Waste Deep

Economic Outlook

On February 18, 1982, President Reagan announced the formationofthe Private Sector Survey on Cost Control, to be chaired by entrepreneurJ . Peter Grace. The commission was to attempt to scrutinize government spending through the eyesofprivate-sector business . . . in effect, to study the government as if it were a firm with which commission members were considering merger. The Grace Commission (as it came to be known) worked on its study for about 18 months and turned in a comprehensive report consistingof47 volumes that document nearly 2,500 specific recommendations. It has been estimated that, if implemented, the actions proposed by the commission would result in a reduction in the federal deficitof424 billion dollars over a three-year period and would do so, in the commission's words, without "weakening America's needed defense build-up, and without in any way harming necessary social welfare programs. "

And that may well be the case, but precious fewof us"little guys" are likely to be willing or able to wade through 36 major reports and 11 special subject studies to find out! That's why we were glad to see that William R. Kennedy Jr. and Robert W. Lee have summarized that monumental publication in an easy-to-read 160-page paperback (available for $2.95 postpaid from Western Monetary Consultants, P.O. Box 430, Ft. Collins, CO 80522; 800/525-4956). The following excerpt from the first chapterofthat booklet, which encapsulates a fewofthe commission's recommendations, can serve as a sampleofwhat Kennedy and Lee have to offer . . . and provide examples ofthe sortofgovernmental waste that's at the heartofthe federal deficit now threatening to strangle the economic futuresofour children and grandchildren. Noneof usare likely to agree with all ofthe proposals made by the Grace Commission, but mostof uswould agree that some ofthese recommendations could go a long way toward restoring a little much-needed sanity to the American economy.

Foreign Loan Subsidies(Potential Savings: $360 million). The Grace Commission discovered that taxpayers are subsidizing foreign borrowers. Interest rates in 1970 on Official Development Assistance (O.D.A.) loans, for instance, were 69 percent of the Treasury bond rate (the price at which the federal government borrows money). But by 1981, that foreign rate had plummeted even further, to a mere 27 percent of the T-bond rate. Which means, in the Commission's words, that "foreign borrowers were getting loans from American taxpayers at 2.5 percent." If the foreign rate could once again be raised to at least the 1970 average of 69 percent, taxpayers would realize a savings of $360 million—an amount equal to the federal income taxes paid by 162,308 median-income families in 1983.