Original URL: http://www.nationalreview.com/moore/moore053003.asp

Sunset Spending, Not the Tax Cuts
If lawmakers are really serious about eliminating the deficit . . .
National Review Online
May 30, 2003
Stephen Moore

President Bush has now signed into law his $350 billion investor/worker tax cut. This was an
unexpectedly decisive victory for Bush and for pro-growth economic policy.

But as with most gifts from Washington, this tax relief comes with a catch. The
income, capital-gains, and dividend tax reductions expire in 2008. So we get a tax
cut for six years and then ... poof, it disappears and we go back to the pre-existing
tax code. The same is true of the repeal of the death tax that was enacted in 2001.
The death tax is eliminated in 2010, but then in 2011 it magically comes back to life
again.

Congress calls this “sunsetting.” We now make tax changes in Washington that are
only temporary. This, of course, insanely complicates the tax code and makes
long-term tax planning a near impossibility. How can anyone plan an estate if no
one knows whether or not there will be a death tax after 2011. A sound tax system
is one that is stable and where the rules aren’t rewritten more frequently than NBA
teams fire their head coaches. Figuring out the tax code is now like playing a game
of Monopoly — the rules change every time you pass GO.

Instead of sunsetting tax cuts — if lawmakers are really serious about eliminating
the budget deficit — Congress should sunset government-spending programs.

There are now several thousand agencies in Washington with annual budgets of
more than $5 million. In the last three years we have sunset not a single one. Many
programs date back to the Franklin D. Roosevelt era and have no useful function.
We still have, for example, a wool and mohair subsidy that dates back to World
War I. The purpose of the program was to subsidize wool for the making of
military uniforms. Guess what? We haven’t used wool in uniforms in at least twenty
years, but we still give these well-to-do goat herders millions of dollars every year
in taxpayer dollars.

Congress scandalously and quietly voted to increase the national debt ceiling by
another $1,000,000,000,000 (that’s $1 trillion) last week. Worse yet, deficit
spending in 2003 may reach a new post-World War II high. If we were to sunset
obsolete, ineffective, and counterproductive federal agencies, we could balance the
budget in lightning speed.

Do we really need to spend hundreds of millions of dollars on a solar-energy
research, when the past $1 billion we’ve spent hasn’t produced a single kilowatt of
electricity? Do we really need to be spending $300 million a year on bilingual
education, when all the research shows that foreign-language classes stunt the
learning of English by immigrant children? Do we need to be providing free Viagra
to Medicaid patients?

Wait, there’s more. Do we really need 15 different agencies to fund job-training
programs? Should we be giving the Pentagon a $50 billion raise this year when the
federal accounting office tells us the department cannot even account for hundreds
of millions of dollars that disappeared? Why do we give Amtrak nearly $1 billion a
year in taxpayer handouts, when its financial performance deteriorates every year
and its share of the transportation market continually declines?

Here’s the budget reform that’s needed: All federal programs should be sunset
every five years. We should then review the financial performance of the agencies
that receive the $2.2 trillion that Uncle Sam doles out each year.

We could then take this a step further. Congressman Pat Toomey of Pennsylvania has suggested
common-sense legislation that would not allow a spending increase for any federal agency that cannot
pass a basic audit. It turns out that hundreds of agencies receiving billions of dollars cannot pass the kind
of audit that every business must undergo each year. It turns out, we have a multitude of Enron-like
problems right in the heart of Washington, D.C.

In 1995 the new Republican majority in Congress proposed the elimination of 200 programs that no
longer serve a useful function. They ranged from the shark-research program at the Department of
Commerce to the Legal Services Corp. We called these programs Washington’s “living dead.” The Cato
Institute reports that nearly ten years later, you can count on two hands the number that have actually
been terminated. Like the Orkin pest-control man, a sunset provision would allow us to actually kill these
pesky programs dead.