Description

Executive Summary

The federal government is headed toward a

financial crisis as a result of chronic overspending,

large deficits, and huge future cost increases

in Social Security and Medicare. Social Security

and Medicare would be big fiscal challenges even

if the rest of the government were lean and efficient,

but the budget is littered with wasteful and

unnecessary programs.



In recent years, mismanagement scandals have

occurred in many federal agencies, including the

Army Corps of Engineers, the Bureau of Indian

Affairs, the Department of Energy, the Federal

Bureau of Investigation, and the National Aeronautics

and Space Administration. Even the National

Zoo in Washington has recently been shaken by

scandal. The $2.3 trillion federal government has

simply become too big for Congress to oversee.



The good news is that Americans do not need

such a big government. Most federal programs are

unconstitutional, unnecessary, actively damaging,

or properly the responsibility of state governments

or the private sector. This study analyzes

programs that could be cut to create annual budget

savings of $300 billion. If these cuts were phased

in over five years, the budget would be balanced by

fiscal year 2009 with all of President Bush's tax

cuts in place.



Some reform ideas should be applied throughout

the government. Business subsidies should be

terminated, and commercial activities should be

privatized. Also, federal grants to the states should

be scaled back. Currently, a complex array of 716

grant programs disgorges more than $400 billion

annually to state and local governments, which

become strangled in federal regulations. That

form of "trickle-down" economics is very inefficient.



Such reforms were on the agenda in the

Reagan administration and in the Republican

Congress of the mid-1990s. But the need for

spending cuts is even more acute today because of

the large fiscal imbalances that loom from projected

growth in entitlement costs. Spending cuts

would not just balance the budget; they would

also increase individual freedom and expand the

economy. All federal spending displaces private

spending, but many federal programs actively

damage the economy, cause social ills, despoil the

environment, or restrict liberty as well.



Given the government's record of mismanaged

and damaging programs reviewed in this report,

policymakers should be far more skeptical about

the government's ability to solve problems with

higher spending.