Written by: Eugene Steuerle
Major government reform has always been challenging to achieve. The sheer complexity of government provides one obstacle, as it overwhelms reformers of all stripes, whether Republican or Democrat, advocate or academic researcher, voter or elected official. While one cannot avoid complexity in a multi-trillion dollar set of spending and tax programs, systematic ways exist to address the inefficiency it might foster. Here, I discuss three practical approaches: competition, integrated pursuit of broad goals, and information systems built to reveal, not hide.
Consider the broad range of programs providing direct support to individuals. The table above provides a partial list of government programs that support individuals, with the bottom row listing just three of many reform proposals being debated today.* The table excludes programs adopted by states and localities, the taxes and administrative efforts required to cover program costs, and the many government programs that indirectly support individuals, such as in defense or energy. I could have listed thousands of programs, but then I would need to publish a book, not a column.
A change in any one of these programs inevitably interacts with others. If Congress bumps up or down one type of income support, a household’s total income changes, which, in turn, often affects everything from the household’s need for those other programs to the level of subsidy each provides, given the change in income.
To some extent, this complexity is unavoidable. Governments at all levels in the United States provide spending and tax subsidies that exceed 40 percent of gross domestic product (GDP), and the U.S. share is lower than in most developed countries. Stating the reform goal as “fixing government” conveys about as much meaning as “fixing the private sector east of the Mississippi.” Large organizations need multiple products and suppliers to confront problems and exploit new opportunities. Large governments, businesses, and other organizations cannot help but be complex, but that only compels continual effort to simplify and add to efficiency.
Competition
In the private sector, competition weans. Ideally, it leads to innovation and replacing the bad with the good, the more costly with the less expensive, and the inferior with the superior. Products and companies of value at one time are abandoned when dollars spent elsewhere start yielding even greater value to customers. The Ford Model T was a good car in its time. Competition often adds to the number of companies and products in the economy but reduces the share of spending on inefficient ones.
Competition across government programs can do the same thing. More efficient housing vouchers usually proved superior to public housing, which then declined in relative importance. Ideally, charter schools compete with other public schools to improve both. Medicare Advantage and traditional Medicare offer two different ways of providing healthcare to beneficiaries; if well-designed, they would push healthcare providers to compete over who can spend money more effectively for patients rather than who can garner the most payments from the government.
Broad Goals
Reform can increase efficiency and reduce complexity when organized around broad goals common to multiple government programs. In the individual support arena, these include limiting poverty and promoting work. Setting broad goals would lead elected officials to address interactions such as the effective tax rate and marriage penalty that programs create together, not one at a time. The recent debate over child credit revealed how much more efficient it was at reducing poverty than many other programs. Multiple voucher programs that support food, housing, and childcare could be combined into a voucher that adapts to the household’s needs more efficiently and hence gets more “bang per buck.”
Information Structures
Presidents have often required program administrators to try to compare benefits to costs. Modern efforts include the Planning, Programming, and Budgeting System in the early 1960s, the Government Performance and Results Acts of 1993 and 2010, and the 2023 Biden-Harris Administration’s “New Initiative to Advance the Frontiers of Benefit-Cost Analysis and Strengthen Government Decision Making.” The last proposes expanded use of data, new information systems, and private-public research collaboration, among other efforts. President Biden was the first president to mention Artificial Intelligence (AI) in his State of the Union address on March 7, 2024.
However helpful these efforts might prove, the notion that any person or AI tool can measure all program benefits and costs and then rank every government action along some scale of better to worse is a pipe dream. Again, the primary requirement is continual improvement—finding better ways to perform given the always imperfect measures of a program’s value to society. A pet peeve of this column is that fear of offending some constituencies has increasingly led the White House to centralize and block the release of information developed within the Executive Branch on how programs might be improved legislatively.
Of course, these are only three of many systematic approaches to the broader issue of reforming government. “Letting Leaders Lead” with fewer constraining rules is one of my favorite themes from Phillip Howard’s book Everyday Freedom.
My point is simple: improving efficiency and reducing complexity among government programs involves more than identifying $100 hammers purchased by the Defense Department. It requires continual improvement through competition among programs, integrated pursuit of common goals across program areas, and information structures built to assess and reassess over time.
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