In 1982, President Ronald Reagan initiated a two-year effort to ask thousands of businesses and associations to help his administration root out inefficiencies in the federal government. This advice was formally funneled into 26 task force reports. I served as donated staff on a couple of the projects taken on by the insurance industry.  Thousands of recommendations (actually 2,478) from the President’s Private Sector Survey on Cost Control – also known as the “Grace Commission” for its leader, businessman Peter J. Grace – became a 656-page blueprint for saving the nation an estimated $424 billion of federal government expense over three years.

For perspective, the federal budget in 1984 was $666 billion and the feds actually spent just under $852 billion that year. The savings and loan “crisis” later that decade prompted interventions that, by 2004, cost the nation’s taxpayers more than $160 billion in direct costs and associated litigation. This is approximately eight times what implementing the Grace Commission recommendations would have cost us, had we not so quickly ignored it.

Another Grace Commission conclusion from 30 years ago should sound familiar:

With two-thirds of everyone’s personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the federal debt and by federal government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services [that] taxpayers expect from their government.

Of course, in the meantime, what taxpayers have largely come to expect from their federal government is transfer payments.

Coincidentally, when Ross Perot ran for president in 1992, he and his son had just bought 20 parcels of land at ten cents on the dollar from the Resolution Trust Corp. to launch another billion-dollar family enterprise. The agency was set up to, among other things, liquidate the land holdings of bankrupt savings and loans institutions that didn’t survive the failure of the United States to act on the Grace Commission solutions.

I bring up Ross Perot because a student at the Annenberg School for Communications at the University of Pennsylvania eventually analyzed the full seven and a half hours of campaign infomercials run by the ’92 Perot campaign and came up with a startling conclusion.  Less than twelve minutes out of all those hours of earnest chat by Mr. Perot actually proposed solutions to some of the problems he catalogued– the “great sucking sound” created by NAFTA and so forth.  (Ross Perot, Jr. now controls the largest “inland port” and most lucrative free trade zone in the nation built on the land formerly owned by the S&Ls.)

Popular authors and commentators John Stossel, P.J O’Rourke, Steve Moore of the Wall Street Journal and most articulate members of Congress can impress us with stories of titantic battles in Washington in recent years among the nation’s federal lawmakers over sums of money that are equivalent to spending by the federal government for one work day. One three-day fight was over an amount sufficient to run the federal government for seven hours.

This is political theater, and has nothing to do with solutions. In fact, watching the recent drama in the nation’s capital with an eye fixed on any move toward actually making some progress on very serious management failures by our lawmakers is a huge disappointment.  To say nothing about the president of the United States not even bothering to cast his usual “present” vote.

With serious debate this week about whether our nation’s managers can constitutionally pay out transfer payments before making payments on U.S. Treasury obligations owed to bondholders, it is time to examine ways to get around the lack of leadership in Washington.

My solution is to devolve leadership over our affairs back to the states as much as possible, because that is the only place right now where conflicts can be resolved and solutions are being proposed and implemented.  It may be too late, since the average state has 50 agencies directly funded by Washington, but it is nevertheless worth exploring, and some really smart people are working on it.

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