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Budget Watch


A newsletter covering budget reform and the latest news and views on the federal budget, published by The National Center for Public Policy Research, 501 Capitol Court, N.E., Washington, D.C. 20002, (202) 543-4110, Fax (202) 543-5975, E-mail [email protected] Web http://www.nationalcenter.org and the Small Business Survival Foundation, 1320 18th St. NW, Washington, D.C. 20036, (202)785-0238, Fax (202)822-8118, Web http://www.sbsc.org.


Issue #34 * February 16, 1998 * David A. Ridenour and Karen Kerrigan, Editors


Bill Seeks to Take 100,000 IRS Agents Off the Street

Representatives Steve Largent (R-OK) and Bill Paxon (R-NY) have unveiled a plan that could take more than 100,000 IRS agents off the streets and out of our neighborhoods. The plan, the Tax Code Termination Act (H.R. 3097), would sunset the IRS Code on December 31, 2001. The bill, which already has some 114 co-sponsors, is being offered to curb abuses and waste by the IRS. The current IRS code is over 3,458 pages in length, twice the length of the Bible, and requires over 110,000 employees to administer and police at an annual cost of $9.8 billion. With so many people policing the tax collection system, with little accountability, it's no wonder so many people now fear the IRS. The current IRS code is also incredibly inefficient. Its been estimated that taxpayers spend 5 billion hours each year and some $225 billion preparing their tax returns. "The Tax Code Termination Act eliminates the questions of 'if' and 'when' we end the current tax code," said Representative Largent. "It sets a date certain for the enactment of a new tax system, one that I hope will be simpler, fairer and applies one rate, one time, to all taxpayers." For more, contact Steve Peterson at Congressman Largent's office @ 202/225-2211.

Smallest Government in 35 years? Not Exactly

Boasting that the federal government is the smallest it has been in 35 years, President Clinton used his State of the Union address to call for a new wave of government spending on everything from subsidized baby-sitting to an expansion of the Medicare system. The Cato Institute's Steve Moore estimates that the President's complete package of new spending, if approved, would cost at least $200 billion over five years.

Perhaps such a high level of new spending could be justified in the minds of many Americans if the President's claim about the size of government was correct. It's not. Federal expenditures -- one of the best measure of the size of government -- have increased from $106.8 billion in 1962 to more than $1.6 trillion in 1997, a close to 14-fold increase. Even as a percentage of GDP, federal expenditures have risen from 18.8% of GDP in 1962 to 20.1% of GDP in 1997. The best the President can claim is that the size of government is the smallest it's been since 1974. That was the last time federal spending as a percentage of GDP fell below 20.1%, at 18.7%. But even this modest achievement appears to have more to do with the end of the Cold War than any budgetary discipline exhibited by either the President or Congress. While defense spending declined from 9.3% of GDP in 1962 to 3.3% of GDP in 1997, all other spending skyrocketed from 9.5% to 17% of GDP during the same period. Now that the defense budget has been pared to the bone, the total size of government can be expected to rise.

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