I had my first reckoning with big government in a small town in New Jersey. The incident remains startlingly fresh in my mind, although it was years ago. A traffic island on a main road, perhaps 20 feet in length, was being demolished. Perched above the brightly vested construction workers was a white metal sign with black letters. The cost of the project was close to $500,000, much of it provided by the U.S. Department of Transportation. I was gobsmacked. The community’s average household income was north of $100,000. The project was plainly local, not interstate commerce by any stretch of the imagination. Why were the feds paying anything?
This, in a nutshell, is an example of what John DiIulio calls “leviathan by proxy.” The federal government now spends $3.5 trillion annually, much of which is transferred to state and local governments and private organizations. In 2012, for example, the Department of Health and Human Services gave out 81,000 grants amounting to $350 billion. The Department of Defense relies on 710,000 contractors. States and localities reap $600 billion in federal funds every year. Approximately 56,000 not-for-profit organizations receive federal largesse.
DiIulio brings leviathan’s scope into focus with this chilling challenge:
Just try to name ten adult U.S. citizens you know who have never received any federal, state, local or intergovernmental payments, loans, subsidies, grants, contracts, or other benefits whatsoever. (O.K., can you name just five?) Or just try to identify any activity in which you engage; any space that you traverse; any building that you enter (including your own private home); any product or service that you produce, buy or sell (including private health insurance); or, for that matter, any air that you breathe on which there is no government policy, program, or regulation. (Give up?)
How did we get here?
It’s a complex story, one DiIulio can’t fully tell in this trim volume. He points out that a big piece of it comes down to elected officials rationally pursuing their short-term interests (i.e., reelection) at the country’s long-term cost. Congressmen rail against big government and trash federal bureaucrats, but simultaneously promise the public more and more benefits. Our representatives authorize new programs and appropriate more and more money, but fail to make taxpayers foot the bill immediately.
It is an insidious form of government that masks its size by borrowing and by using nonfederal actors to administer federal programs. Thus, America today is a “debt-financed, proxy-administered, superficially antistatist form of government” whose total government debt-to-GDP ratio topped 100 percent last year. The federal government has more than $16 trillion in debt, not counting various unfunded promises. (Medicare, DiIulio notes, is a $40 trillion unfunded liability.)
DiIulio’s ameliorative for our republic’s ills is counterintuitive: We can curb government growth and improve its performance by hiring one million more bureaucrats by 2035. The idea is not a batty one: Since 1960, federal spending has quintupled, yet the number of civil servants (two million) has remained flat.
With more federal employees, the public could better discern the size of the government. Work outsourced and granted to unaccountable proxies would be insourced to these new civil servants. Democratic accountability would be improved, as Congress could keep a closer eye on civil servants than is possible with sub-subcontractors and grantees scattered all over the nation. Costs might possibly be reduced, as funds would be transferred through fewer parties that each take a cut. (This is the “leaky bucket” problem that the late economist Arthur Okun identified long ago.)
Certainly, some agencies would benefit from more staff. It is very difficult for a bureaucrat at a desk in Washington to know whether the grant for a traffic island he approved actually has been well-expended. It seems doubtful, however, that Congress would take work and funds away from private proxies and give them to federal employees. Proxies vote and lobby aggressively. Additionally, as a Government Accountability Office study recently showed, federal employees, in effect, have lifetime tenure. Republicans will not go for a million more unionized lifers demanding annual raises. Perhaps the circle can be squared by authorizing agencies to hire more bureaucrats who are put on multiyear, performance-based contracts.