Too Big to Govern

Watching the Presidential and Vice Presidential debates over the last few weeks has reminded me of my issues with our current political system.  I would like to see a candidate urge his or her peers to get "our own house in order" before debating whether we should cut or raise taxes, whether defense spending is appropriate or not, and whether entitlement programs need to be overhauled or not.  After years of tracking regulatory change, and reading through the Federal Register on a daily basis (for those whom are unfamiliar, it is "the Daily Journal of the United States Government"), I have come to one undeniable conclusion - our government is too big to govern itself.   I think most Americans would be shocked if they knew the true size and expanse of our federal government.

I want to see today's politicians attempt to address the excess, waste and unnecessary redundancy that blatantly exists in the US government today.  Over this article, I will: (i) highlight examples of the superfluous bureaucracy and size of our government; (ii) recommend an alternative approach; and (iii) suggest we scale back on partisan political debate of these topics until there has been sufficient time to measure the success of these initiatives.

Size of the US Government
Did you know that there are over 225 unique government entities and agencies (at least that I am aware of)?  Some of these agencies will be familiar by name or by acronym - for example, FDA (Food and Drug Administration), ATF (Alcohol, Tobacco, Firearms and Explosives Bureau), NIH (National Institute of Health), EPA (Environmental Protection Agency), FEMA (Federal Emergency Management Agency) - to name a few.  But how many of you are familiar with some of these:  Surface Mining Reclamation and Enforcement Office, Agency for International Development, Energy Efficiency and Renewable Energy Office - again just to name a few.  Let me begin by clearly stating that I am NOT suggesting that these agencies aren't important or serve a valid purpose.  I simply want to highlight the level of redundancy and unnecessary bureaucracy in having multiple agencies with similar or tangential mandates, but each with their own management structure and budget.  I will posit that some of these agencies are ancient, legacy entities that may only exist due to strong lobbying efforts or a lack of desire by Congress to address inefficiencies created by their predecessors.

It is also not clear to me exactly how much lobbying time and taxpayer dollars are spent between these organizations that ultimately add little to no benefit to the average American.  Let me start with an example that is closest to my career.  There are at least three government agencies responsible for regulating the banking industry - the Fed (Federal Reserve Bank), FDIC (Federal Deposit Insurance Company), and the OCC (the Office of the Comptroller of the Currency).  I intentionally used the term "at least" three because one could argue that there are even more once you include NCUA (National Credit Union Association), FFIEC (Federal Financial Institutions Examination Council), among others.  Focusing on just these three, their 2015 fiscal year budgets approved by Congress were a whopping $3.97BN, $2.32BN and $1.03BN respectively.  Most bank regulations are typically issued as joint rulings from the 3 agencies, with the exception of when a complete lack of agreement cannot be achieved.  Case in point - certain banks in the US are subject to the LCR (Liquidity Coverage Ratio) and the 3 agencies itemized a list of assets that are eligible to count as high-quality, liquid assets (HQLA) in the numerator.  Except that within a year of issuing the rule, the Fed issued a divergence from the FDIC and OCC to allow certain Municipal debt holdings that can count as HQLA only to Fed-Reporting banks (the FDIC and OCC never ratified the inclusion of Muni debt).  So I question how much time and taxpayer money is wasted in order to get 3 different government agencies (each with their own agendas, budgets and management structures) to agree on a proposal, when ultimately they can go their own routes anyway.  I have yet to see the benefit of having 3 regulators all focus on the same industry with such similar mandates and goals.

But Financial regulation is not the only example of this symptomatic issue within our government.  Did you know that Transportation last year only represents 1.2% of the entire US government budget, yet despite the small allocation of the overall budget, we have over a dozen agencies and government entities focused on transportation. Just to name a few:  Department of Transportation, FAA (Federal Aviation Administration), Federal Highway Administration, Federal Maritime Commission, Federal Motor Carrier Safety Administration, NTSB (National Transportation Safety Board), and Pipeline and Hazardous Materials Safety Administration.  Let me reiterate that I am NOT suggesting to eliminate any of these agencies - simply that as American taxpayers we have the right to question if these multiple agencies are the most efficient use of resources with overlapping responsibilities and mandates as opposed to some version of consolidation.

A similar argument can be made for Food & Agriculture which last year represented 4.6% of the overall US government fiscal budget, yet is also comprised of 11 unique agencies or commissions.  Transportation and Agriculture 50-100 years ago were significant components to our economy, but I see no evidence of Congress rethinking the need for so many agencies as our economy has evolved.

Consolidation Approach
I propose a long-term consolidation approach whereby government entities and organizations are combined over a 10-15 year period through attrition such that there is only one government agency per Cabinet Secretary member.  Currently there are 16 Cabinet positions and I see no need for more agencies than there are Secretaries.   I firstly admit that should this approach be enacted by Congress, it would likely require a restructuring of the Cabinet to add another half dozen or so Secretaries to the Cabinet, but 20-25 government agencies sounds a lot more reasonable to me than 250!  Each Secretary would be responsible and accountable for their portion of the government. 

Let me elaborate with some specific examples.   I believe that the Secretary of Transportation should be responsible for anything that is transportation-related in the federal government, and he or she does not need 16 government agencies to accomplish that goal, especially with only 1.2% of the overall budget.  I am NOT suggesting that we layoff thousands of government employees, but hold the Secretary of Transportation accountable for running this part of the government efficiently.  This may include merging these government agencies, and through attrition over a 15 year period, not replacing redundant or unnecessary positions. 

The Secretary of the Treasury would be in the toughest position, responsible for merging 18 (Yes Eighteen!) or more government agencies and entities over the 15 year period and addressing any excess or waste as described above that exists in the financial sector of the US government.  Interestingly, the Secretary of Education already operates in this environment, as we only have a single government agency responsible for education in this country.   Even the Secretary of Veteran Affairs would have two agencies to merge.

Conclusion
Given the overall size of the US government and

 the long-term apathy in Washington to make any efforts to address this excess and waste, I cannot predict if this idea would save tens of millions of taxpayer dollars, or if the magnitude is hundreds of billions of dollars.  But as a taxpayer and an American, I want to try find out!  Once we do that, then we can go back to debating the appropriate way to spend our dollars - but I want to stop flushing some of it down the toilet first!