What Exactly Do We Need the Federal Government For?

In the days of the American nanny state in which almost half of the population receives some government benefit, Americans have totally lost grasp of one of the most important principles upon which the nation was founded: individualism. The idea that a citizen should take responsibility for his health care, retirement, or savings in case of unemployment or other emergency is now called “barbaric” and “lacking compassion”. Today, pandering politicians promise to not only preserve unsustainable programs like medicare, medicaid, social security, food stamp programs, and welfare, but to expand them. When confronted with the reality of a $16 trillion debt, another $100 trillion in unfunded liabilities, and a trillion-plus deficit, most Americans bury their heads in the sand and refuse to support any substantial government cuts. Although many Americans theoretically admit that something has to be cut, they are unwilling to give up any programs that directly benefit them. Even the most aggressive of the mainstream Republican plans, like Paul Ryan’s “maverick plan”, only ventures to balance the budget in 26 years. In reality, this “radical” plan doesn’t actually cut a thing. It would only eliminate the future growth of government expenditure. To make matters worse, Ryan’s plan operates under the faulty assumption of untenable and unrealistic growth.

So what can America realistically cut? Liberpublican Presidential Candidate Ron Paul proposed one trillion in cuts in his first year of office. From an economist’s perspective, that is about the only credible plan to hold even a sliver of hope to save America from its crushing debt load. This video explains why a debt default is not just probable, but a certainty, unless drastic cuts are enacted.

But what exactly does Ron Paul’s plan entail? Paul would disseminate almost all of the current federal responsibilities into the hands of the state governments, as the Tenth Amendment to the Constitution expressly dictates. For the majority of Americans who have forgotten, or never learned, what the Tenth Amendment says,

The Powers not Delegated to the United States by the Constitution, nor prohibited to it by the States, are reserved to the States respectively, or the the people

The federal government, in collusion with the Supreme Court, have grossly misinterpreted the Necessary and Proper Clause and the Commerce Clause of the Constitution to usurp almost all of the powers delegated to the states into the federal government’s hands. These infringements have left the states as subservient colonies rather than semi-autonomous entities in cooperation for security and economic prosperity. As Thomas Jefferson said, “The Tenth Amendment is the foundation of the Constitution.”

The point of this slight digression is simply to point out that almost everything Americans have come to rely on the federal government for, can, and used to be the domain of the states. Most people believe that unifying programs like public education and health care into a single entity’s hands, such as the federal government, would create economies of scale. Unfortunately, this economic principle does not apply to government. Instead, massive bureaucracies are created, which operate without any real accountability or oversight. For example, the General Services Administration, which is supposed to keep an eye on government spending, was recently wrapped up in a scandal of wasteful spending of its own, culminating in some GSA employees making music videos about their ability to waste taxpayer money. See this article for a detailed account of modern day government waste.

The truth is that when it comes to government, the best, and really the only efficient way, is to localize. Allowing Washington politicians to oversee the expenditures of other bureaucrats is like allowing bank robbers to guard banks. When government agencies become so large that thousand-dollar expenditures are insignificant and often overlooked, corruption is not just likely, but a certainty. For example, according to the Heritage Foundation, government auditors found that 22 percent of all federal programs have failed to show any signs of success. Eliminating these programs would save $123 billion annually. The auditors also identified $25 billion in annual charges for vacant federal properties. A Government Accountability Office study estimated that 41 percent of government credit card purchases were fraudulent or abusive.(1) The localization and personalization of governance allows for greater scrutiny and the increased probability of small amounts of money being missed. When a federal government can just print more money, or when a few hundred million dollar waste becomes a drop in a massive multi-trillion dollar bucket, corruption and waste will plague and eventually stall the entire economy.

The uniformity of policy for issues like education, health care, and poverty also ignores the practical realities of jurisdictional differences such as geography, demography, income distributions, and cultural customs. All of these factors affect lifestyle, which should have a large impact on policy implementation. Creating a monolithic bureaucratic policy will never serve the best interests of a large group of diverse people such as Americans. Besides, centralizing the authority for these governmental programs in the federal government’s hands is unconstitutional. It removes the freedom of choice from the citizenry. Of course a person can always buy private health insurance, or send his child to private school, but a federal mandate requiring citizens to pay into a retirement fund, pay for public education, or pay into a healthcare fund, removes the citizenry’s ability to opt out of the socialistic system altogether.

The whole point of the United States of America was to have multiple semi-autonomous regions from which citizens could choose to live in order to maximize their freedom. For example, while public education and universal healthcare sound like noble ideas, some citizens may want to live in places where they are not responsible for the education of other people’s children, or the healthcare costs of the uninsured. Some citizens may want a small government and more personal responsibility. If they don’t have that option, then they have been robbed of their freedom. And if that is the case, then the idea of America has been dead for quite some time.

The philosophy of individualism may seem cruel to Americans today, because the majority of Americans do not understand the principles of the Founding Fathers, nor have even read the entirety of the United States Constitution. Constitutionalists (a seemingly rare breed these days), on the other hand, believe  that dependency is the real root of suffering. For example, American Indians and African Americans have not seen their situation improve by becoming slaves of the federal government’s dole, but instead have seen their economic prospects stagnate, and even deteriorate in some cases. When the government gets in the business of fighting poverty and hunger, garaunteeing retirement funds, or taking responsibility for people’s healthcare problems, the result is not the elimination of suffering, poverty, or hunger, but rather the maximization of it.

In an effort to save a small number of people from dying, incredible amounts of resources are bureaucratically wasted with the net result of creating broader dependency in the masses. While food stamps and universal healthcare may save some people from starvation and death initially, these programs sentence a great multiple of others to long term poverty and poor healthcare. That is, until these programs inevitably bankrupt the entire government (as we are witnessing today in Europe and America) and cause a greater degree of suffering for a much larger number of people than would ever have occurred had the government not gotten involved in the first place. Michael Moore and other activists superficially applaud the European health care system for its short-term benefits to the people, but almost without exception they fail to examine the long-term economic consequences.

Government intervention in healthcare is a perfect example of short-term, negative humanitarianism at work. The United States Emergency Medical Treatment Act was passed in 1986, which forces hospitals to treat patients in emergency situations regardless of their ability to pay or citizenship status. A noble endeavor to be sure, but unfortunately one that has not been in the overall best interests of the people. The net result of the legislation is that people refrain from preventative care and instead rush into emergency rooms when problems arise, thereby inflating the costs of medical treatment for paying customers. When patients don’t pay, the costs are passed on down the line to paying customers. As a result, the price of medical care greatly increases, which means that some of the patients who would normally be able to afford medical insurance or health care treatment can not. In effect, health insurance becomes more expensive so more people end up uninsured, which also increases the costs. The legislation has created a snowball effect in which the numbers of paying patients supporting the system continually reduces, making the costs greater and less affordable, which further reduces the number of patients able to pay, which increases the costs, and so on.

There are of course other elements at work here, but this one mandate has exponentially increased the costs and is partly responsible for America’s status as the largest healthcare spender in the world. An ignominious title to be sure, considering that Americans don’t even have universal coverage to show for it. The American medical system is basically a half-socialist, half-capitalist system which ends up with the worst aspects of both models, and few of the benefits. To make matters worse, America is witnessing a health crisis of epic proportions as the population gets older, fatter, and more sedentary. Health care costs have already begun to see significant growth, and that trend will only be exacerbated in the future.

Military expenditure is another great example of federal governance gone awry. Today, the military is consolidated in the federal government’s hands, but this was not the model on which the United States was founded. In the early days of The United States of America, the states had their own militias. These were formed in part to protect against foreign invaders and also to protect the states against the federal government. Flash forward to present day, and America now has national guard units. The title tells the entire story. They are not called state militias or state guards, but national guard units, thus defeating half of the purpose. As a result of the complete federalization of the military, the US now spends more on its military than the next 14 largest military spenders combined. If a military is truly for defensive purposes, as America’s military was constitutionally intended to be, then how can such over-expenditure be explained? One would think that America should be able to outperform a nation like China with the same budget, given America’s historical productivity, ingenuity, and economic success. What does it say about the American people or our military management that we need to spend more than the next 14 largest spenders combined to maintain a military advantage?

Without wasteful defense contracts and cronyism, America could reduce this cost by at least 80%. For example, according to a 2004 United States Government Accountability Office (GAO) report, the Department of Defense (DOD) purchased $100 million worth of plane tickets it never used. In fact, the DOD even qualified for refunds on many of these tickets but never claimed them.(2) Another GAO report revealed that military personnel spent $100,000 on cruises, prostitutes, gambling, and concert tickets. At one point, the Pentagon actually paid $998,798 to ship two nineteen-cent washers. It also paid $455,009 to ship three machine screws costing $1.31 each.(3) It would take a whole book to list all of the cases of fraud, theft, and waste that riddle the Defense Department budget. The real problem is that these extreme cases are just those that have been uncovered. Who knows what the real waste of defense spending is per year? This level of abuse could only be perpetrated by a massive, unchecked federal bureaucracy.

It is not just federal socialist programs that are the problem, but also protectionist policies like drug laws, gambling regulations, and airport security. Let’s take drug regulation for example. Since Nixon declared war on drugs in 1972, the cost to the American taxpayer is over $2 trillion. And what have been its benefits? The United States now has the highest incarceration rate in the world, and that is directly attributable to the war on drugs. According to the Bureau of Justice Statistics’ “State Court Sentencing of Convicted Felons, 2004” report, of the 1,078,920 people convicted of felonies in the state courts that year, 362,850 were drug offenses. More than 700,000 people are arrested for marijuana possession every year, which is over 50 percent of all drug-related arrests.

The most disgusting aspect of the drug war is that we have proof that decriminalization is the most effective way to deal with drug use. For example, while drugs are technically illegal in the Netherlands due to international treaties, the Dutch do not prosecute for the consumption or possession of small amounts of drugs, and their crime and drug consumption rates are significantly lower than those in America.

In 2001, Portugal decriminalized all drugs and, as a result, dramatically reduced its prison population and cut its addict count in half; what’s more, the nation’s rate of HIV infections from drug use fell 90 percent.

Switzerland’s policy of offering heroin addicts substitute drugs such as methadone and buprenorphine has led to a significant reduction in their addict counts. Given these facts, American politicians who push to keep drugs illegal are either completely ignorant or making the false claim that Americans can’t handle deciding what to put in their bodies even though many other people around the world can.

If the American people want to have any hope of a prosperous economic future, they will have to ask themselves some hard questions. Starting with, what exactly do we need the federal government for? Clearly there must be a federal government to provide mutual defense and to regulate trade disputes, but do we need federal funding for schools, or federal mandates on educational parameters? Do we need federal welfare, food stamps, or a federal retirement plan? Could not the states build and maintain their own highways? And what would prevent each state from connecting those highways to other states? Should the states be allowed to determine their own drinking age without the threat of federal funds being withdrawn? Do we need a federal government playing world policeman and creating terrorist threats by intervening in the Middle East and supporting a hostile, nuclear-armed apartheid state like Israel? Do we need a Federal Reserve debasing the people’s currency, so it can finance “too big to fail banks” and unconstitutional wars? Do we need an IRS to harass citizens and violate their privacy by forcefully collecting taxes in an effort to finance all of these unconstitutional activities?

Beyond returning their constitutional rights back to the states, how much government do we really need at all?  The Founding Fathers obviously believed in the most limited government possible. Why not put more power in the hands of the people, as was done in the early days of the republic? The Tenth Amendment says the power not relegated to the federal government is reserved for states or the people.

Let’s take one example of a seemingly insignificant local government intrusion that most Americans believe is absolutely necessary: Low speed limits. Although most Americans think that speed traps and policemen enforcing speed limits are necessary to make people safer, the Federal Highway Administration conducted a study in 1998 called the “Synthesis of Safety Research Related to Speed and Speed Limits,” which found that increasing the speed limits on low- to moderate-speed roads had little to no effect on safety or the rate of crashes. The autobahn in Germany is just as safe as American highways, yet the Germans are allowed to maintain whatever speed they feel is safe. Even if one were to assume that lowering the speed limit does make the roads safer, is the danger from “speeding” enough to justify the loss in productivity associated with forcing hundreds of millions of people to spend extra hours on the roads every year due to lower speed limits than should be considered reasonable? Governments should be asking what the fastest possible speed is that they can let people drive without posing excessive risk to others—not what the slowest possible speed is that people will tolerate. Without ridiculous speed limits, police could focus on protecting people and property rather than wasting time and money on speed traps and traffic courts.

This begs the question, what can be privatized? Could the private sector educate people, and perhaps more efficiently? Do we really want a standardized education system that teaches people to memorize and conform? Could private individuals get together to build a national highway and then charge a toll to use it? Could airlines be responsible for their own security? Congressman Ron Paul certainly thinks so, and to corroborate his opinion, private security has already been tested in airports and has shown to be far more professional, efficient, and effective than the TSA. And finally, do we need the government to tell us what to put in our bodies or to criminalize behavior that leaves no victim?

1) “Governmentwide Purchase Cards,” U.S. Government Accountability Office, http://www.gao.gov/new.items/d08333.pdf. 61 “Voting rights in the United States,” Wikipedia,

2) “DOD Travel Cards,” U.S. Government Accountability Office, http://www.gao.gov/new.items/d04398.pdf.

3) “Pentagon Paid $998,798 to Ship Two 19-Cent Washers (Update3),” Bloomberg, http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aY5OQ5xv9HR8.