For some people, it would appear that the only good government is no government. TSA airport screeners offer one of the purest in-your-face examples of cutting back a government service just as demand increases by 15 percent. The answer is long lines and frustrated passengers who are now being “taxed” by the value of their time spent in line and at the cost of missing flights. It’s the last thing anyone needs considering how little it costs per head to do it right.
I have written in the past about the insanity of reducing the budget of the IRS when each marginal dollar spent yields $6 of otherwise uncollected taxes. Across the board, government discretionary spending of every stripe has endured substantial budget cuts in recent years, and a column by Steven Rattner in the New York Times ticked them off one by one. A quick look at some of the more egregious examples should leave us all thinking, “Which of these will amount to a ‘soft-dollar’ indirect tax on me?”
The TSA example is the most obvious. In response to the notion that that “privatization” is the answer to efficiency, the screening for the past three years has been increasingly taken over by private contractors. So, in addition to the people paid to do the actual work, there is now a company with a management food chain and a profit motive. We now pay for dividends to stockholders, debt service, private equity firms to reward and much more that I would argue has no place where the safety of the public is involved. Enough insider whistle-blowing has taken place recently to convince anyone that this is now a broken system.
Thinking that privatization was a stroke of genius, we have cut TSA budgets by 8.5 percent over the past five years which has lead to a 5.5 percent drop in screeners --- all this while airline travel has increased by 15 percent.
The National Institute of Health has had its funding reduced by 23 percent so there goes some of the funding for cancer research and other diseases, not to mention the Zika virus. And the Environmental Protection Agency --- part of President Nixon’s legacy --- has had its funding cut by 27 percent since 2010. Remember real smog that stung the eyes? It, or something worse, may be back soon.
We all pay a lot more in taxes because many Americans don’t pay what they owe. In a column last summer devoted to the subject, I quoted the New York Times which pointed out that roughly $385 billion is the ANNUAL shortfall between what people owe and what they get away with paying --- about half our annual military expense. Most cheating occurs with incomes of $200,000 and up, but the IRS has had a budget cut of 18 percent since 2010. The enforcement staff has been reduced by 23 percent. So there you have it.
To apply simple arithmetic, we could reduce the tax bill for all of us and perhaps make a flat tax work if we just spent about $60 billion more on the IRS. Applying the $6-for-each-$1-spent metric, the IRS might collect, say, $360 billion of the $385. This would give us a net gain of $300 billion in tax revenue that would reduce the projected 2017 deficit of $560 billion down to $260 billion.
Actually, it would be a better deal than that because increased enforcement and publicity would prompt more people to think about becoming law-abiding citizens. Lompoc Prison in the ‘60’s was full of doctors who took cash from patients and didn’t report it. Just an article about them in Medical Economics magazine prompted many to think first before continuing that practice. This time around, we probably would get plenty of bang for the buck after spending just $10 or $20 billion more on enforcement.
The obsession with cutting government spending today has more to do with ideology than with financial arithmetic. It’s a tool to reduce the size of government even if it means being “penny wise and pound foolish.” When we can borrow money for thirty years at half the interest we have paid historically, today’s real cost of this country’s debt is a fraction of what it has represented in the past.