll of the White House Office and the Office of the Vice
President are covered by the Hatch Act. No Congressional
employees are covered.
The proposal would extend the Hatch Act to all Congressional
employees other than those on the Members' personal staffs.
Pros
Would create parity between the branches.
Reduces incumbent advantages in elections.
Cons
o
As noted in conjunction with the proposal to extend the
Freedom of Information Act, Legislative Affairs believes
that the Members may disagree with the analogy between
Committee and agency employees.
Recommendation
I recommend approving the draft proposal.
Approve
Disapprove
BUSH QUAYLE '92
TEL 202-336-7155
Apr 02'92
12:48 No. 005 P.02.
TALKING POINTS
BUSH
Dave-
QUAYLE
D like Philadelphics 92 1
Issue No. 67, p. 2.
How about quotive Pete D.
own instead of /on
that raises taxes (under the current rules, any tax decrease requires a
in
supermajority). Since 1983, the Democrat-controlled Congress has passed
addition
six federal budgets that contained tax increases.
to
"The message is clear," says McCain. "Higher taxes virtually guarantee a
Boren
weaker economy and a bigger budget deficit. If we're serious about creating
prosperity and opportunity, we must force government to change its
attitude about taxation of the private sector."
/ will
"IT'S OBVIOUS CHANGE
IS NEEDED HERE"
Elsewhere in the Congress, Republican lawmakers are heeding President
Bush's call for change! Sen. Pete Domenici of New Mexico has called on
the Congress to pass a reform that would result in two-year budgets and
appropriations, instead of the current annual system. Domenici, along with
53 co-sponsors in the Senate and 192 co-sponsors in the House, wants a
bipartisan commission to review the Congress and enact a comprehensive
reform of the institution.
"I'm not interested in band aids," says Domenici, the senior republican on
the Senate Budget Committee. "I'm interested in changing how the Senate
works so we can get our jobs done. It's obvious change is needed here."
WHO YOU GONNA CALL?
"PORKBUSTERS"!!
Even in the House of Representatives, home of scandal-of-the-month club,
change is on the way. GOP Rep. Harris Fawell of Illinois, co-author of the
Spending Reform Act of 1992, and his army of House "Porkbusters" are
calling for something different on Capitol Hill: accountability.
"The American people are fed up with pork barrel politics and business as
usual in Washington," says Fawell. "What we Porkbusters ask is simple:
let's have an up or down vote on each of these projects. That is all we ask.
That is all the President asks. Moreover, that is what the American people
ask."
1030 15th Street NW, Washington, DC 20005, Ph. (202) 336-7080
Paid for by Bush-Quayle 92 Primary Committee, Inc.
THE WHITE HOUSE
WASHINGTON
April 1, 1992
MEMORANDUM FOR CLAYTON YEUTTER
FROM:
CHARLES E.M. KOLB
Clmic
SUBJECT:
The Congressional Budget Process
If Friday's speech on government reform does not include a
discussion of the "part time" Congress, then perhaps it could
include a brief discussion of John Cogan's idea for
centralizing budget authority. The attached materials explain
everything one needs to know about John's ideas and his
historical research. In short, we can blame it all on the new
deal! (See page 6, table 2, of Cogan's attached research
paper.)
Attachment
CC: Dave Demarest
THE WALL STREET JOURNAL
December 5, 1989
Get Congress Back on the Wagon
By JOHN COGAN
Another legislative session has ended
tively stimulate competition among com-
with Congress demonstrating once again
mittees to spend ever-increasing sums.
that it is hopelessly incapable of taking
Without a central committee to balance
any decisive action on the budget deficit.
and check these special interest commit-
Throughout the year. Congress avoided its
tees and invoke the general desire for fis-
responsibility by repeatedly violating its
cal restraint. the level of spending soon
own budgetary rules and continually miss-
outstrips Congress's willingness to tax.
Imagine a publicly owned forest that is
ing its self-imposed deadlines. The budget
opened to all logging companies that de-
bill enacted at the session's end. which jug-
sire access to it. No individual company
gled payments between years. shoved ex-
would have any reason to restrain its log-
penditures off-budget and simply declared
ging activities. In fact. each company
that spending increases are deficit reduc-
would have every incentive to cut down as
tions. was more an exercise in budgetary
many trees as it could before a competitor
obfuscation than anything else.
did so. In this setting. the inexorable forces
To many observers. failure to take deci-
of competition would inevitably lead to the
sive action on the budget deficit is due pri-
depletion of the forest.
marily to tax politics: The president is un-
The same forces are at work in produc-
willing to raise taxes and Congress is un-
ing deficits. as the history of Congress
willing to cut spending. To others. the fail-
demonstrates. When the budget process
ure is due to a lack of political leader-
has been highly centralized. spending has
ship. or the public's indifference or divided
been held in check and the budget has
government. But these factors do not ex-
been balanced. When the process is decen-
plain the persistence of deficit spending
tralized spending has grown out of con-
since the 1930s. They do not explain the
trol.
deficit's doubling each decade since World
During the first 90 years of U.S. history.
War II.
spending authority was concentrated in a
Answer in History
single committee in each House, and
No. the problem isn't all politics. There
budgets were balanced except during re-
cessions and wars. Then. a little over a
is something deeply and profoundly wrong
with the congressional budget process. But
century ago, the House stripped the Appro-
what is it about the process that leads to
priations Committee of much of its spend-
ing authority and gave it to numerous au-
continual deficit spending? Both common
thorizing committees. Rep. Samuel Ran-
sense and Congress's own history provide
a simple and compelling answer.
dall. chairman of the Appropriations Com-
mittee and a former speaker of the House,
Jurisdiction over spending is widely dis-
warned in 1884, "if you undertake to divide
persed among a host of congressional com-
mittees. Dispersal of spending authority
all these appropriations and have many
committees where there ought to be but
among these "little legislatures" is a re-
one. you will enter upon a path of extrava-
cipe for excessive spending and large
budget deficits. Since the total level of
gance you cannot foresee the length of or
spending is beyond any single committee's
the depth of until we find the Treasury of
the country bankrupt."
control, political accountability to the elec-
Randall's statement proved prophetic.
torate for total spending does not exist.
Without that accountability. no committee
Immediately after the enfeebling of the
has any incentive to restrain its spending
Appropriations Committee. federal spend-
commitments. Worse, as special interests
ing grew at an unprecedented rate. The
form around each committee, they ac-
10% budget surplus of the early 1880s
December 5, 1989
Wall Street Journal
turned into a deficit that persisted through-
ora of entitlement programs including
out the 1S90s. By the mid-1890s. federal
Medicare. Family Support Payments and
spending excluding interest payments)
Supplemental Security Income fall under
was 50% larger than it had been in 1886,
the tax-writing committees in each House.
and by 1916 it had risen an additional 45%.
The House Energy and Commerce Com-
This explosive spending growth produced
mittee has jurisdiction over Medicaid and
deficits that were more frequent and
shares responsibility for Medicare with the
larger than ever before in U.S. history.
Ways and Means Committee. The Appro-
Much like today. all growth in spending
priations Committee. which in 1930 con-
relative to GNP from 1886 to 1916 occurred
trolled 90% of non-interest spending. now
in programs under the jurisdiction of the
controls less than one-half.
authorizing committees. But unlike today.
National Embarrassment
Congress recognized its problems and took
decisive steps to correct it.
Congress's current budget process and
The House of Representatives moved
its inevitable outcome is a national embar-
first. In 1919. it established a select com-
rassment. The one reform that has proved
workable is to consolidate spending author-
ity into a single committee. Article I. Sec-
The problem isn't all politics.
tion 5 of the Constitution provides that
each House of Congress has the exclusive
Jurisdiction over spend-
authority "to determine the rules of its
proceedings." The Senate does not need
ing is dispersed among a host
the House's consent. nor does the House re-
quire the Senate's. No new laws are neces-
sary. nor is the consent of the president.
of congressional committees.
Undoubtedly. any effort to consolidate
spending authority would face severe oppo-
mittee on the budget. which quickly rec-
sition. Likely to stand in its way are en-
ommended that the House adopt a change
trenched special interest committees
that "centers on one Committee
the
which will not be willing to loosen their
authority to report all appropriations."
grip on the treasury's coffers regardless of
Following a bruising floor fight, the House
the cost to the country. But, as the 1919
voted to strip seven authorizing commit-
House Select Committee on the Budget ar-
tees of their power to appropriate. The
gued. it is time for these committee mem-
Senate followed two years later.
bers "to submerge personal ambition for
Concentrating spending authority had a
the public good.'
dramatic effect. From 1921 until 1930. ex-
Without consolidation, the budget pro-
penditures relative to GNP were held con-
cess will continue to lack political account-
stant and the budget was balanced. But
ability and the national debt will continue
Congress was doomed to repeat its own
its relentless upward march. Without con-
fateful history. In 1932. when Congress cre-
solidation, special interests will continue to
ated the Reconstruction Finance Corp.
dominate congressional spending decisions
and placed it under the jurisdiction of
at the expense of the general interest. And
the Commerce Committees, decentralizing
without consolidation, as the 1919 House
began once again. The process moved
Select Committee on the Budget put it,
slowly at first, accelerated significantly in
"true budgetary reform is impossible."
the 1960s and 1970s. In today's Congress
jurisdiction over spending is spread among
Mr. Cogan. a former deputy director of
17 House committees and 15 Senate com-
the Office of Management and Budget, is a
mittees.
fellow at the Hoover Institution.
The Agriculture Committees have au-
thority over farm price supports. food
stamps and other rural programs. A pleth-
WHATS WRONG WITH THE CONGRESSIONAL
BUDGET PROCESS
BY
JOHN F. COGAN
Senior Fellow
Hoover Institution
Stanford, CA 94305
Federal Budget
Deficit spending has been a way of life for the federal
government for most years since World War II. A whole generation
of elected federal officials has come and gone without ever
balancing the budget. The last time that federal budget
expenditures were brought into balance with revenues was in 1969,
and prior to that the last time was in 1960.
Since World War II, the federal budget deficit has risen
almost continually, regardless of which political party has
occupied the White House, and regardless of which party has held a
majority of seats in the House of Representatives or Senate. As
Table 1 indicates, in each of the last four decades, the average
size of the federal budget deficit relative to GNP has
approximately doubled. Due to the extraordinary string of budget
deficits, the national debt is now equivalent to over $40,000 for
every family in the United States.
TABLE 1
FEDERAL BUDGET 1950-90
(Percent of GNP)
SPENDING
REVENUES
DEFICIT
1950-59
18.0%
17.6%
0.5%
1960-69
19.0%
18.2%
0.8%
1970-79
20.5%
18.3%
2.1%
1980-89
23.0%
19.0%
4.3%
1990
23.2%
19.1%
4.1%
The existence of chronic budget deficits during the post-World
2
War II years stands in stark contrast to the pattern of federal
finances during most previous periods in America's history. For
most of our history prior to 1940, the federal budget was balanced,
except in years of armed conflict and economic recession.
The causes of persistent federal budget deficits during the
last 40 years are not well understood. Many observers believe that
the cause of the deficit lies in unique policy mistakes during the
1980s, such as the simultaneous reduction in taxes and increase in
defense spending. But this explanation ignores the persistence of
budget deficits for the three decades prior to the 1980s. It also
ignores the fact that, since 1981, expenditures on non-defense
programs grew almost as rapidly as those on defense and that the
federal tax claim on the country's Gross National Product (GNP) is
currently higher than it has averaged during any preceding decade.
(see Table 1).
Other observers claim that deficits persist because the
American public demands more in government benefits than it is
willing to pay for in taxes. Although this explanation has
intuitive appeal, it fails to explain why the American public's
preferences have changed. Why did Americans previously want the
same amount of benefits as they were willing to pay for in taxes?
The Budget Process and the Commons Problem
The Congressional budget process has contributed to persistent
budget deficits. The most important feature of the current budget
process is its decentralized nature. At no point in the process
3
does anyone decide on the total amount the federal government will
spend. Instead, responsibility for individual legislative bills
that determine the total amount of spending is divided up among 15
separate Congressional committees in the Senate and 17 committees
in the House of Representatives. The Appropriations Committee has
jurisdiction for non-entitlement programs covering about 40 percent
of the total federal spending. The remaining 60 percent is made up
of entitlement programs, which are handled by various other
standing committees. The Agriculture Committees have authority over
farm price supports, food stamps and other rural programs. The
tax-writing committees in the House and Senate are responsible for
Social Security and Medicare. The House Energy and Commerce
Committee has jurisdiction over Medicaid and shares responsibility
for Medicare with the Ways and Means Committee.
The decentralization of spending authority creates powerful
incentives for deficit financing. By spreading responsibility for
spending authority among Congressional Committees, the Congress has
created a situation known as a "tragedy of the commons." (See
Tragedy of the Commons.) The situation arises whenever numerous
claimants compete for a commonly-owned resource. The tragedy is
that the inexorable forces of competition for the resource lead to
over-consumption and eventual exhaustion of the resource.
To understand the commons problem, imagine a publicly-owned
forest that is open to all logging companies that desire access to
it. No individual company would have any reason to restrain its
logging activities. In fact, each company would have every
4
incentive to cut down as many trees as it could before a competitor
did SO. On a more personal level, imagine that a mother sends her
family to the store, tells her husband to buy beer, her teenage
daughter to buy magazines, and her 10-year old son to buy candy.
Imagine, moreover, that she sets no limits on how much each can
spend. Each family member would then overspend on the various
items.
Congress is like that family. From the individual committee
standpoint the commonly-owned resource is general fund revenue
raised primarily from taxes levied on individuals and corporations.
The consumers of this resource are the Congressional Committees.
The common resource is "over-consumed" when government spending
repeatedly exceeds tax revenue--that is, when chronic budget
deficits occur.
A Historical Sketch
An historical look at government spending and the budget
process reveals the powerful role the commons problem has played in
producing budget deficits. When the budget process has been highly
centralized, spending has been held in check and the budget has
been balanced. When the process has been decentralized, the growth
in spending has outpaced the growth in revenues, and chronic budget
deficits have resulted.
5
TABLE 2
BUDGET DEFICITS
TIME PERIOD
AVERAGE DEFICITS
Centralized Budgeting
(Percent of GNP)
1799-1885
0.26%
1922-1931
- 0.77%
Decentralized Budgeting
1886-1921
0.69%
1932-1989
3.61%
During the first 90 years of U.S. history, spending authority
was concentrated in a single committee in each House, and budgets
were balanced except during recessions and wars. Then, in 1885,
the House stripped the Appropriations Committee of much of its
spending authority and gave it to numerous authorizing committees.
This period of decentralized budget decisionmaking lasted until
just after World War I.
At the time, some observers recognized the consequences of
decentralization.
Rep. Samuel Randall, chairman of the
Appropriations Committee and a former speaker of the House, warned
in 1884, "If you undertake to divide all these appropriations and
have many committees where there ought to be but one, you will
enter upon a path of extravagance you cannot foresee the length of
or the depth of until we find the Treasury of the country
bankrupt."
Randall's statement proved prophetic. Immediately
after
Congress splintered the budget process, federal spending grew at an
6
unprecedented rate. By the mid-1890s, federal spending (excluding
interest payments) was 50 percent larger than it had been in 1886,
and by 1916 it had risen an additional 45 percent. This explosive
spending growth produced deficits that were more frequent and
larger than ever before in peacetime U.S. history. In the five
years immediately preceding the House of Representatives
decentralized budget decisionmaking, annual revenues exceeded
annual expenditures by 40 percent. The subsequent expenditure
growth turned this sizeable budget surplus into record peace time
deficits in the mid-1890s. Deficit spending persisted throughout
the remainder of the decade. During the first fifteen years of the
20th century, the budget was in deficit during one-half of the
years.
Much like today, from 1886 to 1916 all growth in spending
relative to GNP occurred in programs under the jurisdiction of the
authorizing committees. But unlike today, Congress recognized its
problems and took decisive steps to correct them.
The House of Representatives acted first. In 1919, it
established a select committee on the budget, which quickly
recommended that the House adopt a budget process reform that
"centers on one Committee
the authority to report all
appropriations."
After seven months of deliberation the
recommendation sent shock waves reverberating throughout the House
committee chambers. The Budget Committee's proposal would stop
spending jurisdiction from seven powerful committees. The House
voted to strip the seven authorizing committees of their power to
7
appropriate. The Senate followed two years later.
The corrective step worked. From 1921 until the onset of the
Great Depression (1930), expenditures relative to GNP were held
constant and the budget was balanced. Unfortunately, during the
Great Depression, decentralization began once again. The process
moved slowly at first, and accelerated significantly in the 1960s
and 1970s as Congress created new programs and placed spending
jurisdiction for them in an ever increasing number of Congressional
committees. Deposit insurance legislation, enacted in 1934,
provided a federal government guarantee for certain deposits in
banks and savings and loan institutions. Social Security
legislation, enacted a year later, provided pensions to persons age
65 and older and guaranteed matching payments to state governments
for the cost of welfare programs. In 1956, the Social Security
Disability program was created to provide federal cash assistance
to disabled persons. In the 1960s, the Food Stamp program (1964),
Medicare (1965), Medicaid (1965), and the Guaranteed Student Loan
program (1965) were created. In 1974, the General Revenue Sharing
and the Child Support Enforcement programs began.
By the mid-1970s, the process of decentralizing budget
decisionmaking by creating new programs was largely complete. The
forty-year process had a profound impact on the degree of
depression committee spending authority.
In 1932, the
Appropriations Committee had jurisdiction over more than 90 percent
of all programs. No other committee had more than one percent. By
the early 1980s, the Appropriations Committee controlled only about
8
40 percent. Seven other committees shared an additional 55
percent.
This return to decentralized decisionmaking once again
introduced the "commons" problem into the Congressional budget
making process as it had in the past. The inevitable forces of the
commons drove government expenditures upwards at a rate far in
excess of government revenues. The chronic federal budget deficits
described in Table 1 were the result.
This 200-year review of the relationship between the
Congressional budget process and the existence of structural budget
deficits has demonstrated the critical role that institutional
rules play in determining outcomes. Although other factors, such
as a defense build-up or a savings and loan crisis, may have time
and place importance in contributing to deficits, it is the
institutional rules that create incentives for particular forms of
behavior and drive decisionmaking over the long run.
An
understanding of these rules and the way in which they affect
behavior is a necessary first step toward correcting the structural
problem of the budget deficits.
--John F. Cogan
BIOGRAPHY
John F. Cogan is a senior fellow at Stanford University's Hoover
Institution. He was formerly Deputy Director of the Office of
Management and Budget. Professor Cogan is currently directing a
project to build a consistent record of government spending
9
decisions over the post World War II era. When completed, this
record will provide the general public and the research community
with a valuable tool to achieve a greater understanding of
government spending.
FURTHER READING
John Cogan "The Evolution of Congressional - Budget
Decisionmaking and The Emergence of Federal Deficits, " Hoover
Institution Working Papers, Stanford, 1988.
Garrett Harden, "The Tragedy of the Commons"
Science
Magazine, (Vol.162 Dec 1968).
Harold Demsetz, "Toward A Theory of Property Rights" American
Economic Review, (LVII, No.2, May 1967).
Aaron Wildavsky, "The New Politics of Budgetary Process,"
Scott, Foresman, and Company, Illinois, 1988.
10
David,
Here are some
refinements that
Strengthen an
already strong
product. I'll
keep "tweaking
it in hopes of
making it even
better Janie
Demarest/Aarhus
Draft #2
Reform2
PRESIDENTIAL REMARKS AT OLD HOUSE CHAMBER
PHILADELPHIA, PA.
WEDNESDAY, APRIL 1, 1992
Thank you for that kind introduction. [ACKNOWLEDGEMENTS]
Today, I would rather be in Philadelphia. Old Congress Hall is
home to great ideas and great debate. In this very room, pivotal
and profound discussions occurred - setting in motion a grand
experiment in man's ability to chart his own future.
The vision of our Founding Fathers is still our vision
today. They wanted their new country to prosper. They knew that
prosperity and freedom are inextricably linked. They were
determined to preserve the inherent strength of faith and the
nurturing haven of the family. The were committed to ensuring
that the citizens of our young nation could live in peace -- safe
and secure from threats at home and abroad. It took a revolution
to achieve their vision, but that vision still stands.
Today, we face a revolution no less significant for being
internal rather than external. Today, we face a choice between
the old national order the status quo -- and changes that will
position our nation for world leadership in the new century.
When British General Cornwallis surrendered at Yorktown in
1781, he had his band play "The World Turned Upside Down," as his
troops marched before Washington's Continental Army. The song
was profoundly symbolic of an old world order coming to a close
and the beginning of a new world order.
Now, more than two hundred years later, we face a monumental
choice. In recent months, democracy and freedom have -- once
again turned our world upside down. During the turmoil,
America stood firmly on principles and moved to the forefront of
a great movement that changed the world.
Those changes have placed our nation at a new threshold.
During the 20th Century, there was no question that it was the
American Century. Now, as we approach the year 2000 the question
we must answer is -- will the 21st Century be a New American
Century?
I think this audience and all of American would give a
resounding "Yes" to that question. But, if we are to stay at the
forefront in world leadership, we must meet six great challenges
here at home.
First, our nation must help strengthen the nation's
families, give people a sense of well-being about their
children, and establish a social climate in which our
young can mature into productive adults.
Second, we must guarantee Americans access to the
finest health care system in the world, and make that
care more affordable.
Third, our people must be educated, literate --
motivated to make learning a lifelong pursuit. We must
reform our education system -- literally revolutionize
it -- top to bottom.
Fourth, our civil justice system must do what it was
designed to do: dispense justice for all. Eighteen
million lawsuits a year are choking us -- costing
individuals and businesses billions of dollars -- and
putting a tremendous drag on our civility as well as
our economy.
Fifth, during the next century, our economic
competition and opportunity will come from beyond our
borders. We must utilize more foreign markets for
American goods and export more services to other
countries. Our workers and our companies must become
more competitive in order to sustain and create
American jobs.
And finally, we come to the topic that is our focus
today -- reform of our government. During the past
decade, one institution after another has been
challenged to take a hard look within itself. We must
make needed improvements and go back to basic
principles to renew our nation's institutions. In
short, we must initiate widespread reform.
I've been amused recently to see the television ads for a
local kitchen modernization business. A housewife dressed in
1960's apparel and surrounded by 1960's appliances is magically
updated through TV technology to the 1990s. What a
transformation!
Most Americans have forgotten how dramatic those changes
have been. Today, American products are quantifiably better than
they were only a few years ago. In the private sector, we have
focused on crusades of excellence -- quality products and quality
services. It's not often flashy -- sometimes it's a return to
old values and standards like "built to last a lifetime,' "the
customer's always right," or "service with a smile." At other
times, it's measuring and evaluating performance to improve
output. In many ways, competition has been the driving force in
improving quality and performance. Not surprisingly, it has
worked.
Can you imagine how appalled he would be to hear that
98% of Congressmen who seek re-election are, in fact,
re-elected.
Can you imagine how astonished he would be to learn
that one party -- the Democrats -- have controlled the
Congress 58 out of the last 62 years.
Can you imagine how dismayed he would be to discover
that not one Republican member of the house -- and some
of them have over 30 years of service -- has ever been
in the majority. Yet, all but five Democrats have
never been in the minority.
One-party rule in Congress is a big part of the problem, but
that is not the whole story. We have had divided government
before in our history -- sometimes during periods of great crisis
-- and we pulled together as a nation to meet the challenge that
threatened our security or national well-being. No, the larger
issue is a systemic problem. Congress is a sticky web -- made up
of 284 Congressional Committees, 34 thousand Capitol Hill
employees and staff, 2 billion dollars of taxpayer financing, and
an overlay of a 117 million dollar re-election war chest in
special-interest campaign contributions, and millions more in
special-interest influence.
Such a system cannot promote reform and change. Instead, it
aggressively protects the status quo. Talk to retiring members
and you will hear the frustration. Talk to Senator Warren Rudman
of New Hampshire who has given up on trying to break through the
log jams. Senator Rudman was asked about the continuing specter
of huge budget deficits. He indicted the system, "the fact is
that we are unable -- institutionally -- to do what has to be
done. We are not just watching the fiddler fiddle while Rome
burns, we are watching the entire orchestra."
Let me give you one example of the misplaced priorities on
Capital Hill -- the rash of proclamations that Congress spends an
inordinate amount of time in passing. Do you know that nearly
one third of all the legislation that passes my desk is made up
of these items. Three times a week proclamations come across my
desk for action -- and these proclamations are passed by a joint
resolution of Congress. They might designate a particular day as
"National Tap Dance Day" -- true story. Or, they might proclaim
a month as "National Digestive Disease Awareness Month. "
Literally, hundreds of proclamations come the White House for
Presidential action each year.
Now, there is nothing wrong with Congress passing a
proclamation heralding "National Crime Victims Week. But there
is something wrong when Congress spends its time on that
proclamation instead of passing a comprehensive crime bill that
would actually make people safer in their homes and communities.
"National Asparagus Month" may be good constituent
relations, but the problems of American agriculture have to do
with our national vitality, not our national vegetable.
For every one of these bills, there are legions of staff
churning out public-relations campaigns to accompany them -- both
on Capital Hill and in the executive branch. There are
constituents contacted, newsletters written, paper -- reams of
paper -- produced. Is this a big ticket item in the federal
budget? Probably not. But, it is more evidence of a Congress
that chooses to spend its time and effort on the easy constituent
pleasing activities rather than on the difficult, often
controversial issues that determine the future of our country.
Maybe it's small potatoes, but the public knows PR when it sees
it. For each letter a member receives, 12 thousand go out --
free. That adds up to real money -- taxpayer money, and we must
put a stop to it.
These actions undermine the people's confidence in their
government the same way as outrageous pork-barrel spending does.
[Just as I sent to Congress ten days ago my anti-pork line-item
rescissions, I am telling Congress today that the Executive
Branch will not spend taxpayer dollars to fund publicity
campaigns for special interests -- so don't send me any more of
these pork-barrel proclamations.
The American people are a compassionate people -- we are
m
willing to foot the bill to make this country better. But, when
taxpayer money goes for special-interest publicity campaigns and
pork-barrel projects, people get angry -- they don't trust
government to use their hard-earned tax dollars wisely. In
dollar terms, one quarter of everything we produce, build, or
grow as a nation, is devoured by the central government. There
is no bigger appetite on earth.
Today, our government is a trillion and a half dollar
business that too often forgets that the taxpayer is original
investor, customer, shareholder, and board member all rolled into
one.
Because government has forgotten the customer, it has
issued counterproductive regulations -- ones that
increase the cost of doing business, but worse, ones
that don't really solve the problems they were designed
to solve.
Because government has forgotten the shareholder, it
shelters perpetual programs that have outlived their
function, but not their funding.
Because the government has forgotten who is really the
boss -- the American taxpayer -- it has become
insulated, unresponsive and resists reform. It is
almost impossible to adequately reward success, much
less punish failure.
Let me make it clear, these comments are not meant for the
four million hardworking people in our government offices. Talk
to them and most will say the same thing -- they are frustrated,
too. But the system, which was good for its time, must now
change, and it won't be easy.
Congress has created these giant centralized bureaucracies.
It has laid down mandates and funded programs -- then, Congress
has protected them, harassed them, investigated them, micro-
managed them. With a Congressional subcommittee Chairman as
godparent, the bureaucracy has become Congress's coddled pet.
A few examples will show what I'm talking about. The
Department of Defense has no less than some thirty different
Congressional committees and 77 subcommittees who claim some
oversight responsibility. And, some 74 committees and
subcommittees compete to exercise jurisdiction over the War on
Drugs. Then we wonder why it takes so long to get something done
in government.
Think of the time and resources spent by the Executive
Branch to fulfill Congressional demands for testimony. Think of
the thousands of required reports that must be researched,
written and delivered to Capitol Hill. Sixty reports from HUD.
Six hundred from the Defense Department -- and so on -- through
all the Cabinet departments.
Congress has legitimate oversight responsibilities. And, I
know that the federal government cannot be run just like IBM or
the local convenience store. But, we can improve government's
performance. We must improve its performance. What merely
hampered us in the past, will stall us out in the new century.
Congress can no longer ignore our proposed reforms. The federal
bureaucracy must be reformed; I have proposed reforms in the past
and I am proposing additional steps today. These actions will
give clarity to the mission of America's government and return
our people's confidence in government.
First, we must have universal application of the laws of the
land. Federalist paper #57 asserts that elected officials, "can
make no law which will not have in full operation on themselves
and their friends, as well as the great mass of society." In
other words, Congress must govern itself by the laws it imposes
on the public -- across the board. No more exceptions. Like
civil rights laws. Age discrimination laws. The Americans with
Disabilities Act and the Freedom of Information Act.
Congress should also submit to the laws it imposes on the
Executive Branch -- the Privacy Act, or Title VI of the Ethics in
Government Act of 1978, the independent counsel law. [[ To those
ends, today I am sending to Congress [name of Administration
bill] which will force Congress to be covered by the same laws
which govern everyone else. Further, I will veto any new
legislation that does not also apply to Congress. ]] But that is
only a first step toward rebuilding public confidence in our laws
and our lawmakers.
Second, we must reform the Congressional committee system.
I advocate efforts to trim the overgrown thicket of committees
and subcommittees which now paralyze the Congress. Democratic
Senator Boren said it best when he described the Congress as
"inefficient, unresponsive, wasteful, and compromised by the way
it finances its campaigns." The number of Congressional
reformers is growing, but they need the support of the American
people now more than ever.
Third, we must endorse sweeping campaign finance reform.
Three years ago -- in 1989 -- I proposed the total
elimination of Political Action Committees and limits
on so-called "leadership PACs."
I proposed increasing the support that the parties can
provide to federal campaigns to reduce the influence of
special interests.
I proposed increasing the time candidates and
incumbents spend fund-raising.
I proposed increasing the legitimate role of our
political parties.
I proposed that we reduce allowable contributions by
"independent" PACs to federal campaigns.
I proposed laws to ensure that PACs stay truly
independent and unaffiliated -- in other words, clean.
Finally, I asked the Congress to join me in stopping
the abuse that results from spreading around what's
called "soft money" -- I asked for full disclosure of
"soft money" expenditures by all organizations as the
only way to clean up the system.
Fourth, we must enforce spending reforms. I have already
proposed to freeze domestic discretionary spending in federal
employment next year. I have also proposed to curb the growth of
mandatory programs without touching Social Security. I call
again for the American people to demand that the Congress pass
the same measure that 43 governors have: the line-item veto.
In the absence of that important tool, I will continue to
use whatever means are legally at my disposal, including the
line-item-rescission, to protect the taxpayer from the spending
excesses of Congress. I will resist any attempt by the Congress
to dismantle the only defense the taxpayer has against
Congressional overspending -- budget caps implemented in the 2990
Budget Act. Finally, I again call for a Balanced Budget
Constitutional Amendment.
Fifth, we must enforce regulatory reform. I have put a
ninety-day moratorium on new government regulations. We are
revising and eliminating regulations that impede our ability to
compete, and we are accelerating regulations that enhance our
competitive edge. We have cut back XXX of regulations, pages in
the Federal Register by xx% just in the last XX months/years.
[Today, I am announcing an extension/new review process ]]
Next, we must have a new communications policy between the
Congress and the Executive Branch. [ [Logging reform -- decision
memo result. Reform of the nomination process. ]]
Finally, we must limit Congressional terms. The cycle of
virtually guaranteed re-election through the built-in advantages
of incumbency must be broken. [ [So today, to truly fix the
system, I have sent to Congress legislation to limit terms of
United States Senators to two, and Representatives, six terms. ]]
After all, as President, my terms are limited, the same should
apply to members of Congress.
Change is sweeping America, just as it is sweeping the
world. Just as our nation faced challenges when it was newly
formed, today, we face the challenge of change as we prepare for
a new century. The choice is clear. On one side stand the
defenders of the status quo. On the other -- the forces of
change. The American people must make a choice. That choice
must be worthy of those who began the world's only permanent
revolution. Back then, that revolution changed the world.
Today, we must prepare America for a new century. The reforms I
propose will restore the principles of our Founders, guarantee
continued freedom for our children, and provide our people with a
government worthy of their trust and faith.
We must make the choice for change.
We must make the choice for a revitalized America that is
fit and ready for leadership in the new American Century.
Thank you, and may God bless the United States of America.
######
Our nation's emphasis on reform has also gone beyond the
private sector. Healthy competition has spread across-the-
board. For example, the military. In the face of budget cuts,
the military has had to get leaner and smarter. In Desert Storm,
we proved it worked. Other institutions -- state and local
government, unions, trade association, charitable groups -- all
organizations that serve the public -- have been influenced by
this drive for excellence.
There has been one glaring hold-out -- the federal
government. Our government has resisted reform and protected the
status quo -- even in the face of overwhelming evidence that
change was necessary.
The changes that are sweeping the rest of the country have
stopped cold at the Capital Beltway. This entrenched status-quo
attitude can be laid squarely at the doorstep of the United
States Congress.
We know that government is too big and spends too much. We
know that too often the government spends the American taxpayer's
money like there will be no tomorrow -- inefficiently,
ineffectively, without accountability, and frankly, without
compassion. If this keeps up -- tomorrow will be no bright new
day. Congress, is simply not up to the job of reforming
government; they are too firmly entrenched in the status quo.
We've got some very tough problems ahead and Congress has not led
the way in solving those problems. Even worse, they have stood
in the way of every solution we have proposed.
Let me tell you why that is the case and how we must change
things.
Political scientist Morris Fiorina paints a disturbing
picture of how Washington really behaves. His picture is all too
familiar. Fiorina says that the growth of big government has
changed the role of Congress from policymaking to pork-barreling
-- changed the Congressional office to a campaign and constituent
office. He argues that Congress has set in motion a self-
perpetuating cycle of support for unnecessary spending --
creating bigger bureaucracies. Fiorina says that Congress has
become lethargic and unresponsive to the needs of the American
people.
We have seen Congressional members and their powerful staffs
increasingly become the ombudsmen between constituents and the
bureaucracy -- where they expedite benefits and procure more
pork. These self-serving actions ensure re-election and a
continuation of the status quo.
Our Founding Fathers warned us about this. Madison, in
Federalist Paper #52, argued that permanent majorities are
dangerously undemocratic.