THE TAXPAYERS' ORGY

MARCUS DUFFIELD

For years a handful of wise observers have been saying that democracy is the most expensive form of government yet devised by man, but only now is the American public realizing it. The cost of government in this country has been shooting upward at the rate of nearly a half billion dollars a year for the last decade. In the boom days, nobody paid much attention, but the present lean times have made the orgy of governmental spending stand out in high relief.

The curve of government costs in the last thirty years looks like the take-off of an autogyro. The total of expenditures today is about nine times what it was in 1902. This increase is entirely out of proportion to growth of population, and to expansion of national income. Each person in the nation is paying five times as much to the government as he was in 1902; and taxation is now eating three times as large a share of the total earnings. Here are the comparative figures; including local, state and federal governments:

GOVERNMENT COST 1903 1913 1931

Total, in billions of dollars 1½ 3 13½

Per capita, in dollars 19 30 108

Per cent of national income 6 11 22

(In the absence of complete compilations, the 1931 total and per capita figures are estimated on the basis of a moderate rise over 1930 figures.)

Obviously, much of the increase is inevitable because of the increasing complexity of civilization—the multitude of new problems created for government by modern inventions, the crowding of population into smaller areas in cities, the more exacting social conscience, and the rising standard of living. Most people realize that, even though they may forget it temporarily in their indignation about taxes. Yet there is today a virtually unanimous outcry against the extravagance of government. Wrathy taxpayers are in a general uprising that extends from the smallest villages through cities and states to the national capital. Office-holders throughout the nation are squirming, writhing in the spotlight; this is their evil year. The turmoil in Congress, where legislators were goaded into a condition of panic by the twin hot pokers of taxpayers' anger and the necessity of balancing the budget, is only too famous. T hat was only the central act of a many-ringed gladiatorial circus all over the country in which the citizenry have been flinging barbs into the now sensitive skins of officialdom.

There appears to be a widespread suspicion on the part of the people that they are not getting their money's worth for their taxes. They aren't.

The public fury is seldom analytical. Mr. Coolidge, the patron saint of thrift, sounded the keynote in a solemn sermon on saving which sold out every copy of the magazine that contained it. His thesis was that taxes must be cut down. Indisputable; everybody agrees. Few, however, explore to any depth below the surface to find out why they are too high and why the public is getting short value. Any thorough search for the reason is bound to be unpopular because it inevitably leads right back to the people themselves. To blame the war, or the tariff, or the greedy politicians is much too easy.

The root of the trouble lies in America's attitude toward government: we regard it as a sort of mystic entity in itself—apart from, and not comparable to, any other manifestation of life. We have not yet learned to regard government as a business—a business to be conducted efficiently by experts to supply certain unromantic common services. The result is that the most fantastically unbusinesslike methods are prevalent, and calmly accepted. The responsibility cannot be put upon the politicians alone. To be sure, it is no secret that their management has been slovenly for years. The politicians can be trusted to follow whatever policy gets them the most votes; in the last analysis the onus returns to the national fuzzy-mindedness that tolerates such fabulous waste.

The condition permeates every unit of government—local, state and federal-and everywhere takes enormous financial toll. The same services that are being performed by government today could he retained unimpaired and undiminished with a saving of at least a billion dollars a year. This is a conservative estimate. The taxpayers of the nation could, without sacrificing any benefits, reduce their taxes by eight per cent, probably more, if they could bring themselves to regard government as a business instead of a mystic, romantic game, and act accordingly. Such a mental feat is not possible over night; if possible at all in a democracy, it would take generations of tradition-building. But the first step is to realize the fact.

To begin with, our entire government system, because of the prevalence of the semi-romantic instead of business attitude toward it, is one of the most unmodern institutions of the twentieth century. The form of local and county administrations dates back to the Duke of York's laws of about 1670, and have not been seriously remodeled since then. Changing conditions have been met, not by scrapping or adapting existing units, but by sentimentally clinging to the old and superimposing new ones, and subsequently clinging to them. Aside from villages, townships, boroughs, counties, cities and states, there are innumerable independent administrative districts to take charge of schools, fire protection, water, lighting, sewers and sidewalks —in all some 500,000. No man can say how many of them could be eliminated with a gain of efficiency and reduction of expense perhaps half, perhaps two thirds. Large cities have underneath their municipal structures, like old suits of underwear, from two to five county governments each with a musty set of officials who fiddle about with duties that often have largely shrunk into gestures. In less thickly populated districts there are hall a dozen county governments where with modern communication facilities only one or two are necessary. No person in New York State lives under less than four governments, and some citizens pay the upkeep of as many as ten.

There is where the rub comes; the taxpayers have to support so many office-holders. An unsentimental efficiency expert could weed out an army of supernumeraries; but he would be driven from the country by the very citizens who are howling about high taxes. One person in every ten is working for some government or other in the United States now: if we keep on at the present rate, according to one estimate, every other person will he working for a government by 1953.

Not only have time and tradition piled upon us far too many governments, but the chaos and cost is exaggerated in the great majority of them by the utter absence of up-to-date methods of running them. Any corporation that conducted its affairs after the manner of most governmental units would have gone rapidly into bankruptcy. Administrations have caught on to the idea of keeping books, and some of them even have modern auditing systems. But what is an auditor to do with entries of millions of dollars under the heading, "general legislative expense"? He is further defeated by items such as "I Chrysler coupe—cleaning sewers"; or "Cadillac sedan—waterfront lands".

Governmental units have caught on to the idea of making budgets, but they are made on the wish-fulfillment principle. Officials wish they had a given amount to spend, and budget accordingly, then pass laws spending somewhat more than they budgeted for. At the end of the year there is, of course, a deficit, so a loan is floated and the tax rate raised for next year. The process continues until in time of depression the administration is teetering on the edge of insolvency. But always the officials are allowed to follow such a policy, if not pressed into it, by the voters.

The most striking examples of chaotic rule are to be found in the largest and wealthiest cities in the nation. Their plight is already notorious, but the fact that it arises from lack of common-sense business methods is not always made apparent. New York City, for instance, was put upon the "pay-as-you-go" system as far back as 1915 by a charter amendment that forbade long-term borrowing except for self-supporting enterprises. That was fine, and businesslike. Then the amendment was gradually vitiated by a series of amendments to it, nine in all, each of which provided for exceptions to the rule so that now the city can borrow for almost anything, self-supporting or not. But whether the rule stands or falls apparently makes little difference because, according to Professor J. D. McGoldrick, an outstanding authority on the matter, the city's accounts are kept in such a manner that nobody can tell anyway to what extent its enterprises are self-supporting.

The depression has brought into public attention, however, some of New York's financial facts which were secrets only because no one was especially curious about them. The city is spending about 700 million dollars a year, which is seven times as much as it was only 30 years ago. In the interval its population has only doubled. The city never knows until the end of the year whether its expenditures are keeping down to expectations or its income up to expectations. If any official bothers to fear the worst, his fears are almost always justified at the end of the year, because there is a deficit, and the city habitually has to borrow to tide itself over. That happened, as usual, this spring, but the bankers were less genial than usual; were, in fact, so unpleasant as to bring up the old point about the subways. This matter affords a perfect illustration of how the responsibility for the utter ignoring of business principles is shared by the people. Subways obviously ought to be a self-supporting enterprise. But New York s are not, because the voters insist upon a five-cent fare. Since a five-cent fare will not run the subways, the deficit has to be made up out of taxes. The comptroller estimates that the subways will cost the taxpayers 200 million dollars in the next five years. This naturally helps keep the city's finances in a mess, and helps increase its debt, the interest on which, of course, helps boost the high tax rate. The subway riding five-cent fare voters probably think they are getting something for nothing, overlooking the fact that they pay taxes too, even if they do not own property, whenever they pay rent or buy food.

Essentially the same situation exists in the other big cities whose predicaments have become famous—Chicago, Detroit, Philadelphia—and in hundreds of other governmental units throughout the country. In 250 cities the average per capita debt in 1917 was $78 and in 1929 was $138. The Municipal Administration Service recently made a survey of about 100 large cities and found that 36 of them incurred operating deficits in 1929 and 30 had deficits in 1930. The expenditures of 71 increased in 1930, leading to the suspicion that most of the cities are keeping out of difficulties only by raising taxes even in the depression despite voters' protests.

All these financial messes which the depression has brought to light are sudden developments only in the sense that they are just now being noticed; actually they are the fruit of years of inefficiency resulting from an inability on the part of Americans to look upon government as a business and demand its conduct on that basis. In the average city of more than 30,000 population, the governmental cost is $70 a year to each and every resident. Civics experts estimate that the same service could he rendered for $50 if efficiency were introduced. It is within possibility that our sentimental conception of local, including state, government is costing us a billion dollars a year sheer waste. And to that must be added the toll of waste in federal affairs.

The cost of unbusinesslike principles in the national government is variously estimated at from 200 million dollars a year to half a billion. Inasmuch as the estimates come from the statesmen in charge of affairs they are in reality admissions, so the largest figure is probably a conservative one.

The story of federal administration runs parallel to that of sectional units. The federal government started out with 54 employees in Washington and has been accumulating more of them ever since with zeal like that of a fanatical stamp collector. The population has increased 23 fold and the number of government employees in the Capital has increased slightly less than a thousand fold. Counting the employees in Washington and adding those scattered throughout the rest of the United States and the world, there are a million persons on the national payroll for an annual salary total of a billion and a half dollars. Five different federal agencies are kept busy looking after all the employees— the Civil Service Commission, Bureau of Efficiency, Employees' Compensation Commission, Classification Board, and a part of the Veterans' Administration.

Despite the ministrations of this cluster of commissions, a certain unbusinesslike atmosphere seems to hover over the federal personnel situation. For example, the actual working days demanded of the employees are fewer hy at least a month in every year than the working clays required of average ; employees in private businesses.

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While regional and local govern1ments have been piling up layer upon layer on top of each other through I (he years, the national government has responded rather more sensibly to the need of performing new functions by expanding the existing major departments through the addition of various internal divisions and bureaus. That is, such was the custom until early in this century when the "independent establishment" was invented. This is a federal government unit created by Congress and responsible, insofar as it has any responsibility, to the President. By 1913 five of them had cropped up and were timidly spending three million dollars a year. In 1931 there were 42 independent establishments gaily spending 1300 million dollars. The two largest spenders are the Veterans' Administration and the Farm Board.

To create a new bureau or commission is easy; to put one out of existence almost impossible. The result is that the federal government is by now swarming with them—200 in all.

The carefully compiled government documents on the love life of the bullfrog and how to rear canal children are famous. Some services recently cited by Senator McKellar are less well known. The Corn Borer Bureau began to war on worms that eat corn in 1919 with a $10,000 appropriation and this year asked for $750,000, although, as the Senator said, there are so few corn borers in the country that 96 of the Bureau's keenest corn borer hunters sometimes spend a whole summer in a district hunting and hunting without finding a single worm. To ban and destroy the Mediterranean fruit fly the government has spent nearly seven million dollars, but, according to the Senator, no man has ever seen a living Mediterranean fruit fly in the United States. The Bureau once found a dead one and has him in a glass case.

It is not surprising that efficiency goes out the window with all this maze of antiquated bureaucratic machinery. An investigating commission once noted that the government was buying 28 kinds of ink. 278 kinds of pens, 11 kinds of typewriter ribbons and 132 grades of pencils. One department was paying 81.70 for a dozen quarts of ink, another was paying $3.70 a dozen quarts. The purchase of 250 million dollars worth of supplies yearly is entrusted to men scattered through every branch of the government.

Likewise, there is no centralization of federal building activities. An ordinary public highway is built by the Bureau of Public Roads of the Department of Agriculture; if it runs through a national forest, the Forest Service builds it; if through a national park, the National Park Service of the Department of Interior builds it; if in Alaska, the Engineer Corps of the War Department builds it; if for an ambassador abroad, the Foreign Service Building program of the State Department takes care of it. Twenty-one different groups and sub-groups divide the half billion dollars a year spent for federal construction.

A recital of the complete absence of businesslike method could be continued indefinitely. Hawaii is governed by the Department of Interior, the Philippines by the War Department, and Guam by the Navy Department. Direct aids to the merchant marine are in charge of 14 different bureaus or agencies in six different departments or independent establishments. If a man shoots a fox in Alaska he must settle accounts with the Department of Agriculture, but if he traps it he must settle with the Department of Commerce. The Secretary of Interior protects grizzly bears, the Secretary of Commerce protects polar bears, and the Secretary of Agriculture protects brown bears. If a brown Kodiak bear has twins, one brown and one black, they are under the auspices of two different federal departments.

For thirty years Presidents have been trying to persuade Congress to do something about governmental waste; for thirty years Congresses have been trying to get the Presidents to do something about it. Neither executive nor legislative branch has been able or willing to make any far-reaching move by itself, held back by the eternal threat of voters' resentment.

Optimists say that the depression may work wonders toward bringing to the attention of the citizens the huge financial waste their conception of government causes. The indications are, at least, that the lean times are doing more in that direction than the tons of reformers' sermons poured forth in the last quarter of a century.