Government: June 2012 Archives

Despite the questionable results of a Bloomberg poll, we are not better off than we were four years ago. As much as many of us lay the blame for the anemic economic recovery on President Obama's actions (or inaction), it isn't Obama alone we have to thank for this mess.

Reams and reams of laws and government regulations have been choking off our economic engine for decades. Every now and then someone comes along who, once they gain the White House or the Governor's office, strip back many of those encumbering laws and bureaucratic regulations. The results are almost always a booming economy and a strong job market. But then over time Congress or the state legislature, government bureaucrats, and anti-business presidents and governors start tightening down the screws on economic activity, all in the name of "protecting the consumer/small business owner" or ensuring "fairness in business", with fairness being defined in esoteric or emotional terms having nothing to do with reality. In turn we see businesses saddled with more taxes and burdensome regulations that do nothing but ensure some bureaucrat somewhere a job enforcing all those regulations. Economic activity slows down, profits fall, jobs are lost, and then we find ourselves in yet another recession.

One of the better examples of this is Washington DC, where the Congress and the leviathan that is government bureaucracy has made more difficult for businesses to survive. That trend does not seem to be abating.

The federal government spent $3.6 trillion in 2011. But according to the Small Business Administration (SBA), the annual cost of complying with federal regulations has exceeded $1 trillion since around 2005, and none of those costs appear in the federal budget. The federal government actually costs us half again more than most people think it does.

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The federal government lists all of its regulations in the Code of Federal Regulations. It is more than 169,000 pages long and growing. Last year alone, 3,807 new final rules were published in the Federal Register -- more than 10 per day. In 2010, it was 3,573 new rules.

Small businesses bear an outsize share of regulatory burdens. Candidates from both parties constantly climb over each other to seize the mantle of Protector of Small Business. But their claims ring hollow if they don't work to enact top-to-bottom regulatory reform.

It must be understood that it is small business that creates most of the jobs, particularly during a recovery. But make it difficult and expensive for them to do so, those jobs won't be created. In turn the economy suffers. With all these "protectors of small business" out there you'd think they'd actually do something to protect those small businesses. But it's mostly rhetoric and political posturing and the small business owner be damned.

The weather has reminded me of something I've advocated in the past, something that would certainly slow down the ever meddling Congress and the government bureaucracy: make heating and air conditioning illegal in Congressional and government bureaucracy offices. If it's too hot or too cold they won't be spending time coming up with new ways to make earning a living more difficult. Instead, they'll go home and stop wasting taxpayer dollars.

Maybe it's an idea whose time has come.

On more than one occasion I have opined that farm subsidies are something that should end because they have outlived their usefulness. These days farm subsidies have nothing to do with helping the family farm survive but are more about unneededcorporate welfare for the agri-businesses, i.e. crony capitalism.

However, the farm lobby is powerful and doing away with something that benefits the agri-businesses will be difficult even though it would save the American taxpayers $22 billion directly, and untold millions or billions indirectly when consumers no longer have to pay artificially high prices for some foodstuffs.

Cronyism is the practice by which government officials provide preferential treatment (such as loans, subsidies or regulatory preferences) to handpicked firms or industries. It is a bipartisan practice, as we may once again find out if lawmakers reauthorize most of the farm bill currently moving through Congress. There is no justification for extending our current regime of agricultural subsidies -- a clear example of cronyism.

In 2012, the Department of Agriculture is projected to spend $22 billion on subsidy programs for farmers. Introduced in the 1930s to help struggling small family farms, the subsidies have become the poster child for government welfare for the affluent. Farm households have higher incomes, on average, than do nonfarm U.S. households.

Second, farm subsidies tend to flow toward the largest and wealthiest farm businesses. According to the Environmental Working Group database, in 2010, 10 percent of farms received 74 percent of all subsidies. These recipients are large commercial farms with more than $250,000 in sales and mostly produced crops tied to political interests. The Cato Institute's Tad DeHaven and Chris Edwards calculate that more than 90 percent of all farm subsidies go to farmers of just five crops -- corn, wheat, soybeans, rice and cotton. For every federal dollar spent on farm subsidies, 19 cents goes to small farms, 19 cents to intermediate (middle-income) farms and 62 cents to the largest commercial farms.

Other countries have ended farm subsidies and in the end everyone was better off without them, including the farms. The excuse "But we've always done it this way!" is lame. All subsidies do is distort the market by short-circuiting the free market feedback systems and give political power to both major parties because they can use them to reward their "friends" and punish their "enemies" by granting or denying them taxpayer dollars.

It's time to do away with that kind of foolishness and end yet another failed FDR-era policy.