A streak that has to end

Posted: May 19, 2006 12:05 PM
Baseball fans realize this may be the year. The Atlanta Braves have won an unprecedented 14 straight division titles, but are off to a slow start in 2006. This may be the year the inevitable happens and the Braves fail to finish first. After all, they can’t go on winning forever.

Conservatives know the same thing is true about the growth of government.

Since the Depression, we’ve seen a steady increase in the size and scope of governments at all levels, from the federal Department of Education through state welfare agencies and local school systems. It’s easy to assume governments will just go on growing, forever and ever.

But this decades-long trend, like the Braves’ streak, has to end eventually. We simply can’t afford the long-term liabilities posed by all the government employees we’ve already got -- a fact that new rules from the Government Accounting Standards board will soon make clear. Those rules will force governments to explain exactly how much they’ve promised to pay to retirees in medical benefits.

Because of that, “Taxpayers will soon get a surprise bill that could exceed $1 trillion,” USA Today reported on May 18. State and local pensions alone, the paper reports, have an unfunded liability of about $500 billion. “Taxpayers will revolt when they realize the enormous cost of this,” Minnesota state auditor Pat Anderson told the paper.

That’s what Lewis M. Andrews is counting on.

Andrews is executive director of the Yankee Institute, a conservative think tank in Hartford, Conn. He predicts a second civil war is coming, one between taxpayers and government workers (both active and retired). “Taxpayers are the odds-on favorite to win,” he writes, because “a system that protects government-funded jobs from efficient restructuring, compensating public employees far more generously than those in the private sector, is over time economically unsustainable.” In other words, at some point, we’ll simply refuse to pay for all the government we’re getting.

This won’t happen right away. Just this year, the federal government hired some 6,000 extra workers to help enroll retirees in Medicare Part D, the prescription-drug plan that will cost taxpayers billions of dollars. The era of big government, clearly, is far from over.

Still, the shock of a trillion-dollar price tag may be just what’s needed to make things happen. “The longer state and municipal governments delay the elimination of inefficient and wasteful programs,” Andrews writes, the less money they’ll have “to provide incentives for early retirement and to gently economize through the gradual attrition of older workers.”

Author Charles Murray advocates a more radical approach. In his new book, In Our Hands, he lays out a simple way to replace today’s bloated welfare state. Murray proposes replacing virtually every federal social program with a $10,000 annual cash payment to every adult.

This would have two beneficial effects.

First, we could eliminate wasteful and duplicative programs (the General Accounting Office estimates there are 50 programs to help the homeless, 23 programs for housing aid, 26 programs for food and nutrition and 44 job-training programs, all run by the federal government), which would save taxpayers money immediately. Second, we could lay off hundreds of thousands of unnecessary government employees, eliminating their pensions and thus saving taxpayers money in the long term.

Poorer Americans would actually benefit, Murray says, because instead of depending on various government offices for payments, they’d know exactly how much money they’d get each year. This might encourage marriage in low-income communities and help rebuild civil society. It would at least allow the government to replace the threatened Social Security and Medicare programs with a system that’s sustainable for the long-term.

Andrews predicts that employees who continue to act as if today’s public employment system can survive without reform “will one day find themselves facing the abrupt elimination of positions and programs, drastic across-the-board budget cuts and frozen cost-of-living adjustments in their retirement plans.”

That may seem extreme, but one things’s for certain: Like the Braves’ streak, the current government employment system can’t continue indefinitely. As economist Herb Stein said, “If something can’t go on forever, it will stop.” It’s simply a matter of when and how.