Dear
Mr. Pearlstein:
Thanks
for your 12/19/13, "Power or Money Article" in the Washington Post. While
the anecdotes were interesting, they do not begin to justify your conclusions or
explain why you neglected to mention key forces and developments that have led
to the situations you decry.
The
fact that "Washington" became a money pit to be exploited by the powerful
certainly did not start during the Reagan Administration. It can much more
clearly be traced to the late 1960's when adoption of the federal "Unified
Budget" concept at the insistence of LBJ made it possible for almost every
administration (except Reagan) and Congress since then to pretend that the
federal treasury was unlimited.
By
combining the Social Security surplus at the time with the rest of the federal
budget permitted massive expansion of the role of government and of spending,
entitlements, special interest tax breaks, and credit programs while pretending
that the US had something close to a "balanced budget." (As I'm sure
you recognize, that fiction has played out now that Social Security is no longer
producing a mythical surplus.)
The
alleged surpluses permitted members and staff of appropriations and tax writing
committees to have a "field day" in giving away tax dollars through
subsidies, tax breaks, and ineffective programs while ignoring the fiscal cliff
that has finally overtaken us.
Another
factor that contributed mightily to the "contracting out" practice that you
claim led to "Washington wealth" was not necessarily the merits of the practice
itself (which has both advantages and disadvantages) but instead to the practice
encouraged by successive administrations and congress to limit the number of
people on the direct federal payroll. Contracting out permitted hiding the
real size of the "federal" workforce. Another factor leading to
contracting out was the perceived need to pay more for certain kinds of talent
(usually labeled "scientists and engineers," but in fact much broader) than was
possible at the time under the federal Civil Service pay scales (a problem that
has been over-corrected). This occurred under the Manhattan Project and
continued under the Atomic Energy Commission and the Department of Defense and
then NASA, CIA, etc.
The
"contracting out" practice has expanded to all agencies and proceeded to the
point where federal agencies do not have the competence to oversee contracting
practices in as way that protects the interests of taxpayers and/or prevents
massive fraud, waste and abuse.
All
of this happened while key players NOT mentioned in your article -- that is,
powerful members of Congress and their staffs -- were enjoying their roles in
passing out tax breaks and subsidies and collecting power, prestige,
perquisites, and, perhaps most important, campaign contributions that kept them
in office and enhanced their power -- at the expense of ordinary citizens and
taxpayers.
While
you mention the great things done by the leader of the Carlyle Group, you failed
to mention that partners in hedge funds and private equity firms such as
Carlyle, Blackstone and others enjoy a huge tax break in the form of the
"carried interest" provision of the tax code that permits them to pay income
taxes to the federal government at a 15% rate while "normal" corporations pay
35% and many taxpayers pay more than 15%, some up to 39.6%. The great
charitable contributions they make are made possible in part by shifting their
tax burden to ordinary taxpayers. (You might also note the article about GRATs
appearing in the same section of the Post as your article.)
I
hope that in future articles you will focus more accurately on the people,
positions, and policies that lead to the conditions that you don't like,
especially members of Congress who are unwilling and/or unable to resist
entreaties from lobbyists and using their positions to stay in
power.
It
is indeed sad that Washington has become such a source of easy wealth for so
many individuals and some corporations. Some very large corporations
apparently have concluded that there is more profit with much less risk in
"mining" the federal government for tax breaks and subsidies than in pursuing
entrepreneurial, innovative, and commercially productive activity in
the private sector. Some observers have claimed that one large, formerly
innovative corporation employs more lobbyists in Washington than scientists
and engineers in its laboratories!
Meanwhile,
associations operating in Washington -- such as the US Chamber of Commerce,
National Association of Manufacturers, Business Roundtable, and others --
once ardent defenders of private enterprise now devote much of their
activities to the protection and enhancement of tax breaks and subsidies for
their members who exploit Washington’s weaknesses.
Happy
New Year!
Glenn
R. Schleede
Ashburn,
VA
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