Republicans should realize that size does matter

Posted: Jan 30, 2006 12:05 AM

A breezy new little book called "Size Matters: How Big Government Puts the Squeeze on America's Families, Finances and Freedom," by Joel Miller provides a great snapshot of what Americans should have in mind in the midst of the current wave of scandals in Washington and calls for lobbying reform.

The book is filled with anecdotes showing, clearly and simply, the inverse relationship in runaway growth in laws, regulations, and taxes _ allegedly passed for our benefit _ and the ability of businesses to grow and provide new and affordable products. Or in the ability of Americans to afford core necessities such as buying a home or saving for retirement.

Particularly timely, given the current environment in Washington, is Miller's discussion about the Sarbanes-Oxley Act of 2002, passed and signed into law in the wake of the Enron and WorldCom scandals.

Sarbanes-Oxley was another case in point that it is inconceivable to politicians that free people, when left alone, can simply learn from their mistakes. Those who commit crimes go to jail, and the rest of us, businesses and consumers, can read about what happened and avoid making similar mistakes (e.g., don't put your life savings into one stock). Change and improvement can take place cheaply and efficiently.

But, under such a scenario, how can our senator or congressman be a hero? No, they must pass new laws to demonstrate that they are indeed manning the ramparts, ready to deliver new solutions for making a better world.

Of course, this better world somehow always winds up with government even bigger than it was before, with new laws, regulations, and costs.

Miller points out that Sarbanes-Oxley will cost large firms about $5 million on average in new compliance costs, with auditing costs going up around 50 percent. Small firms are seeing their auditing costs doubling and tripling.

Furthermore, as result of this law, private firms are having second thoughts about going public and having to submit to the regulatory nightmare. As result of staying out of the capital markets, they forego new growth opportunities, which translates, for us simple folks, into jobs.

Sarbanes-Oxley put new criminal offenses on the books, adding to the four thousand that are already encoded. The total number of federal crimes enumerated in our Constitution, we learn in this little book, is a grand total of three.

Bottom line: One American does something wrong and the rest of us pay the price forever. That is, all of us except the politicians who have even larger fiefdoms to oversee and lawyers and accountants who have more laws requiring compliance and opening the door for more litigation.

Miller quotes former Senator Phil Gramm at the time Sarbanes-Oxley passed saying, "In the environment we're in, virtually anything could have passed the Congress."

Do you get the feeling we're getting ready for more of the same?

After reading the statistics Miller quotes, any sane person will click off the next self-righteous political spiel about lobbying reform. In the 1920's there were 400 lobbying organizations in Washington. By the 1990's there were 10,000. Today, 35,000 registered lobbyists roam the streets and halls of Washington _ about 65 for every senator and congressman.

Let's not forget that a good chunk, and among the most lucratively compensated, of this lobbying corps are ex-senators and congressmen. Last time I checked, I found that around 40 percent of members of Congress never return home; many set up shop in the nation's capital to rake in the big bucks playing off the contacts they have and their intimate knowledge of the town.

Our problem is the size and scope of government. Period. New laws about who can talk to whom and when and who can buy whom lunch are a joke. They're cosmetics that simply redirect behavior and change absolutely nothing.

According to the latest Harris polling, Americans are indeed dubious that changing lobbying laws are going to make any difference. About 75 percent respond that new laws won't make any difference. Eighty-six percent think the type of behavior to which lobbyist Jack Abramoff pleaded guilty typifies Washington lobbying behavior.

What are the political implications here?

Republicans should pay close attention. According to investment advisor Don Luskin, a Wall Street Journal/NBC poll done last December polling voter preference for which party should control Congress now shows a stronger preference for Democrats (46 percent prefer Democrats; 38 percent prefer Republicans) than the same poll, taken in October, 1994, before the Republicans wrestled control of Congress away from Democrats, that showed 44 percent favored Republicans and 38 percent favored Democrats.

I think Republicans retain an advantage in that there are at least some who want to cut back government. Size does indeed matter and Americans should settle for no less than change that is real and that is substantial.