NCPA - National Center for Policy Analysis

Congressional Renewal

September 10, 2013

The growth of executive government and government debt are both highly worrisome. On the one hand, the executive branch operates mainly through regulation. Government borrowing, on the other hand, is a method of public finance. Regulation imposes costs and trouble on particular firms and individuals, and is subject to a large body of law. Borrowing is diffuse and non-justiciable. Excessive regulation threatens liberty; excessive debt threatens wealth. A unified field theory seems unlikely, says Christopher DeMuth, a distinguished fellow at the Hudson Institute.

In the early 1970s, decision-making on spending and budgeting became something of a free-for-all, and Congress became less able to counter the spending ambitions of presidents.

  • In the 1960s, annual deficits averaged 4 percent of federal spending and 0.8 percent of gross domestic product (GDP), and public debt fell from 45 percent of GDP (still reflecting World War II debts) to 28 percent.
  • In the 1970s, deficits doubled to 10 percent of spending and 2 percent of GDP and the debt stayed about the same.
  • In the 1980s, deficits grew to 18 percent of spending and 4 percent of GDP and overtook economic growth. By 1990, the debt was back to 45 percent of GDP.
  • For fiscal year 2012, the deficit was 35 percent of spending and 9 percent of GDP, and the debt was 77 percent of GDP.

Debt and regulation are both legitimate government functions that have come to be used to ignore established norms of public finance and democratic accountability. Broad regulatory delegation permits legislators to vote for clean air, sound banking and other good things while leaving it to the agencies to navigate the shoals of achieving the statutory goals. The costs of regulatory directives are borne within the private sector -- manifested not as taxes but rather as higher prices charged by regulated firms. Borrowing is a complementary means of taxation evasion: elected officials provide constituents with higher levels of spending than of taxes to pay for the spending, leaving the difference to be paid in the future by nonvoting younger and future generations.

Congress needs to be refashioned in a way that it could stand up to the executive, moderate its ambitions, and localize our politics. In this structure, the federal government could not spend a dollar, or guarantee a loan, without the consent of the chairmen and majority of the House and Senate appropriations committees, and could not tax or borrow a dollar without the consent of the chairmen and majority of the House Ways and Means Committee and the Senate Finance Committee. The abstract discipline of today's budget procedures would be replaced by incarnate discipline.

Source: Christopher DeMuth, "The Bucks Start Here," Claremont Institute, August 26, 2013.


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