Policy Digest

January 1997 

New National Parks Policy

Many of the nation's national parks and recreation areas are over-used and under-maintained, by anyone's standard. So the Department of the Interior is initiating a pilot project to double entrance fees at some of the most popular parks and start charging them at some national forests and wildlife refuges.

Land management experts say that not only are the fee hikes long overdue, the amounts charged should be even higher.

  • At present, 270 million people visit the park system each year -- paying in fees only 6 percent of the National Park Service's $1.2 billion operating budget.

  • Even with the increased fees, it will still be cheaper for a family of four to visit the Grand Canyon than to go to a movie.

  • Had entrance fees at Yellowstone National Park kept pace with inflation over the past 70 years, they would now amount to $115 per car -- rather than the new $20 fee.

  • Thanks to the ridiculously low fees, the parks have a $4 billion backlog of needed repairs.

Under the pilot program, the parks will be allowed to keep four-fifths of the extra fees -- rather than having to send the money to Washington.

While experts say these are all steps in the right direction, they recommend going further with market-based reforms, such as:

  • Allowing parks to set their own prices and make spending decisions -- as well as paying for more of their own costs.

  • This would improve the quality of services as well as the environment.

  • More realistic pricing at public parks will allow private landowners to sell recreation services on their lands.

Source: Perspective, "In Praise of Green Fees," Investor's Business Daily, December 10, 1996.

For more information on the Environment, visit the NCPA's Environment page at http://www.public-policy.org/~ncpa/pi/enviro/envdex.html

Defense Spending Decreases

Knowledgeable military analysts are warning that the U.S. may not be capable of achieving a victory comparable to that won in the Gulf War in 1990 at today's level of military preparedness.

They make these points:

  • An Army commitment like the 1990 war would exhaust its ten active divisions -- including those now deployed in Europe and Korea.

  • American air power is now a fraction of what it was during Desert Storm.

  • The Marine Corps is said to be approaching its threshold of effectiveness.

  • Since fiscal year 1985, military budgets have declined 35 percent.

Spending on Pentagon research and development has declined 57 percent and procurement spending is down 71 percent, analysts say.

  • Funds allocated to the Pentagon have increasingly been diverted to non-military programs -- such as U.N. peacekeeping operations in Haiti, Bosnia, Iraq and Somalia.

  • Some $28 billion in Defense Department funds has been earmarked for environmental compliance and clean-up through fiscal year 1999.

  • Other funds are to be used for job programs to upgrade the San Francisco Bay Area Rapid Transit system.

Vital items in the military budget -- including funds for strategic and general purpose forces -- account for only 37 percent of its budget, down from 55 percent in 1962.

Even though the world continues to be a dangerous place, the Central Intelligence Agency budget has also been cut and its program focus diffused, critics warn. The bulk of CIA resources now goes for "global issues" -- including pollution, health, natural resources and endangered species activities.

Observers say that sagging preparedness levels are affecting military morale, with 17,000 enlisted soldiers now on welfare. In 1994, the Marine Corps failed for the first time in 15 years to meet its recruitment goals. And Air Force personnel are regularly deployed oversees for tours of duty considerably longer than the maximum recommended time limit.

Source: Casper W. Weinberger (former Secretary of Defense) and Peter Schweizer (Hoover Institution), "Flower Power," National Review, December 23, 1996.

Areas Where Spending Could Be Cut

A report from the Heritage Foundation chronicles a number of cases of wasteful spending by the federal government that could be eliminated to help finance a tax cut.

For example, the Department of Commerce's National Oceanic and Atmospheric Administration (NOAA) issued 5,000 to 6,000 Smart Cards to employees. As a result:

  • The NOAA exceeded its travel budget by 84 percent in 1994, says Commerce's Inspector General.

  • Numerous employees misused the government travel card with "excessive unpaid charges, use of the card for personal purchases, and questionable automatic teller advances."

  • Misuse included payments for meals at Washington-area restaurants and the purchase of liquor, jewelry, flowers, books, music, computer on-line service fees and automobile insurance.

More money was wasted on the mismanaged Housing Authority of New Orleans (HANO). In the last three years alone, the Department of Housing and Urban Development (HUD) spent $244 million to rescue the local agency.

  • As recently as 1994, HUD's Inspector General reported that a random sample of 150 of HANO's housing units found that all 150 failed to meet housing quality standards.

  • Typical problems included missing ceilings, holes in walls, loose and peeling paint and roach infestation.

  • A follow-up random survey in 1995, however, did find some improvement -- only 93 percent of the sampled units failed.

One reason for the agency's poor performance: while the maintenance backlog for the 15,000 units was estimated at 36,000 individual work orders, the work crews who serviced nine of the 10 projects shared one pickup. Even so, managers purchased 16 new Ford LTD Crown Victoria passenger vehicles for the central office staff in 1993.

Finally Amtrak receives federal subsidy of $750 million per year, equaling $47 per passenger, but announced in August 1996 that because of an expected $250 million deficit, it was dropping three train routes serving 42 cities, including Dallas, Texas. At the same time, it was starting up a costly new service between Boston, Mass., and Portland, Maine. But the route is already served by a private bus company that offers a two hour ride for $15 per trip, and Amtrak's $40 million service will take 30 minutes longer to make the trip.

Source: Ronald D. Utt, "How Government Wastes Your Money: Report No. 3," F.Y.I. No. 123, October 15, 1996, Heritage Foundation, 214 Massachusetts Avenue, NE, Washington, DC 20002, (202) 546-4400.

For the full text of this Heritage study http://www.townhall.com/heritage/library
/categories/budgettax/fyi123.html

CPI's Effect on the Deficit

Cutting the Consumer Price Index by 1.1 percent -- as economist Michael Boskin's advisory panel recommends to make up for an overstatement of inflation -- would have a considerable impact on the federal deficit.

Here are some projections from the Congressional Budget Office:

  • If we do nothing in the way of adjusting the CPI, the deficit in the 1997 fiscal year would be about $169 billion -- versus $141 billion under the Clinton budget with a 1.1 percent COLA reduction.

  • By 2000, an unadjusted budget would rack up a $193 billion deficit -- compared to $63 billion with the COLA adjustment.

  • By the year 2002, the unadjusted figure would be $150 billion -- versus a $71 billion surplus if adjusted.

Beyond the budgetary effects, the new CPI would rewrite recent economic history, experts say. The conventional wisdom holds that real income for the average American worker peaked in 1973. Boskin's data show a 13 percent rise in hourly earnings since then -- with most of the rise occurring between 1981 and 1989, when Ronald Reagan was president.

Source: Ed Rubenstein, "Right Data," National Review, December 31, 1996.

Amtrack Spending

Already receiving $1 billion a year in federal subsidies for operating costs, Amtrak now wants a trust fund established to cover capital needs. A new study from the Cato Institute rejects the passenger rail service company's plea.

  • Established 25 years ago, Amtrak was supposed to become solvent five years later -- but did not.

  • Amtrak has so far cost taxpayers $13 billion in federal monies.

    Taxpayers subsidize each rider by an average of about $100 -- or about 40 percent of the total per passenger cost.

  • The round trip subsidy for a passenger going from New York to Los Angeles runs $1,275 -- more than three times a typical discount airfare.

    Only 0.4 percent of Americans traveling between cities use Amtrak.

    Cato's economists figure some of Amtrak's busier routes could be profitable if they were freed of red tape. (One rule requires that laid-off Amtrak workers get six years severance pay.) Routes which could be money-makers include Boston-Washington, Santa Barbara-Los Angeles-San Diego and Chicago-Seattle.

    Many economists contend that the best solution is to privatize the system and get Amtrak out of taxpayers' wallets.

    Source: Perspective, "Taken for a Ride," Investor's Business Daily, December 31, 1996.

Misspent Highway Taxes

Observers say the nation's highway system needs extensive repairs -- but three-quarters of the federal taxes paid by motorists to fund road building and repair is spent for other purposes.

Taxes on fuels and trucking pay the federal government's share of the cost for the 45,000 miles of Interstate highways and some 160,000 miles of additional primary highways -- representing a quarter of all roads and 85 percent of travel.

According to a 1995 U.S. Department of Transportation (DOT) survey:

  • Of the 54,000 bridges in the Interstate highway system alone, roughly 10,000 are "functionally deficient," meaning they are too narrow, lack adequate clearance or are subject to flooding.

  • Another 3,000 bridges are "structurally deficient," meaning they need "significant maintenance attention, rehabilitation or sometimes replacement."

  • Of the 270,000 bridges in the greater national highway system, 80,000 need repair.

All told, DOT says fully 26 percent of the 922,000 miles of the nation's highways have poor or mediocre pavement that must be repaired or replaced to preserve their usability.

Just to prevent roads and bridges from getting any worse than they were in 1993 would require the feds alone to spend roughly $6.5 billion more each year; to bring the roads up to par would cost $15 billion a year.

The taxes dedicated to the Federal Highway Trust Fund would more than cover the cost -- except the money is spent elsewhere.

  • These taxes brought in $29.4 billion in 1994, the last year for which figures are available.

  • Some $12.7 billion was legally diverted into the government's general fund.

  • An additional $2.3 billion went for mass transit subsidies, another $4 billion was given to the states as aid and $2 billion was spent on such things as research and administration.

Thus only $10.4 billion was actually available to spend on highways in 1994. Less than this is spent each year, so by the end of 1995 the trust fund had a $19 billion balance. But this consists of IOUs from the federal government, which has spent the trust fund balances elsewhere.

Source: Chris Galm, "Why Our Highways Need Repair," Consumers' Research, November 1996.