A Libertarian Plan
2010-10-10 · Guest: Matt Welch (Editor-in-chief of Reason Magazine) · 49:13
Balancing the federal budget through constitutional limits
Bob Zadek and Matt Welch discuss the constitutional limits of federal power, contrasting James Madison’s “few and defined” powers with modern expansive interpretations. They propose a series of specific cuts to the federal budget, including eliminating housing subsidies, agricultural payouts, and the FCC, to balance the budget without raising taxes.
Topics: Enumerated Powers, Federal Budget, Constitutional Law, Libertarianism, Tea Party Movement, Regulatory State, Department of Agriculture, FCC, Housing Policy
Speakers: Bob Zadek, Matt Welch, Caller (Forest)
The Concept of Enumerated Powers [00:00]
Bob Zadek: Welcome everyone. Welcome to the Bob Zadek Show, Sunday at noon on 910 AM Fox News Radio in the Bay Area and on the web around the country. I’m your host, Bob Zadek. We are the leading libertarian talk radio show in the Bay Area, the show of ideas, not attitude. If you have a point of view, 800-345-5639. All ideas are welcome.
I am, in the words of a fabulous Robert Klein comedy album, a child of the 50s. Growing up in Queens, New York in the 50s, we didn’t have a baseball team and I was a Brooklyn Dodger fan. I still can recite the lineup of the 1953 Dodgers from memory, but I’m not going to do it on this show unless begged to do so. In right field in Ebbets Field, where the Dodgers played their home games in Brooklyn, was a sign. And to show you how quaint baseball was in the 50s, and that was not so long ago, there was a sign in right field behind Carl Furillo. And the sign said, “Hit this spot,” and there was a circle a couple of feet wide. “Hit this spot,” it invited the batters, “and win a free suit.”
Now, that was 1953, and winning a free suit by a baseball player was in 1954, ‘55, a big deal. Why do I mention Ebbets Field, right field, Carl Furillo, and “Hit this spot”? Because I remember that the sponsor of that sign was Abe Stark. Abe Stark was simply a clothier in Brooklyn, New York. That was Abe Stark’s imprint on culture in the 50s. For a different Stark with a different point of view, and to introduce our show today, Tim, the audio please.
The opening quote was a quote by Pete Stark, the most progressive representative in the House of Representatives according to various left-wing organizations. Pete Stark was quoted as saying, “There are no constitutional limits to what the federal government can do. There are no constitutional limits to what the federal government can do.” That’s Pete Stark, a representative running in the California 15th election district. That’s his view. Compare that view with the view of another politician. Quote: “The powers delegated to the federal government are few and defined. Those which are to remain the state governments are numerous and indefinite. The powers delegated to the federal government are few and defined.” Who said these words? James Madison, Federalist 45. James Madison, among the other credits he gets, he wrote the first draft of the Constitution and was the leading proponent of the Constitution in the Convention of 1787.
Enumerated powers. The powers of the federal government are few and limited. If only we would honor James Madison’s view of the Constitution and not the views of Pete Stark and others, we would have no trouble balancing the budget without interfering with entitlements, without raising taxes. And that indeed is the topic of today’s show: How do we balance the federal government’s budget without raising taxes? The fast answer is, it’s easy. I am delighted to welcome on the show to join me, Matt Welch. Matt is editor-in-chief of my very favorite, very favorite magazine publication, Reason Magazine. Matt, thanks so much for joining us.
Matt Welch: Thanks so much for having me. It’s an honor to be on the show.
Bob Zadek: Matt, the honor is mine. I have been a fan of your magazine forever. And it used to be that Boy’s Life was my favorite magazine in all of my life, especially the Norman Rockwell paintings on the cover of many issues. But Reason Magazine has elbowed out Boy’s Life as now my favorite publication of all time. I don’t know how you guys do it, but you have the most readable, the most fun to read, the most informative, cutting-edge publication one could ever imagine. Thanks so much, you’re doing God’s work.
Matt Welch: Thank you very much. And we’re just trying to have fun in an era where there’s too many examples of things that would make you a little bit pessimistic. We still think there’s a case for optimism in this great world of ours, if you look everywhere except politics.
The Expansion of the Administrative State [06:50]
Bob Zadek: Well, Bob Dylan and I agree with your optimistic view. “The times, in fact, they are a-changin’,” in the words of Bob Dylan. And now I opened the show with, of course, the Pete Stark view of the Constitution as granting the federal government unlimited powers. And it’s that very view that got us in the, among other things, spending pickle that we’re in. In other words, if the federal government would simply be true to the constitutional limitations imposed upon it by our founders, we wouldn’t be in the economic mess that we’re in now. And Matt, I think it’s the case, and you’ll help me with this, that mere adherence to the Constitution—that’s all we need is adherence to the Constitution—and we would be in much better financial shape. And it’s that diversion, that wandering away from constitutional limitations that got us in this mess.
Matt Welch: We have this feeling in the country, and it’s something that’s really gone crazy over the last 100 years especially, I would say, basically beginning with Teddy Roosevelt and kind of spreading ever since then. Looking for the federal government to solve any and all perceived problems. And it’s just escalated and escalated. The level of which government was involved in people’s lives was scandalous in the 20s, and then it doubled in the next 20 years or tripled in the next 20 years. And we’ve gotten to a point where literally we have, you know, the President of the United States in the State of the Union address talking about steroids in professional baseball.
We have a Department of Agriculture, just to throw one out of, you know, dozens out of a hat. There’s 100,000 employees at the Department of Agriculture. Do you know what 100,000 people are doing there? We have this sense that there isn’t any transaction that Americans can have between one another that should happen without someone making sure that everything is on the up and up. Even on the local level, or especially on the local level where it’s more constitutional, but you still have the same mindset. You always hear stories—we track them constantly—of seven-year-old kids in Portland, Oregon getting fined for selling lemonade. And the defenses of this when you bring this up are like, “Hey, listen, the rules, you know, there’s got to be some kind of structure here.” This is the overweening mindset. And the mindset came when we sort of crossed or broke through that constitutional membrane that you rightly flagged at the beginning of all of this.
We have so much work to do to kind of roll back the mindset, let alone the legality of things like the expansion of the commerce clause, so that somehow it’s interstate commerce if someone in Oakland grows a marijuana plant in their backyard for their personal consumption, which the Supreme Court ruled a few years ago. We have so much work to do that can feel very daunting. But we are at a crisis in which at every single level of American life, we are out of money, especially at the federal level, but not only at the federal level. And that tends to clarify people’s minds a little bit about what’s going on. And so that’s why we have come up with our current cover’s Norman Rockwell—it’s a horrifying hand with a blade coming out in 3D saying how to slash government before it slashes you. And we come up with page after page of specific, sort of concrete steps to unwind this incredible overhang that we have.
Bob Zadek: You mentioned as we go into break, 100,000 employees in the Department of Agriculture. That’s probably more than we have farmers in this country. So I think we should flip it around and the farmers should control the Department of Agriculture, not the other way around. This is Bob Zadek, 800-345-5639, delighted to have Matt Welch as my guest, editor-in-chief of Reason Magazine. We’ll be back solving the federal government’s budgetary woes in 90 seconds. Thanks for listening.
A Bipartisan Disregard for Limits [11:00]
Bob Zadek: Welcome back everyone to the Bob Zadek Show. I’m your host, Bob Zadek. I’m joined by Matt Welch. Matt is editor-in-chief of my super favorite magazine, Reason Magazine. It is fun, enlightening, informative. It is an important yet breezy read. Now Matt, before we go back to the business at hand, and just because I am such a Reason Magazine sycophant, I would like to share with my audience the day that I fell in love with Reason Magazine, if I may, Matt.
Matt Welch: Please.
Bob Zadek: I had been a subscriber of Reason Magazine for many, many years. It’s just a fun read. And I remember it was probably four or five years ago, and Reason Magazine, which I think has a print circulation or had then of about 75,000 readers, I went to the mailbox and got my Reason Magazine. For some reason, I think it was in June, but I could be wrong about that. And the topic in the magazine was something like, “There is no more right to privacy, forget right to privacy, it’s gone.” And to make the point on the cover of my magazine that I got in my mailbox, it said, “Mr. Zadek, we know where you are.” And there was an arrow from that bold print on the cover of the magazine to a circle in the middle of the cover. And in that circle was a satellite photo of the street on which I lived with my house circled. And 75,000 readers all got their own magazine. When a magazine can be that creative and that much fun, it had my lifetime subscription. I was going to—okay, here’s my life expectancy, I’m in it for life. So thanks a lot, Matt. And Matt, before we go further, we have a caller that I’d love to hear from. Forest on line one, welcome to the Bob Zadek Show.
Caller (Forest): Thank you, Bob. Great to be here.
Bob Zadek: Now Forest, according to the call screener, you are running for public office.
Caller (Forest): Yes, I’m the Republican Party candidate running against Pete Stark in Congressional District 13.
Bob Zadek: Against Pete Stark! Oh, you’re doing God’s work. Thanks so much for calling in.
Caller (Forest): Well, thank you.
Bob Zadek: So what about the show caught your interest, Forest?
Caller (Forest): Well, of course, the far-left view of the Constitution that is typical of the way Pete Starks of the world and indeed our president are operating is that there’s enough wording in the Constitution that allows them to write laws or to interpret laws in such a manner as to serve their own agenda regardless of the spirit of the Constitution. And sometimes it takes decades for this sort of misbehavior to be brought in front of the Supreme Court to be tossed. A good example is the honest services fraud clause of Title 18 that was recently tossed in the Skilling case.
Bob Zadek: Skilling was involved with Enron, of course, and his case went up to the U.S. Supreme Court and on somewhat technical grounds, his conviction was thrown out.
Caller (Forest): Well, a variety of things—he was convicted on a variety of charges, but one of the charges was that he had violated 1346, honest services fraud, that has been interpreted by the Department of Justice to make it criminal to have a conflict of interest. For instance, if you own your own bank, you can’t lend money to your own company. And that interpretation, which is four decades old, really crippled the bottom-up capital practice of capitalism with small entrepreneurs or small business owners who happen to have an equity interest in a small bank.
Bob Zadek: Forest, help us to understand in a few words how the Pete Stark view of the world has damaged the budgetary process and how it offends folks who favor the Madisonian view of the Constitution, such as Matt and myself. In a few words, how does the Stark interpretation of the Constitution damage the budgetary process?
Caller (Forest): Well, they’re able to basically do anything that they want to do based on the few words in the Constitution that say that the government should provide for the general welfare or protect the general welfare.
Bob Zadek: And Forest, just to supplement that, we do have this wonderful, wonderful, in his own words quote from Pete Stark. Now this show is not about Pete Stark, but rather it’s about the mentality as demonstrated by Pete Stark. And the reason I’m using this quote is not because it’s about Pete Stark, but only because it is representative. This is not unusual. So Tim, if we can play the soundbite.
Pete Stark (Audio Clip): “I think that there are very few constitutional limits that would prevent the federal government from rules that could affect your private life.”
Bob Zadek: Matt, can you believe what that man said?
Matt Welch: For whatever reason, it didn’t play in my ear, but no, I can believe it, actually, because he is in many ways giving an accurate reflection of the world that we sort of unfortunately live in, or the legal-political climate that we live in. And since your caller is Republican and I’m not, I feel duty-bound to point out that this is a bipartisan thing. Some of it might look particularly left-wing flavored as from Pete Stark, but let’s remember, you know, the biggest assault on the First Amendment in this country over the last 10 years was campaign finance reform. It restricted political speech. It did what they said in the First Amendment that we wouldn’t do, that we should never do. And thankfully it’s been pared back to the point where now you no longer have to get the federal government’s approval to put an advertisement up criticizing your local congressman. But both parties, especially when they hold power, find whatever excuse that they can concoct in these elastic phrases in doctrinal law to basically justify what are unjustifiable expansions of government, both in terms of dollar costs and intrusions into our lives. And it’s something that thankfully I think Americans are starting to focus in on now in a very strong way.
Bob Zadek: You know, Matt, I agree 100%. Of course, I am not a Republican either. The last Republican I voted for was Ronald Reagan. I’ve not voted for any Republican since then. And this is an issue where neither political party tells us anything about what the candidate stands for. You have to drill down a bit and look for the underlying principles on which the candidate is running. But a political party is nothing other than a marketing cooperative to get people elected. So Forest, tell us just in a few words, since you were good enough to call, not what you’re going to do, but the governing principles so that those who are listening to the show and live in your district can help decide whether your principles are the ones they might sign onto.
The Right to Fail in Capitalism [18:16]
Caller (Forest): Well, I’m a capitalist. I’m a grizzled old capitalist. I’ve been doing this for 40 years. And the problems in the nation today are fundamentally economic and our practice of capitalism. And as a libertarian or as a very hard libertarian-leaning conservative Republican, it’s clear to me that the government is intruding into our practice of capitalism for their own with their own agenda, especially the supply-side agenda which consolidates power into the corporations and the banks and denies access to our practice of capitalism to our bottom-up entrepreneurs, if you will, or small business owners who would really like to expand into a larger part of the global arena. So as a congressman, indeed the practice of government intruding into corporations and into, for instance, what we’ve done with the banks and what we’ve done with General Motors, has got to be—the stupidity of that, which we as capitalists can see, has got to be reversed. The problem that I see in Washington is that those people, bless their hearts, don’t understand the economy, don’t understand capitalism. They’re mostly lawyers, and most of them were mediocre lawyers when they were out in the real world.
Matt Welch: What they don’t understand specifically about capitalism is failure. And how when people like us talk about not intruding on things, the biggest thing that I want them to not intrude on is the system of failure. When people misbehave, I want them punished by the market by going out of business instead of being caught and cushioned and slid down very comfortably in a long, slow, and expensive decline. This is something that people cannot figure out or wrap their minds around who are in the sort of official commentariat and chattering class, but it’s something that I think Americans have intuitively understood since George W. Bush freaked out on national television in September in 2008 and said, “Normally I like the free market, but…” and ushered in this modern era of bailout economics. It’s unjust. It supports people for making bad decisions. It supports the big guy over the little guy, and it does it using all of our money. And it’s unjust.
Bob Zadek: Forest, thanks so much for calling. We appreciate your call and we appreciate you being a listener to the show.
Caller (Forest): Thanks for having me.
Bob Zadek: Matt, you said it perfectly. You know, without the right to fail, you don’t have the right to succeed.
Matt Welch: What they’re doing is they’re socializing risk. They’re basically saying, “Go ahead and take a risk, but if you fail, we’re going to bail you out.” So they get to have private profits and socialized risk. And no wonder it’s not working. No wonder the economy is terrible and it’s looking like it’s going to be terrible for a long time.
Bob Zadek: And the great seduction, as we go to break, the great seduction in the progressive point of view, the seduction is that what they want to spend their money on is sort of good things in the abstract. Helping people. Nobody can oppose helping people. But the question is, is that the duty and should the federal government be in that business? Or should they just be, as I think it was John Roberts said, just the umpire making sure people play by the rules, but not rigging the game? This is Bob Zadek. I’m talking to Matt Welch, editor-in-chief of Reason Magazine. The topic is how to fix the economy without raising taxes. More when we come back in 90 seconds. Thanks for listening. 800-345-5639.
The Failure of Government-Controlled Sectors [25:50]
Bob Zadek: Welcome back to the Bob Zadek Show. I’m your host, Bob Zadek. We’re here every Sunday at noon on 910 AM Fox News Radio. Today’s super special guest, Matt Welch, editor-in-chief of Reason Magazine. As I said earlier, my very favorite magazine. I can’t wait for the issue to arrive. I read their blog every day online. It’s mandatory reading if you want to have fun and follow the political system in the United States. Matt, welcome back to the show.
Matt Welch: Thanks so much.
Bob Zadek: Forest had mentioned that he didn’t think that progressives and Democrats, and I dare say Republicans in Washington, don’t understand capitalism. The issue I will take is they sort of understand this a little bit. My own personal analogy is that people in Washington who haven’t spent a good deal of their life in the private sector see capitalism, indeed see the free markets, sort of the way we might look at atomic power. It is very powerful, almost uncontrollable, but it’s a power which, if controlled and harnessed in exactly the right way, can serve certain public good. And what they don’t understand is, while that may be true of atomic power—harness it and control it and channel it—to harness capitalism, to harness free markets, is to destroy it. And the vision I have is Nurse Ratched in One Flew Over the Cuckoo’s Nest. Once you do the capitalistic lobotomy, it’s done. It’s now been neutered and all of the benefits, the right to fail, Matt, that you mentioned earlier, simply disappear. And without that, the system dies. It’s no longer useful to anybody.
Matt Welch: I think that’s a really useful analogy. And I would point out to what you implied but didn’t state outright: a lot of people look at atomic power as kind of inherently evil. There’s something wrong with it. It’s Pandora’s box. It is, by definition, poisonous, let’s say. And you see this actually in the offhand comments, especially at things like graduation ceremonies at law schools, that both Barack and Michelle Obama have given over the years. I think Michelle more so than Barack, but you hear this constantly from people who go into quote “public service” unquote. They will tell the graduating class from Harvard, who are usually super high-charged, powered type of people, they’ll say, “Hey look, you know, sure you can do the whole corporate thing. We’re here to tell you that it’s a more meaningful life if you don’t sell out, if you work for public service.” And I don’t mean to single out Obama. I mean, the biggest single peddler of this line of talk over the last 15 years on American campuses has been John Sidney McCain III. He always talks about serving an interest higher than yourself and so on. And it’s understood from him, because he’s never worked in the private sector either, that somehow it’s vaguely disreputable to be involved in this private muckety-muck.
And all kinds of pathologies sort of ensue, follow naturally from that. I mean, the majority of people who work on Capitol Hill are lawyers, who are representatives in the House of Representatives and the Senate. They are lawyers. I live in DC, I moved from Southern California three years ago. It’s eerie. You know, our first landlord here, she was a lawyer. She was married to a lawyer. They both worked for the Department of Justice. At my preschool where I send my kid, you know, you meet a parent. “So parents, what do you do?” “Oh, I work as a lawyer for the antitrust division in the Department of Justice.” It is a town filled with lawyers. And nothing wrong with being a lawyer, don’t get me wrong, but like to have that to be such a huge concentration, it’s a specific mindset and worldview. And the policies that emanate from that start to make sense only when you view it in terms of, okay, they do think that this private stuff is disreputable, could disrupt and destroy people’s lives, and just sort of needs to have various lassos and harnesses on it to make sure it doesn’t rampage out of control.
But think about it. Think about the sectors in American life that are the most under control of the government. Without exception, those are going to be the ones that work the least well. Whether it’s your DMV, whether it’s your local school system, you know, Social Security as a sort of an economic Ponzi scheme. These things don’t necessarily work very well. And if you look at the things that give you the most pleasure or utility or joy in life, chances are they’re going to be something like, I don’t know, on the internet. Places where the government is least involved tend to be places that bring you this incredible sort of Moore’s Law pace of change out there. And I think the challenge for all of us, whether we’re looking at, you know, the state budget in California, which is a big mess, or whether we’re just looking at our personal life or the federal government, doesn’t matter. The challenge from a public policy point of view is how can we translate this incredible revolution that has so enriched our lives privately and have that impact on the goods and services that the government publicly delivers? And I think that’s the great challenge of our age.
The Tea Party and Spontaneous Order [29:30]
Bob Zadek: And you know, Matt, one of my observations is that we have become aggressively regulated, sort of as you observed, you started with Teddy Roosevelt. But of course, it really happened, the aggressive regulation happened in earnest in the 60s and then the 70s, and it’s grown and grown and grown and grown, with maybe a slight respite during the Reagan eight-year Reagan term, but really has grown. And also the Clinton term. Clinton, I think, he reduced on net the amount and spending on regulation, unlike George W. Bush and other people. He certainly did. And my fear was, or my suspicion was, simply as an observer, that when you never have grown up in a relatively unregulated society—that is, where you have more personal freedom than you have now—if you didn’t grow up being allowed to ride your Schwinn bicycle without a helmet, if I was allowed to use a seesaw in the schoolyard in PS 26 and maybe fall and hurt myself, if you didn’t grow up with freedom, you don’t even know what you’re missing. And when you are accustomed to being regulated, it becomes part of life and you don’t even have a goal, you can’t verbalize the goal in your head as to what you want to shed, the regulation you want to shed.
And what I find to be so exciting is that the Tea Party movement was not a movement that was a top-down movement. It wasn’t Bill Bennett or Dick Armey or Newt Gingrich who got together and had this master plan. But it sprung full-grown from the DNA of a whole lot of Americans with unusual spontaneity, which tells me it’s there. It’s part of who we are. And it’s because of the spontaneity of the Tea Party movement that gives me, like you, so much encouragement.
Matt Welch: It’s driving people batty because they can’t find the snake’s head to cut it off, certainly. I mean, what’s happened is kind of predictable if you think about it. America is a weird place, and I say that affectionately. We have, you know, almost as weird as California, which I say even more affectionately. We have some identifiable quirks and traditions. They may not be majoritarian in many cases—the whole point is that we protect minorities here against the tyranny of the majority—but there are, at any given time, there’s a bedrock understanding in this country of capitalism, among other things. Of the observation from Thomas Jefferson that that government which governs least governs best. This is a tradition in American politics that has gone not just ignored but obscenely violated over the last 10 years on the federal level and on the state levels too. I mean, state governments on average during the good period of 2002 to 2007 doubled their budgets. It’s something that you rarely hear people talking about when they are crying over the latest round of budget cuts. You know, I don’t remember California getting twice as many or twice as good services between 2002 and 2007.
So if you are going to completely ignore this American tradition, even if it’s a minority tradition, but it’s definitely percolating in the DNA, if you’re going to ignore it, if you’re going to flout it day after day, and then as icing on the cake, if you’re going to deride people who attempt to sort of revive that spirit as being untenable cooks, racists in many cases, and just not ready for adult conversations, you’re going to have a big surprise on your hands. And that’s what we have right now. We have a lot of people who have a lot of different ideas. They certainly have different ideas on balance when you look at polling numbers than I do, especially on a lot of social issues. But if you look at what they’re talking about, like if you look at the huge difference between, for example, the “Pledge to America,” which is the piece of crap document that the Republicans tried to pass…
Bob Zadek: I hated it. I hated it. I did a whole show, I reviled that for 55 minutes about three weeks ago. I hate it.
Matt Welch: It’s, I mean, everyone’s already forgotten about it. It was an amazing thing. If you compare that huge PDF file to the very terse and 10-point, 10-sentence contract from America that emerged from Tea Party organizations, it’s remarkable. That little 10-point document is all about spending and restraining the size of government. These people might have a lot of different ideas about foreign policy, social issues, but what they’re concentrating on right now, what is getting them out in the streets and mobilized in most cases—not every, but in most cases—is this idea: we’re spending too much money, we’re putting ourselves at risk, we are the next Greece except our house is even in worse financial order, and something at long last must be done. And it’s great to watch how unready both parties, not just the Democratic Party but the Republican Party as well, to deal with that fact.
Bob Zadek: And it’s really only a question, and the Republicans have the edge, of which party recognizes—and it’s not the force of the Tea Party. The Tea Party is not the force. The force is the philosophy behind the Tea Party. It was percolating in Americans and it was just there and it couldn’t be restrained anymore. So it found its outlet in this spontaneous Tea Party movement. And whichever party signs onto it first—and it looks like the Republicans have the edge in that regard—whichever party changes to latch onto this force will be successful in upcoming elections. So this is not about Democrats and Republicans. Democrats and Republicans are simply—those parties are, as I’ve said many times on the show, just marketing cooperatives which only exist to get humans elected. They don’t exist to further any particular worldview. Indeed, they’re really not clearly different between Democrats and Republicans. Some of the methods are. So whichever party recognizes this is serious business and I better sign on or the train’s going to leave the station without you. This is Bob Zadek. I’m talking with Matt Welch, editor-in-chief of Reason Magazine. When we come back, Matt, I’m going to ask you to throw some chum into the shark-infested waters of my listeners and let’s identify some specific ways the federal government can become a more modest enterprise and substantially fix the budgetary mess we’re in. Back in 90 seconds.
Specific Proposals for Budget Cuts [39:41]
Bob Zadek: Welcome back to the Bob Zadek Show. I’m your host, Bob Zadek, here every Sunday at noon on 910 AM Fox News Radio. Today’s super special guest, Matt Welch, editor-in-chief of Reason Magazine. As I said earlier, my very favorite magazine. Matt, welcome back to the show.
Matt Welch: Thanks so much.
Bob Zadek: Just so the audience can find you and find Reason and find Reason Foundation, tell us how to find your good work, how to subscribe. I don’t want the audience to leave this show without that information.
Matt Welch: Go to reason.com. That’s the source of all fun and craziness. Reason.com/subscribe will get you the magazine, 11 issues a year for 20 bucks. Reason.com/blog, I think it’s pretty self-explanatory. And we’re published by a nonprofit foundation based in LA called the Reason Foundation, and you can see a lot of their kind of think-tank style work at reason.org. So just Google Reason, you’ll find us.
Bob Zadek: It’s great, great stuff. It’s politics made breezy. Thanks so much for your work, Matt. Okay, Matt, the federal government has not been modest in its assumption of responsibility over our lives, from what we eat to how we spend our time. And let’s throw out a little red meat here about how it would be so easy to make meaningful cuts in the federal budget without causing—well, it’ll cause pain to the recipients, but the recipients are receiving money they shouldn’t be getting because it’s my money and I don’t want them to have it. So let’s give our listeners some examples of how easy it would be to make meaningful repairs in the federal budget.
Matt Welch: Politically not so easy, I think pragmatically much more easy. First, get the government out of the housing market. Why, oh why, do we have an entity that we’ve already tried to throw $150 billion of bailout money into in terms of Fannie and Freddie, who guarantee trillions of dollars worth of mortgage, including all the toxic stuff that we were supposed to clean up? Remember that?
Bob Zadek: And Matt, it should be pointed out that Fannie and Freddie guaranteeing mortgages is a relatively new federal activity. That for most of the history of our country, people seemed to be able to buy houses and pay for them and pay a fair price and pay a fair price for a mortgage without any federal guarantee. There was, in certain instances, private guarantees, but it wasn’t needed to fuel our growth.
Matt Welch: And if you look at other countries that don’t have a similar institution who do what we do in this country with things like the corporate bond market—I mean, corporations borrow money, they go to banks that have developed an entire private market—those countries have the same if not higher level of homeownership than we do. And that’s the whole purpose behind us doing this is like, “Oh, homeownership somehow having that percentage higher is going to make us a better country.” So unwind that. It’s a complicated trick to do, but eventually, why are we doing this? This is at the root of our financial crisis and economic crisis. No one is talking honestly about it. Get the government out of that business.
Bob Zadek: Good choice. And Matt, just before we go onto agriculture, which is another low-hanging fruit, the beauty of getting the government out of the mortgage guarantee business is there would be no pain felt by anybody. You would still, if you qualified, be able to buy a house, you would pay about the same price for the mortgage, and the only difference is if you didn’t qualify, you couldn’t buy a house. And the concept of homeownership is the American dream is to tell anybody who is a renter, “You loser, you’re not living the American dream.” So great choice, Matt, I agree.
Matt Welch: The pain will be felt by Wall Street companies who thought that the government’s going to back my gambling on this. And they’ll also be felt by people who used their own house and finance on it like an ATM machine or a casino. And I’m sorry that their bad bet didn’t work, but it didn’t. And if you get the government out of that, prices of these houses are going to go down. That’s exactly when homeownership for people like me, who’s been a renter my whole life, goes up. If I can finally afford that place in Palm Springs, I’m going to buy it. But we have to let prices go down.
We spend more than $20 billion a year on direct payouts to the richest country in the world’s richest farmers. To Monsanto, to big agribusiness, Archer Daniels Midland. These people are getting this money and it is directly impoverishing the third-world farmers that we are trying most vociferously in our rhetoric, anyway, to help. Get rid of it.
Bob Zadek: Good choice, Matt. We subsidize farmers as if somehow we have a need to preserve something which really doesn’t exist for the most part, which is the “family farm.” This is a case where a famous American painting called American Gothic probably profoundly influenced our economic policy. It is so quaint and so American to see this couple in gingham and a pitchfork and a hoe, or whatever they’re holding, with their farmhouse in the background. That drives American agricultural policy. If we were to close down, just close it down, the Department of Agriculture, the immediate effect would be you go to the supermarket, everything is cheaper. The next day, everything is cheaper. Milk is cheaper, eggs are cheaper, everything is cheaper. How could you quarrel with closing down the Department of Agriculture?
Matt Welch: Similarly, the FCC, Federal Communications Commission. It was launched way back when to allocate scarce broadcast spectrum. There was only so much of that real estate out there, you needed some sort of sensible doling of all that stuff. Well, it’s no longer scarce. And now we have basically an organization that’s trying every day to come up with new ways to maybe censor us just a little bit. And you can say this on live television and not that on live television. And by the way, we need to do a very long study that talks about what is the precise minority and female ownership of second-tier radio stations in mid-markets. Stop it. Just stop it.
Bob Zadek: Good choice, Matt. And to make my point again, if tomorrow, if tomorrow everyone in the FCC were fired and the FCC was closed down, there would be zero, zero disruption in any American’s life and zero disruption in the economic marketplace, except everything would be cheaper. And the only exposure we would have is, “Uh oh, who’s going to regulate wardrobe malfunctions?” So there would be a gap. And Americans with children, be careful, because if you take away the FCC, who will regulate wardrobe malfunctions? Uh oh.
Matt Welch: Who’s going to turn on and off your television? It’s very, very difficult to do it all by yourself. Good choice, Matt. One of the things that one of our writers came up with is dismantling the Davis-Bacon Act.
Bob Zadek: Yes, done to keep Blacks out of the government contracting market in 1931. Bacon was a Long Island congressman who couldn’t stand the thought of Blacks competing against the whites on Long Island for federal government contracts in 1931. So to prevent the Blacks from price competition in wages, they passed Davis-Bacon. And Davis-Bacon costs everybody in a hidden way all kinds of money because the government must overpay every time it puts out a government contract.
Matt Welch: Yes, you have to pay the prevailing wage, which is always, you know, minimum wage times two or three or at least a percentage, and they can’t competitively bid. They use our money as a way to reward their union friends. A hidden tax. It costs us incredible amounts of money. And on the local level too, especially in labor-dominated states like California, you see this constantly. Living wage ordinances on hotels near LAX, I swear to God, that’s an issue down in Southern California. It’s stunning.
We could repeal the stimulus tomorrow. We have $300 billion in unspent stimulus money. The stimulus, despite the attempts, crude attempts by both the administration and the broad commentariat to declare it all a smashing success, we can declare victory and go home now. It has not come close to delivering on what it was promised, which is hardly surprising because it was promised based on a series of ridiculous theoretical multipliers that said if you spend a dollar, it’s going to bring $1.60 in economic benefits. It doesn’t bring benefits, the money hasn’t been spent, stop spending it. It wastes money and it delays the solving of the problems of the economy that got us into this.
Bob Zadek: Matt, we’ve got one minute left. One more big way to save money that will cause zero disruption in the economy if you cut off the budget this minute.
Matt Welch: Bring the troops home. The Cold War is over. No more troops in Germany, Korea, anywhere else in the world. Bring them home. We are not the police force in Germany. We are subsidizing Europe, Asia. Bring them all home. The position, of course, of Gary Johnson, who will be my guest next week on the show. Bring them home.
Bob Zadek: Tell him I said hi.
Matt Welch: He’ll be on the show next week. He is my hope, my hope for presidential timber. And great choice, Matt. Matt, we have about 10 seconds left. I want to use my 10 seconds to thank you once again for sharing an hour of your time with me. I sure appreciate your insights. Keep up the good work at Reason, and thanks very much for being on my show and helping me save the country from the progressives. This is Bob Zadek. I’m here every Sunday at noon, 910 AM. Thanks again to Matt. Thanks to my audience for listening. Gary Johnson next Sunday, you don’t want to miss the show.