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The Forerunner

Big Government

By Editorial Staff
Published May 1, 1988

by David Rockett

McDonald’s had $4.1 billion in sales in 1986. Add Delta Airline’s operating revenues of $4.4 billion and Wal-Mart’s total assets of $4 billion and the total barely exceeds the $11.96 billion dollar federal government’s food-stamp program. In other words, the federal government spends almost four times the dollars on food stamps that McDonald’s receives in sales revenue.

Such are the contrasts one can make comparing the l988 Almanac figures to a copy of the l988 federal budget. Another example: the Child Nutrition Program budgets of $3.6 billion exceeds the premium income New York Life receives from all insurance and annuity policies. Notice also I am using sales, assets, and premium figures, not profits. Company profits would be much lower. Ford and General Motors had profits in the $3 billion to $4.5 billion range.

The Department of Agriculture has a budget of $49 billion. What could you do with $4 billion? You could buy the listed assets of United Parcel Service ($4.8 billion), Coca-Cola ($8.3 billion), K-Mart ($10.5 billion), Standard Oil($15.9 billion), and Merrill Lynch ($9.6 billion). You might wonder what the Department of Agriculture does with these billions of dollars. Most of it goes for what in Europe is called Socialism.

Consider: $1.8 million to World Agriculture Outlook Board, $85.6 million to Foreign Agriculture Service, $11.9 billion for food stamps, $82.5 million for Nutritional Assistance for Puerto Rico, and $18.1 billion for the Federal Food and Nutrition Program.

When these programs are criticized, a swell of moral indignation arises. Do we not have a duty, particularly as Christians, to have compassion for those who are hungry and in desperate situations? Certainly! Yet we must not forget the eighth commandment given by Almighty God:“Thou shalt not steal.”

Robin Hood was a thief. As we have seen before, the Bible forbids the fundamental practice of Socialism. It is un-Scriptural and is therefore Anti-Christ. Christians are to be compassionate with their own money. They should not encourage the State to confiscate their neighbors’ money to fulfill their duty of charitable giving. Would not a politician giving his own money to charity reveal a genuinely compassionate heart – while the absence thereof exposes his hypocrisy? It costs politicians little to be generous in giving tax money away.

Scripture does give government legitimate but limited functions to fulfill as the ministers of God to the people (Romans 13:4-6). Yet Scripture does not hold government morally responsible for providing food and nutrition. This is the duty of fathers (I Timothy 3:7) and private charity,(church fathers). We must remember that government has no money of its own. Government must first take money from citizens before it can be selectively compassionate.

The Department of Health and Human Services has a $171 billion budget. This is $22.8 billion more than the combined deposits of Bank-America Corp. and Chase Manhattan Bank. What could you buy with $171 billion? You could purchase the assets of General Motors ($72.5 billion), IBM ($57.8 billion), and Ford Motor ($37.9 billion) and have $2.9 billion left! These are three of the four largest corporations in the United States.

Or, you could buy the assets of the 10 largest transportation companies, (UAL, UPS, Burlington Northern, Union Pacific, CSX, AMR, Santa Fe Southern, Delta Air Lines, Texas Air, Norfolk Southern) and have $17.7 billion leftover after subtracting the total Premium and Annuity income of the 10 largest life insurance companies (Prudential of America, Metropolitan Life, Equitable, Atena, New York Life, Teachers Insurance & Annuity, John Hancock Mutual, Travelers, Connecticut General, and Northwestern Mutual Life). Again, these are asset and income figures, not profits.

These figures need to be remembered the next time you hear a congressman complaining about the power of big corporations. When you talk of big business, the Federal government is the place to start. The phrase “Big Government” takes on new meaning when the $14 billion dollar budget of the Department of Education exceeds the assets of Procter & Gamble by a billion dollars, and the $10.5 billion budget of the Department of Energy exceeds the sales revenue of Digital Equipment by $2.5 billion! Corporations are pygmies when compared to the size and power of the Federal government.

Can the Defense Budget Be Cut?

We could go on and on but let’s address the $302 billion defense department budget. Notice first that the socialistic welfare programs, both domestic and foreign, are spread throughout various departmental budgets. Together they exceed defense expenditures. (This is before $259.6 billion in the Social Security Trust Fund, the most Socialistic program of the federal government.) Why do we taxpayers spend so much on defense? Do we have that many hostile enemies – if so why? Is our country that hard to defend? Let me offer you three major reasons why we spend such mammoth amounts on national defense.

1. Have the American taxpayers decided they are morally responsible to pay for the defense of the citizens in the Pacific Basin, Middle East, Western Europe, and elsewhere? Are those peoples and countries truly that helpless to defend themselves? The international presence of U.S. military all over the globe is the primary expense factor in the Department of Defense.

We spend between $130 and $150 billion on NATO (foreign welfare?) alone – every year. A domestic defense strategy could defend our homeland at a fraction of the cost. The personnel, equipment and logistical support of U.S. military presence in every corner of the globe is truly astronomical. Also, does not our very presence fuel hostilities toward our country and lend credence to the charge of our being intruding interventionists? Have U.S. taxpayers gladly assumed these costs and risks? Perhaps they have never carefully considered it?

2. The second cause for the bloated defense budget is the millions of defense bureaucrats. Their jobs depend upon this budget and the mentality behind our defense strategy. They are the internal defense lobby, which has many similar goals as defense contractors who comprise the external lobby. Economist Thomas Sowell is right in saying that bureaucracies are wasteful by design and were never intended to be efficient. Their primary objective is to perpetuate themselves. Despite many good people in the Defense Department, we mustn’t be naive. At the root, most are career bureaucrats.

3. Procurement procedure is the third major reason we are over-spending on defense. This is related to the other two, in fact all three reasons are related. Giving a bureaucracy the huge and infinitely complex task of purchasing for such a widely scattered and diverse defense complex assures procurement wastes of major proportions. Imagine the power struggles which must exist among the bureaucrats who determine how, when, and for what to disburse those billions of dollars.

Balancing The Federal Budget

Cutting defense spending involves the same things necessary to balance the whole budget. Below I briefly survey a five point plan which will give us a balanced budget with minimal economic dislocation. We begin with the assumption of a $175 billion deficit in a $1.3 trillion budget.

1. A l3.46% across-the-board cut will balance the budget. With numbers as big as we’ve just seen, it would not be difficult to find this much money in outright cuts. However, like taking an addict off heroin cold-turkey, the withdrawal pain might be more than our economy can take.

Cutting $175 billion of spending out of the U.S. and world marketplace, and millions of pockets, would cause severe economic disruptions. This can be eased by gradually phasing the cuts in over three years. That’s just $58 billion in true spending cuts – for three years in a row. Though more difficult, this is the most compassionate method.

2. Have every budget department do an A, B, C, D prioritization of their budget. The “As” would be the most important functions performed while the “Ds” the least. This is the divide and conquer method of streamlining activities. You completely eliminate all “Ds,” and as many “Cs” as possible. Alan Laikin has used this technique in business management for years. You also minimize internal wars and muster some of the bureaucrats as supporters by letting the departments do much of the prioritizing – they identify the“most cutable” budgetary items.

3. Now, where do we get the other $117 billion balance in revenue to balance the budget? Two places – Privatization and Auction. The federal government owns over half the land in the country, along with thousands of buildings. If just 10% of all federal lands were sold annually at auction, the budget could easily be balanced.(Don’t start with wilderness lands and stir up the ecologists who ignorantly assume the federal government is the most contentious landowner and protector.)

We could just close down a few military installations (domestic and foreign) and sell the assets at auction.

4. The balance could be done by privatizing government services. The Grace Commission reported hundreds of government services which could be done more efficiently by private industry. This would eventually yield tax revenue rather than expenditures, but initially would generate capitalization revenues.

How many millions of shares could be issued at $10 per share to sell the assets of the U.S. Postal System and Amtrak? Shares could be offered and given first to the employees, with the balance sold to the public. Britain did this with their telephone system and South Africa is about to do this with their $30 billion transportation system. Much the same is being planned with public housing.

Let’s sell the country back to the citizens. The initial sale will soften the need and pain of too severe budget cutting, balance the budget, and privatize the nation.

5. With these done, we can then introduce a phased-in flat tax. We can begin simply with an optional 20% short-form with no interest, housing or personal deductions. If supply-side economics holds true, this will expand the economy and generate more revenue. The flat rate can be gradually reduced. Keep itemizations open for a few years to give CPAs and tax attorneys time to find less parasitic and more productive work. As voluntary compliance soars, the IRS’s budget could then be eliminated!

This is a bit sketchy but the point should be clear. The budget can be balanced. Surely there are decisions to be made and there will be economic pain and dislocation for a limited period of time. But that is the price one always pays for years of excess.


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