Once Obamacare is repealed by the House, the attention of the 112th Congress will turn to the question of where government spending can be cut for the largest immediate impact. Several observers have weighed in with their thoughts, including Dick Armey and Matt Kibbe of FreedomWorks, who have an article in today’s online Wall Street Journal. After reviewing the fiscal hot water the republic is already in, and discussing attempts to re-set government spending back to “base lines” such as 2009, 2008, or 2007, the authors get down to business.
First on their list is liquidating Fannie Mae and Freddie Mac, the government-backed mortgage behemoths which greatly assisted in blowing up the housing bubble in the early 2000s. Those agencies have already cost taxpayers at least $127 billion, and the Congressional Budget Office estimates that total costs could approach $400 billion. Authors Armey and Kibbe demand carving up their carcasses and selling them to the highest bidder in the private mortgage business.
Secondly, thy say eliminating ethanol subsidies would save many billions, and starving “green energy” handouts would save even more. Next, cutting back on the number of government employees would have an immediate ameliorative impact on the budget.
Their next targets would be the Departments of Commerce, and Housing and Urban Development, which would save $550 billion over the next decade in direct costs, to say nothing of the elimination of the need for private businesses to follow and file reports indicating their compliance with the myriad rules, guidelines and regulations that pour out of these unconstitutional fourth-branch agencies. Stuffing farm subsidies would save $290 billion, and cutting NASA in half would save another $90 billion. Their list goes on:
- Ending urban mass transit grants—savings: $52 billion
- Privatizing air traffic control—savings: $38 billion
- Selling off Amtrak and ending rail subsidies—savings: $31 billion
- Reforming federal worker retirement—savings: $18 billion
- Retiring Americorps—savings: $10 billion
- Closing the Small Business Administration—savings: $14 billion
They support Defense Secretary Robert Gates’ modest proposal for saving $145 billion over the next five years. And they support Rep. Paul Ryan’s “Roadmap for America’s Future” as a viable plan to begin to rein in Social Security, Medicare, and Medicaid. The authors proudly announce that “”We’ve identified almost $3 trillion in real spending costs over a decade, and have only scratched the surface.”
Several other agencies just begging for major surgery or complete asphyxiation weren’t even mentioned: The Department of Education, the Environmental Protection Agency, and the U.S. Postal Service.
Nearly a year ago U.S. Postmaster General John Potter recommended eliminating Saturday deliveries in order to shore up the agency’s finances. At the time, the future looked bleak indeed: losses in 2009 approached $7 billion, and “could reach $238 billion over the next decade if nothing is done.” Well, nothing was done, the postal service continues to run huge deficits now in excess of $8 billion, and Potter retired, leaving the mess in the hands of Patrick Donahoe, the 73rd Postmaster General of the United States.
Already having tapped out its $15 billion line of credit at the Federal Financing Bank, Donahoe faces a $5.5 billion bill which is due and payable at the end of the year for the health insurance benefits on its nearly 600,000 employees. With expenses exceeding revenues by more than $8 billion annually, Donahoe busies himself with rearranging the deck chairs: “We are looking for every opportunity to control costs and raise revenue.” One of the first rules he implemented was to have the postal clerks stop asking the customers if they need more stamps, or if they want their package sent express or certified.
It’s like, “Do you want fries with that?” We ended up asking the customers a lot of the same questions…so we told people, “Stop doing that.”
Another change on Donahoe’s watch is being implemented now: postal clerks now stagger their lunch breaks so they don’t coincide with those of their customers. He noted, “Making sure you get the staffing right is critical.”
But what about the big things, such as generating additional revenues, creating new products, determining customer needs and finding ways to fill them, how to fend off FedEx and UPS, and what to do about electronic mail which continues to eviscerate their business? Nothing from Donahoe, except that he’s “hoping for help from Congress and the White House.” In a moment of unintended clarity, he said what he really needs to do is “get out and sell this business. It’s critical.”
Take a brief look at Wal-Mart, the only private company larger than the post office. It owns 8,300 stores, nearly half of them in different countries. Its revenues in 2010 exceeded $500 billion, which is greater than the GDP of all but 18 of the world’s 181 countries. Economist Walter Williams asked how is this possible? He said,
Millions of people voluntarily enter their stores and part with their money in exchange for Wal-Mart’s products and services. In order for that to happen, Wal-Mart…must please people.
If Wal-Mart…were to deliver the same low-quality services [as the post office] they would be out of business.
The difference is elegant simplicity itself: the postal service and other government agencies get their pay, their pay raises and their perks whether their customers are satisfied or not. These agencies are not motivated by profit but have relied, and continue to rely, on more help from Washington to cover their shorts.
Although the 112th Congress has so far remained eerily quiet about cutting off such an obvious example of government waste and inefficiency as the post office, the agency does have the advantage of being very present in the lives of almost every taxpayer. Because of its monopoly on first-class mail, the post office is the only service its customers may use. Despite its high profile in the community, often served by competent and friendly clerks, handlers, sorters and drivers, the postal service still isn’t able to make a buck. What a great place for Congress to start in its quest to reduce wasteful government spending. Repeal the monopoly, and “sell the business,” as inadvertently suggested by Donahoe. Then taxpayers will know they elected a true bill to Congress this time.