Dirty Secrets Behind the Budget Mess.

During last year's budget crisis, Rep. Harris Fawell
(R.,Ill.) had a helpful idea. Why not slash unnecessary
spending Congress had planned for itself? On the floor of
the House, Fawell proposed an amendment cutting $375,000 for
renovations to the House beauty parlor and $25,000 for a
study on a proposed gym for House staffers.

Fawell was shouted down and labeled a sexist for targeting
the unprofitable, taxpayer-subsidized beauty parlor. House
Democratic leaders arranged a non-recorded vote so no one
could be blamed for killing the amendment.

In a federal budget of nearly $1.4 trillion, the money saved
by Fawell's modest proposal would have been insignificant.
But the episode reflects an enduring truth: despite pious
talk, Congress continues to spend taxpayer's money at a
furious clip, and the executive branch usually goes along
willingly. What's more, they go to extraordinary lengths to
deny it.

When the five-year "deficit reduction" agreement was reached
last fall, officials claimed $42 billion in savings. That's
a sham!!! What they didn't mention-and the press didn't
report-is that actual spending will INCREASE by $111
billion, or $480 for every man, woman & child in the nation.
Worse, the deficit, according to governments own official
figures, will grow larger.

On the very day the deal to curb the deficit was forged,
Congress voted to increase social-welfare spending this year
by $22.6 billion, The five-year deal includes $136 billion
in additional funds for non-defense discretionary programs.
Mandatory outlays for Social Security and Medicare will rise
more than $200 billion.

A culture of spending dominates our national capital. An
"iron triangle" of the unelected-executive branch
bureaucrats, Congressional committee staffers, special
interest lobbyists-aggressively protects each program and
pushes unrelentingly for more. Members of Congress believe
spending helps them get re-elected. With few exceptions,
agency heads appointed by the President regard greater
outlays as a measure of their success.

In four years as Education Secretary, William Bennett
learned this the hard way. At first he loyally defended
President Reagan's proposed cuts. He found himself nearly
alone among Cabinet members. Over the next two years, he was
attacked by educators, reviled by his own bureaucrats and
overruled by Congress. In 1987 Bennett rebelled and insisted
on a boost in spending. "There was no political gain in
ruthless cutting," a Bennett aide says. "You could be a
reformer but not a cutter."

Official Washington has created a myth to justify higher
spending in the 1990s. As Sen. Robert Byrd (D.,W.Va.) puts
it, domestic discretionary spending is the "little runt pig"
on the federal budget that has been on the cutting table for
years. It hasn't. Domestic spending was trimmed in 1982,
then grew rapidly during the next eight years. Outlays for
many programs rose substantially, including education for
the handicapped (50%), National Institute of Health (47%),
National Science Foundation (36%), medical care for veterans
(25%) and Environmental Protection Agency (22%).

The biggest problem on Capital Hill, says Rep. Dick Armey
(R.,Texas), is "the committee mystique." Members from
farming areas angle to get on the Agriculture Committee.
Those from port cities join the Merchant Marine and
Fisheries Committee. Those eager to keep military bases in
their district hope to serve on the Armed Services

There's a tacit rule: to get what you want, you go along
with what other committee members want. And it's taboo to
challenge the programs of another committee. "You don't want
them challenging yours," says Rep. Tim Penny (D., Minn.), a
leader for deficit reduction.

Rep. Vin Weber (R., Minn.) a conservative who believes in
spending reductions, was happy to leave the Budget
Committee, which cuts, and join the Appropriations
Committee, which spends. Weber had discovered Washington's
dirty little secret: cutting is a political minus.

Chairmen of the appropriations subcommittees retaliate when
they're crossed. After Fawell criticized nonessential
spending in an "emergency" appropriations bill last year,
extra funding for a project in his district was deleted.
When Rep. Clay Shaw (R., Fla.) voted against the wishes of
Rep. William Lehman (D., Fla.), a subcommittee chairman,
Lehman scratched $1 million in funding for a tunnel in
Shaw's district.

Budget watchdogs such as Penny and Rep. Bob Walker (R., Pa.)
are treated like pariahs. "A large number of colleagues
wouldn't come to dinner at my home," Penny says. An
Appropriations Committee member once remarked of Walker:
"The only cement that will ever be poured in Walker's
district is that around his feet when we throw him in the

"in a corporation, everything is geared toward minimizing
overhead," says Mark Everson, a Chicago manufacturer who was
a top official in three Washington agencies from 1982 to
1988. "In government, almost nothing is." Like many others,
Everson discovered another of Washington's dirty budget
secrets. Instead of being rewarded, officials who make
economy a top priority can count on being criticized by
Congress, jumped on by lobbyists and undermined by
bureaucrats in their own agencies.

When Charles Heatherly became head of the Small Business
Administration (SBA) in 1986, the agency was facing $345
million in bad loans. Heatherly was hauled before a
Congressional committee-but not for the bad loans. His
transgression was trying to streamline the SBA by
jettisoning failed programs. A phalanx on interest groups-
the National Small Business Association, Small Business
United and the American Association of Minority Enterprise
Small Business Investment Companies-weighed in against him.
To SBA bureaucrats, Heatherly was the enemy. "Not one of
them came to me at SBA and said, 'We're with you on this.
What can we do to help?'" Heatherly says.

Because the big spenders presented a united front and
taxpayers made little noise, the SBA was kept alive and
spared further budget cuts. "The iron triangle worked," says

Sometimes the triangle can be very clever. For fiscal year
1991, the Senate and House would have agreed to a smaller
appropriation for the SBA. The Senate voted to give the
agency $440 million; the House voted $438 million. But the
Senate-House conference did not come up with a compromise
figure you might expect, $439 million. Instead, it pegged
SBA spending at $469.5 million.

This upward compromise is but one trick Washington employs
to create the illusion of spending reduction. Here are seven


Imagine a company president who hopes for a $100,000 pay
increase. Instead he receives a $75,000 hike, and then he
claims a $25,000 pay cut. Crazy? in Washington it's routine.

Rather than use this year's level of spending as the
starting point for next year's budget, an artificial "base
line" is created, the effect of which is automatic spending
increases every year. Then, if proposed outlays are less
than the base line, Washington claims a "cut"-even though
spending actually rises.

That's what is happening now. The base-line budget for the
current fiscal year originally called for spending to rise
$130.8 billion. But because it will go up "only" $111
billion, Congress and the White House insist spending was
cut by $19.8 billion. With a projected revenue increase of
$22.2 billion, they claim a total "savings" of $42 billion.


Last year, Congress "reduced the deficit" $2 billion by
dropping the Postal Service subsidy from the official
budget. The subsidy was still paid, only it was done off-
budget. Off-budget programs include direct loans, loan
guarantees, federal insurance and government enterprises.

Of course, real money is involved whether or not a program
is formally in the budget. In 1989, loan defaults and write-
offs were $14.4 billion and insurances losses $67.2 billion,
all picked up by the taxpayer. The total liability of
taxpayers for off-budget programs is almost $6 TRILLION, or
$67,000 for every U.S. household.


With great fanfare and self-congratulation, legislators
established spending ceilings. Then these limits were
quietly ignored.

The original Gramm-Rudman deficit reduction law of 1985
called for gradually  declining deficits. The first ceiling,
for 1986, was topped by $49.3 billion. In 1987 the law was
changed, and the deficit was supposed to have dwindled to
$100 billion in 1990. It was $220 billion. Now Washington
projects declining deficits in 1993 and 1994. Good Luck...!


In 1983, Congress approved $8 billion to build a space
station. By 1987 the price was $12 billion. Now it's $36
billion. Agriculture Department economists said the 1985
farm bill would cost $54 billion. A month later, after the
bill was passed, the estimate was upped to $85 billion.

"There's a generic pattern ," says Congressional staffer
Frank Gregorsky. "Once the legislation is passed, once the
various clients are mobilized, once the bureaucracy is
engaged, once the contractors start marking up-expenditures
overshoot the promised levels." Spenders get their foot in
the door by underestimating the costs of new programs.


In recent years, emergency appropriation bills have become
vehicles for pork-barrel spending.

Last year President Bush asked for "dire emergency"
appropriation to pay for flood relief in the South and aid
to Panama. Congress tacked on another $1.4 billion-including
$3 million for a convention center in Washington, D.C. $5.8
million for a Franklin Roosevelt memorial and $750,000
toward a ferryboat for American Samoa.


A clever way to increase a discretionary program is to
switch funds into it from an entitlement program, which has
no ceiling and thus requires no new appropriation.

"A classic abuse of transfer authority," note budget experts
John Cogan and Tim Muris, was the shift of food-stamps into
the Agriculture Department's extension service. The
Agriculture Stabilization and Conservation Service (ASCS)
supposedly suffered a cut of $300 million in real spending
between 1981 and 1989. Actually, funds were transferred from
the Commodity Credit Corporation, which pays for farm price
supports. ASCS spending actually ROSE by one third.


Last year alone, Sen. Dale Bumpers (D., Ark.) says an
appropriations committee got 2800 requests from other
Senators to designate funds for projects in their home
states. During the 1990 budget "crisis", Rep. Walker pointed
out ten research projects that were sneaked into the Energy
Department's budget and deserved cutting. One allocated $4.8
million to a technology center at Indiana State University
in the district of Rep. John Myers (R., Ind.). Funds for it
and the other projects Walker cited were overwhelmingly

In Washington, D.C., where there are no farms, $1 million
was appropriated for the Agriculture Extension Service. Also
approved was $500,000 to restore the boyhood home of
bandleader Lawrence Welk in Strasburg, N.D. This expenditure
was sought by Sen. Quentin Burdick (D., N.D.). It prompted
Rep. Silvio Conte (R., Mass.) to say: "That is right-and a
one, and a two, and a three, and a four, and a $500,000.
What will they do for an encore? Earmark funds to renovate
Guy Lombardo's speedboat? Or restore Artie Shaw's wedding
tuxedo?" Despite Conte's ridicule and criticism by President
Bush, the Welk project was not killed.

Even the defense budget is used for earmarking. Tucked into
the 1991 Pentagon budget was $5 million to build a new
parliament building in the Solomon Islands and $10 million
for a National Drug Intelligence Center that federal
official wanted in Washington. Not surprisingly, the drug
intelligence center will be located in the home state of
Rep. John Murtha (D., Pa.), chairman of the House
Appropriations defense subcommittee.

Political scientist James Payne, an expert on government
spending, measured the ratio of those witnesses at
Congressional hearings who testified for spending programs
to those who testified against. His finding: pro-spenders
outnumber opponents by 145 to one. Payne also found that
roughly half the pro-spending witnesses are federal
administrators and another ten percent are state and local
officials. It's only human nature that they'd have kind
words for their own programs and ask for more money.

When will the spending binge cease? Not until taxpayers rise
up. THIS MEANS YOU!!! "Congress is going to go on spending
until the public stops them," laments Walker. "Politicians
respond to special-interest groups," says Penny. "They've
been forgetting there's a general interest group-taxpayers."
It's time for taxpayers to remind them.


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