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IRS Scandal: Tip Of The Iceberg

[preamble]Excellent article – government for the government by the government and of the government – see something missing? “the people”……. [backtopost]

This story appears in the June 24, 2013 issue of Forbes.

David Malpass David Malpass, Contributor

The U.S. is shuddering at the disclosures of the Internal Revenue Service’s bias against proponents of limited government and of positions on Israel that differ from the Administration’s. This is the tip of the iceberg. Many parts of government have little accountability and operate from motives that go beyond their legal framework and the public purpose.

Unless there is a continuous new process of restraint the government will expand to undertake all programs it considers useful–with no regard for cost or compliance with the principle of limited federal government. Once established, these programs have strong defenders among those who have prospered from them, making downsizing hard. The battle is almost never about the taxpayer.

This has brought us to a constitutional crisis. The 16th Amendment gave the federal government unlimited new power to borrow against future incomes, even for current spending. To make government work for the people requires a vigilant enforcement of the constitutional limits on federal activities, including the Tenth Amendment’s explicit restraint. This isn’t being enforced. The invention of “mandatory appropriations” and entitlements allows government to grow on autopilot without political accountability or votes. And the Federal Reserve, operating outside the three branches of government, has asserted unlimited power to borrow, purchase assets, hire and make expenditures through its new consumer protection agency.

One of the practical difficulties in restraining government is its instinct for self-preservation, the tendency to accentuate the problems that arise from any limits. The people’s goal is to restrain government in the most efficient way, whereas the government’s tendency is often the opposite, as the sequester showed–cutting critical services, such as fuel for aircraft carriers or the number of air traffic controllers on routes frequented by politicians and their fundraisers.

Government spending restraint is just one of the challenges in our constitutional requirement to achieve limited federal government. My May 6 column described some of the inherent corruption in unfocused government, including the European extremes of government officials with Swiss bank accounts and the conflicts of interest among the U.S. government and the entities that it regulates and subsidizes. An April New York Times article documented 28 former staffers of the Senate Finance Committee chairman who are now employed by companies seeking legislative favors related to prospective tax legislation. The result is a circular process in which the legislature conveys tax benefits to companies that pay the appropriate conduits, who in turn contribute to helpful legislators.

International financial institutions–which occupy the choicest office space in Washington, London, Paris and Geneva–use the U.S. credit umbrella to borrow billions per year, in turn lending the money at low rates to favored governments and pro-government organizations. A portion of the funds finds its way through the network of law firms, lobbyists, nonprofits and consultants to the politicians who fund the loans.

The list is endless: hundreds of independent federal agencies with potential conflicts of interest; the revolving door from senior government positions to highly remunerated posts with for-profits or nonprofits; overly generous consulting contracts for departing government employees; horrifyingly mismanaged federal housing projects; repeated fiascoes in the government’s alternative energy loans, from the Carter Administration to the present.

Many believe that a financial crisis will force spending limits. But those probably won’t come until it’s too late to correct the system. The solution is to rebuild the legal restraints on federal activities using the Tenth Amendment and a rewritten debt limit that forces politicians to make spending choices across both discretionary and entitlement accounts.