Grace Commission

Last updated

The Private Sector Survey on Cost Control (PSSCC), commonly referred to as the Grace Commission, was an investigation requested by United States President Ronald Reagan, authorized in Executive Order 12369 on June 30, 1982. In doing so President Reagan used the now famous phrase, "Drain the swamp". [1] The survey's focus was on eliminating waste and inefficiency in the United States federal government. Businessman J. Peter Grace chaired the commission. [2] Reagan asked the members of that commission to "Be bold. We want your team to work like tireless bloodhounds. Don't leave any stone unturned in your search to root out inefficiency." [3]

Contents

Report

The Grace Commission report [4] was presented to Congress in January 1984. The report claimed that if its recommendations were followed, $424 billion could be saved in three years, rising to $1.9 trillion per year by the year 2000. It estimated that the national debt, without these reforms, would rise to $13 trillion by the year 2000, while with the reforms they projected it would rise to only $2.5 trillion. [5] The report's recommendations that intruded into policy were ignored by Congress, but many other efficiency recommendations were considered and some were implemented. [6]

The US national debt reached $5.6 trillion in the year 2000 [7] [8] and reached 13 trillion in 2010 after the Great Recession.

The report said that one-third of all income taxes are consumed by waste and inefficiency in the federal government, and another one-third escapes collection owing to the underground economy. "With two thirds of everyone's personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the federal debt and by federal government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services that taxpayers expect from their government." [5]

Reactions

Political science professor Charles T. Goodsell read through 45 of the 47 volumes of the commission's findings, and noted that the methodology appeared to give much power to the corporate experts whom the commission employed in interviewing federal employees; he also noted the potential for conflicts of interest. [9]

The Congressional Budget Office and General Accounting Office filed a joint report in 1984 finding that deficit reduction from the 90% of the commission's recommendations they analyzed would only amount to $98 billion. It also critiqued several recommendations as vague or lacking in data, and found disparities between agencies on the relevance of certain performance metrics. [10]

See also

Other similar commissions

Related Research Articles

<span class="mw-page-title-main">Reaganomics</span> Economic policies of Ronald Reagan

Reaganomics, or Reaganism, were the neoliberal economic policies promoted by U.S. President Ronald Reagan during the 1980s. These policies are characterized as supply-side economics, trickle-down economics, or "Voodoo Economics" by opponents, including some Republicans, while Reagan and his advocates preferred to call it free-market economics.

<span class="mw-page-title-main">Social Security Trust Fund</span> Type of trust fund in the United States

The Federal Old-Age and Survivors Insurance Trust Fund and Federal Disability Insurance Trust Fund are trust funds that provide for payment of Social Security benefits administered by the United States Social Security Administration.

<span class="mw-page-title-main">Public finance</span> Study of the role of government within the economy

Public finance refers to the monetary resources available to governments and also to the study of finance within government and role of the government in the economy. As a subject of study, it is the branch of economics which assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achieve desirable effects and avoid undesirable ones. The purview of public finance is considered to be threefold, consisting of governmental effects on:

  1. The efficient allocation of available resources;
  2. The distribution of income among citizens; and
  3. The stability of the economy.
<span class="mw-page-title-main">David Stockman</span> American politician and businessman (born 1946)

David Alan Stockman is an American politician and former businessman who was a Republican U.S. Representative from the state of Michigan (1977–1981) and the Director of the Office of Management and Budget (1981–1985) under President Ronald Reagan.

The Social Security debate in the United States encompasses benefits, funding, and other issues. Social Security is a social insurance program officially called "Old-age, Survivors, and Disability Insurance" (OASDI), in reference to its three components. It is primarily funded through a dedicated payroll tax. During 2015, total benefits of $897 billion were paid out versus $920 billion in income, a $23 billion annual surplus. Excluding interest of $93 billion, the program had a cash deficit of $70 billion. Social Security represents approximately 40% of the income of the elderly, with 53% of married couples and 74% of unmarried persons receiving 50% or more of their income from the program. An estimated 169 million people paid into the program and 60 million received benefits in 2015, roughly 2.82 workers per beneficiary. Reform proposals continue to circulate with some urgency, due to a long-term funding challenge faced by the program as the ratio of workers to beneficiaries falls, driven by the aging of the baby-boom generation, expected continuing low birth rate, and increasing life expectancy. Program payouts began exceeding cash program revenues in 2011; this shortfall is expected to continue indefinitely under current law.

Citizens Against Government Waste (CAGW) is a non-profit 501(c)(3) organization in the United States. It functions as a "government watchdog" and advocacy group for fiscally conservative causes. The Council for Citizens Against Government Waste (CCAGW) is the lobbying arm of CAGW, organized as a section 501(c)(4) organization and therefore is permitted to engage in direct lobbying activities. According to its website, "CAGW is a private, non-partisan, non-profit organization representing more than one million members and supporters nationwide. CAGW's stated mission is to eliminate waste, mismanagement, and inefficiency in the federal government."

<span class="mw-page-title-main">J. Peter Grace</span> American businessman

Joseph Peter Grace Jr. was an American industrialist who was president of the diversified chemical company, W. R. Grace & Co., for 48 years, making him the longest serving CEO of a public company.

<span class="mw-page-title-main">Michael Boskin</span> American businessman

Michael Jay Boskin is the T. M. Friedman Professor of Economics and senior fellow at Stanford University's Hoover Institution. He also is chief executive officer and president of Boskin & Co., an economic consulting company, and serves on the Commerce Department's Advisory Committee on the National Income and Product Accounts.

<span class="mw-page-title-main">United States federal budget</span> Budget of the U.S. federal government

The United States budget comprises the spending and revenues of the U.S. federal government. The budget is the financial representation of the priorities of the government, reflecting historical debates and competing economic philosophies. The government primarily spends on healthcare, retirement, and defense programs. The non-partisan Congressional Budget Office provides extensive analysis of the budget and its economic effects. CBO estimated in February 2024 that Federal debt held by the public is projected to rise from 99 percent of GDP in 2024 to 116 percent in 2034 and would continue to grow if current laws generally remained unchanged. Over that period, the growth of interest costs and mandatory spending outpaces the growth of revenues and the economy, driving up debt. Those factors persist beyond 2034, pushing federal debt higher still, to 172 percent of GDP in 2054.

In American political theory, fiscal conservatism or economic conservatism is a political and economic philosophy regarding fiscal policy and fiscal responsibility with an ideological basis in capitalism, individualism, limited government, and laissez-faire economics. Fiscal conservatives advocate tax cuts, reduced government spending, free markets, deregulation, privatization, free trade, and minimal government debt. Fiscal conservatism follows the same philosophical outlook as classical liberalism. This concept is derived from economic liberalism.

The National Partnership for Reinventing Government(NPR) was a U.S. government reform initiative launched in 1993 by Vice President Al Gore. Its goal was to make the federal government "work better, cost less, and get results Americans care about". The initiative aimed to streamline processes, cut bureaucracy (with a focus on overhead costs beyond issues addressable by statute), and implement innovative solutions. NPR was active until 1998. During its five years, it catalyzed significant changes in the way the federal government operates, including the elimination of over 100 programs, the elimination of over 250,000 federal jobs, the consolidation of over 800 agencies, and the transfer of institutional knowledge to contractors. NPR introduced the use of performance measurements and customer satisfaction surveys, and encouraged the use of technology including the Internet. NPR is recognized as a success and had a lasting impact according to government officials who worked on or were influenced by it under the Clinton and George W. Bush administrations.

<span class="mw-page-title-main">History of the United States public debt</span>

The history of the United States public debt began with federal government debt incurred during the American Revolutionary War by the first U.S treasurer, Michael Hillegas, after the country's formation in 1776. The United States has continuously experienced fluctuating public debt, except for about a year during 1835–1836. To facilitate comparisons over time, public debt is often expressed as a ratio to gross domestic product (GDP). Historically, the United States public debt as a share of GDP has increased during wars and recessions, and subsequently declined.

The Hoover Commission, officially named the Commission on Organization of the Executive Branch of the Government, was a body appointed by President Harry S. Truman in 1947 to recommend administrative changes in the Federal Government of the United States. It took its nickname from former President Herbert Hoover, who was appointed by Truman to chair it.

The economic policy and legacy of the George W. Bush administration was characterized by significant income tax cuts in 2001 and 2003, the implementation of Medicare Part D in 2003, increased military spending for two wars, a housing bubble that contributed to the subprime mortgage crisis of 2007–2008, and the Great Recession that followed. Economic performance during the period was adversely affected by two recessions, in 2001 and 2007–2009.

<span class="mw-page-title-main">Water supply and sanitation in Jamaica</span>

Water supply and sanitation in Jamaica is characterized by high levels of access to an improved water source, while access to adequate sanitation stands at only 80%. This situation affects especially the poor, including the urban poor many of which live in the country's over 595 unplanned squatter settlements in unhealthy and unsanitary environments with a high risk of waterborne disease. Despite a number of policy papers that were mainly focused on water supply and despite various projects funded by external donors, increases in access have remained limited.

<span class="mw-page-title-main">Domestic policy of the Ronald Reagan administration</span>

This article discusses the domestic policy of the Ronald Reagan administration from 1981 to 1989. Reagan's policies stressed conservative economic values, starting with his implementation of supply-side economic policies, dubbed as "Reaganomics" by both supporters and detracters. His policies also included the largest tax cut in American history as well as increased defense spending as part of his Soviet strategy. However, he significantly raised (non-income) taxes four times due to economic conditions and reforms, but the tax reforms instituted during presidency brought top marginal rates to their lowest levels since 1931, such that by 1988, the top US marginal tax rate was 28%.

The economic policy of the Barack Obama administration, or in its colloquial portmanteau form "Obamanomics", was characterized by moderate tax increases on higher income Americans designed to fund health care reform, reduce the federal budget deficit, and decrease income inequality. President Obama's first term (2009–2013) included measures designed to address the Great Recession and subprime mortgage crisis, which began in 2007. These included a major stimulus package, banking regulation, and comprehensive healthcare reform. As the economy improved and job creation continued during his second term (2013–2017), the Bush tax cuts were allowed to expire for the highest income taxpayers and a spending sequester (cap) was implemented, to further reduce the deficit back to typical historical levels. The number of persons without health insurance was reduced by 20 million, reaching a record low level as a percent of the population. By the end of his second term, the number of persons with jobs, real median household income, stock market, and real household net worth were all at record levels, while the unemployment rate was well below historical average.

Political debates about the United States federal budget discusses some of the more significant U.S. budgetary debates of the 21st century. These include the causes of debt increases, the impact of tax cuts, specific events such as the United States fiscal cliff, the effectiveness of stimulus, and the impact of the Great Recession, among others. The article explains how to analyze the U.S. budget as well as the competing economic schools of thought that support the budgetary positions of the major parties.

<span class="mw-page-title-main">Deficit reduction in the United States</span> Economic policy debate

Deficit reduction in the United States refers to taxation, spending, and economic policy debates and proposals designed to reduce the federal government budget deficit. Government agencies including the Government Accountability Office (GAO), Congressional Budget Office (CBO), the Office of Management and Budget (OMB), and the U.S. Treasury Department have reported that the federal government is facing a series of important long-run financing challenges, mainly driven by an aging population, rising healthcare costs per person, and rising interest payments on the national debt.

The economic policy of the first Donald Trump administration was characterized by the individual and corporate tax cuts, attempts to repeal the Affordable Care Act ("Obamacare"), trade protectionism, deregulation focused on the energy and financial sectors, and responses to the COVID-19 pandemic.

References

  1. Harrington, Rebecca (November 11, 2016). "Here's what Trump means when he says 'drain the swamp' – even though it's not an accurate metaphor". Business Insider. Retrieved September 29, 2019.
  2. Gilpin, Kenneth N. (April 21, 1995). "J. Peter Grace, Ex-Company Chief, Dies at 81". The New York Times.
  3. Reagan, Ronald (March 10, 1982). "Remarks at a White House Luncheon With the Chairman and Executive Committee of the Private Sector Survey on Cost Control" . Retrieved 2024-11-25.
  4. The Grace Report from Defense Technical Information Center
  5. Hershey, Jr., Robert D. (May 7, 1984). "Hold the Dust, Hold the Jeers". The New York Times.
  6. "U.S. National Debt Clock FAQ".
  7. "Debt to the Penny (Daily History Search Application)".
  8. Goodsell, Charles T. (May 1984). "The Grace Commission: Seeking Efficiency for the Whole People?". Public Administration Review. 44 (3): 196–204. doi:10.2307/975482 . Retrieved 20 November 2024.
  9. Faherty, Robert L.; Jones, Thelma L.; Brooks, Nancy H. (28 February 1984). "Analysis of the Grace Commission's Proposals for Cost Control" (PDF). Government Accountability Office. Retrieved 20 November 2024.

Literature