Government privatization: There’s budget gold in them bills

Scott Klug, clean cut and earnest, used to be a reporter for KING-TV in Seattle. He liked to investigate politicians. You would not have suspected that he would wind up in Congress himself one day, but that is what happened. Having returned home to Madison, Wisconsin, Klug got elected as a Republican to the House of Representatives. Now in Washington, D.C.–still clean cut and earnest–he focuses a lot on cutting costs and privatizing government programs. And he is making some progress.

The Republican House majority, including Klug and his Washington State colleagues, deserves credit for reducing spending growth and making a balanced budget by 2002 a realistic goal. It wouldn’t have been possible without the Republicans’ sometimes stormy insistence, and if they lose power this fall, that goal surely will erode. But they got in political trouble when their cuts hit some highly visible services with broad constituencies. Everybody wants Congress to combat “waste, fraud and abuse,” but one voter’s idea of waste is another’s idea of a vital service.

Similarly, almost everybody would like a tax cut, as Republicans propose. It is, or ought to be, common knowledge that when federal, state and local taxes are combined, the American family is more heavily taxed than ever before. But, how do you pay for a broad cut? There will be a supply side boost to revenues when marginal tax rates are cut, but it will cover only about a quarter of the tab.

We also clearly need greater efficiencies in government. Klug believes that government monopolies, lacking the discipline of the free market, raise costs directly and–by not paying taxes–indirectly, too. Privatization, while not a panacea, can lower government costs and still improve services.

Privatization was a subject of fashionable discussion in the 1980s, but few actual conversions were undertaken. Selling off Conrail, the government-subsidized freight railroad that had been picked up when Penn Central, New York Central and several other lines failed, was one of the stellar successes. That privatization was led by Ronald Reagan’s Secretary of Transportation, Elizabeth Dole, and turned a multi-billion dollar public revenue eater into a multi-billion dollar tax contributor. (The Dole campaign should make more of this story.)

Klug is now among those promoting the current proposal to privatize Amtrak passenger service. Klug’s efforts led Speaker Gringrich last year to appoint him head of a House privatization task force that includes, among others, Rep. Jennifer Dunn of Bellevue, Washington. An initial effort was the abolition, privatization or partial privatization of some nine programs within the House of Representatives itself–from beauty and barber shops to food services and recording studios. As Gingrich recently noted on Meet the Press, the old House still had ice delivered twice daily to each Memberís office–80 years after invention of the refrigerator. Most of these in-House reforms are now completed, with expected ultimate savings to taxpayers of $44 million, a good example for the rest of government.

The Clinton Administration has made a few modest moves toward privatization, of course, such as agreeing with Congress to sell the Naval Petroleum Reserves (at an anticipated price of $1.6 billion). But Klug is skeptical of any serious or long term Clinton commitment. Dole is much more interested. Whoever is president, however, Klug has a long list of privatization targets. They involve sale or lease of assets, contracting out of services, functional conversion to the private sector and lifting legal barriers to privatization. For example:

• Klug and his task force want to contract out the debt collection activities of the IRS. Citing a General Accounting Office report and a survey by the American Collectors Association, Klug foresees savings of over $10 billion.
• $80 million could be saved by privatizing many activities of the Government Printing Office.
• Money to build badly needed new prisons could be found by turning some operations over to private companies, which experience shows can construct and manage prisons for 20 % less than the government.
• Contracting out government commercial-style services could save “as much as $9 billion a year.” Klug cites as examples the Department of Defense and the Veteranís Administration, which compete with the private sector in grocery distribution.
  Privatizing management of federal loan programs could save $2 billion annually.
• Some of the GOP proposals Klug is introducing will require more study and debate. For instance, he wants to move, though slowly, to sell off the electric power projects built in the ’30s and 40s. This would have been politically unimaginable several decades ago, but, as shown in a report this month by a bi-partisan task force of governors from the four Northwest states, even the huge and venerable Bonneville Power Administration (BPA) is coming under increased consideration for privatization, at least for its power transmission system. The power industry is moving into greater competition these days and a co-existent government monopoly makes less and less sense. Klug wisely suggests privatization ìfrom least to most complexîpower marketing administrations, starting with Southeastern Power Administration, and reviewing Western Area Power Administration and BPA last.
• Perhaps it is remarkable that anyone is even able to talk about such matters these days. Barry Goldwater’s proposal in 1964 to sell the Tennessee Valley Authority (TVA) helped defeat him. But few attack Klug in 1996 for wanting to bring at least the non-power programs of TVA into the private, tax-paying sector, at a savings of $140 million a year, and he bravely asks why regulated private ownership of TVA power would not also make sense for citizen rate-payers in today’s environment–as well as earning $28 billion for the federal treasury.
• There, indeed, are few sacred cows in the Wisconsin representative’s budget pasture. He even dares to mention the Postal Service. Barry Goldwater himself didn’t raise such an issue. If he had, it would have been thought a joke. But that was before private overnight mail delivery, faxes and e-mail. Now Klug’s suggestion that the Post Office evolve into an employee-owned corporation doesn’t strike most people as either ridiculous or extreme. More and more, it sounds like common sense.

Gary Trudeau, creator of the comic-strip Doonesbury, is one of your star boomer celebrities, a self-appointed guru of perpetual ’60s cool. It was Trudeau who invented the jaunty Mr. Butts character that mocks the tobacco companies and the politicians who take their contributions. Today Mr. Butts figures haunt only Republican rallies, despite the annoying fact from the National Library on Money and Politics that more than half the tobacco support of congressional candidates from 1980 to 1994 went to Democrats.

Real history, in contrast to cartoon history, has that way of interfering with a good story. In Trudeau’s case, this crusader against the legal vice of tobacco recently felt obliged to write an essay in Time magazine regarding his own past use of illegal narcotics. Were RJR Nabisco sleuths about to expose him? Regardless, his confession is not the mea culpa of a Newt Gingrich or even the denial of a Bill “I didn’t inhale” Clinton. Instead Trudeau manages to say only briefly that he no longer advocates drugs, while telling us at length how much he once enjoyed them and even sold them. He implies that he only quit once he became a parent, not so many years ago. “To summarize,” he writes, “at one time I possessed, consumed and probably distributed marijuana–activities for which I may feel embarrassment but not guilt.”

These “memories of TOKING UP are fondly held,” he coos in capitals. “Finally, I admit that this has not caused me to lose a moment of sleepy except as it has pertained to my career.”

How’s that as a didactic tale for the kids? Tobacco’s bad for you, but dope’s a bit of a kick. Cartoonist, draw thyself.

The Clinton Administration also did not take drugs very seriously for over three years; indeed, until a political attack appeared on the horizon. Then the administration, too, came up with the preposterous attempt to switch the subject to cigarettes. 

In the first three years of the Clinton presidency, Surgeon General Joycelyn Elders proposed looking into legalizing drugs and the Justice Department recommended reducing mandatory sentences for drug crimes. The president slashed the staff of his drug office by 80 percent and reduced interdiction of drugs at the border and eradication efforts overseas. Coast Guard seizures of cocaine fell 45 percent and marijuana, 90 percent. Supply reduction was deemed a waste of time and money.

When a report was produced for the Pentagon by the Institute for Defense Analysis (IDA) suggesting the contrary–that interdiction is a “cost-effective operational strategy for increasing cocaine prices and thereby reducing cocaine use in the United States”–the administration held up dissemination. Only insistence by the Republican dominated House Government Reform and Oversight Committee brought the report to public awareness Las week. The full contents still have not been released. 

It apparently was the administration’s expectation that increased funds for drug treatment would bring about demand reduction. Indeed, The Man From Hope told a group of Miami middle-schoolers last spring that drug use had gone down “every year for the last three years.”

But the hard facts showed the hope was false. The National Household Survey on Drug Abuse for 1995 revealed that drug use among teens rocketed upward 105 percent since 1992. Cocaine use among teens soared 166 percent. Compared to the past, the drugs themselves have become cheap, “pure” and dangerous. That would tend to validate the IDA study. Greater drug supply produces lower prices and wider availability. Lessened drug education, meanwhile, lowers a threshold for initial usage. Drug treatment for addicts, a Clinton priority, is a valuable and humane service, but not much of an answer to expanded drug supply and usage.

The administration tried to wriggle off the bad publicity–and escape the merciless Dole ad showing candidate Clinton in 1992 laughing on MTV that he wished he had inhaled–by pinning the problem on the Bush years. The numbers in that period, however, don’t show anything more than anti-drug efforts and drug usage reaching a plateau. So another spin was tried, that Republicans in Congress are responsible because they have not supported all the treatment funds the president sought. But again, even if true, that argument begs the question.

That question is, what works? The best answer, so far, is an all-fronts struggle of the kind launched in the Reagan years, when drug use was cut in half. 

Regardless of who is elected president, let’s increase drug interdiction and drug eradication, overseas as well as at home. From my service as U.S. representative to the U.N. narcotics agencies in Vienna in the ’80s, I would argue that we should solicit more international cooperation and financial support for those tasks. Let’s also expand assistance for crop substitution ins such countries as Colombia to promote the domestic stability that gives politicians the courage to stand up to narco-traffickers. 

Let’s revise the once useful, but now stale, “Just Say No” educational campaign among youths. yes, we should continue to improve drug treatment for addicts and we should decriminalize medical use. And let’s do more to rebut Hollywood and media figures who glamorize drugs, or, like Trudeau, laugh them off.

As for politicians (or cartoonists), nobody cares what they did as youths. What matters is whether they set an example as adults who have taken the drug issue seriously.