Wasteful Government Spending: Highlights of the Grace Commission Report

Waste Deep: an excerpt from A Taxpayer Survey of the Grace Commission Report, including an examination of where our tax money is spent.

| March/April 1985

  • Flushing-Money-Down-The-Drain
    William R. Kennedy Jr. and Robert W. Lee have summarized the Grace Commission Report in an easy-to-read 160-page paperback. Here are some highlights.

  • Flushing-Money-Down-The-Drain

On February 18, 1982, President Reagan announced the formation of the Private Sector Survey on Cost Control, to be chaired by entrepreneur J. Peter Grace. The commission was to attempt to scrutinize government spending through the eyes of private-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 consisting of 47 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 deficit of 424 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 few of 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. The following excerpt from the first chapter of that booklet, which encapsulates a few of the commission's recommendations, can serve as a sample of what Kennedy and Lee have to offer, and provide examples of the sort of governmental waste that's at the heart of the federal deficit now threatening to strangle the economic futures of our children and grandchildren. None of us are likely to agree with all of the proposals made by the Grace Commission, but most of us would agree that some of these 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 Grace 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.

Parole Review 

Potential Savings: $256,200 per year 

A prisoner who appeals an unfavorable parole decision is presently entitled to a two-step review of the decision. Incredibly, the same official who initially ruled on the appeal is also assigned to conduct the second review. In the eyes of the Grace Commission, this would make the first examination entirely redundant. Scrapping it would save an estimated $256,200 annually. (If the two-step review is not abandoned, it should certainly be conducted by two different officials! — MOTHER EARTH NEWS) 

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