For the first 140 years of U.S. history, the federal budget was constrained. Two fiscal rules provided the constraint: the U.S. Constitution, which grants Congress only eighteen rather narrowly defined powers, and an informal rule that the government could only borrow during recessions and wars. Since then, the Constitution and accompanying informal rules have become little more than a parchment barrier. As a result, the scope and scale of the federal government have grown enormously. It is time to recognize reality. The federal government has grown too big, promised too much, lost control of the budget, undercut states’ rights, and has no strategic plan with outcome-based performance indicators. It is flying blind, without an instrument panel, in mountains of debt, and with few constraints.
The federal government does not need modest reforms; it needs a dramatic transformational change. Indeed, it does not need a nip-and-tuck job; it needs radical reconstructive surgery.
DOGE was the last attempt to rein in the federal government. DOGE intended to fight waste, fraud, abuse, and mismanagement. While it resulted in attracting a great deal of attention to government failures, it fell way short of achieving its much advertised savings goal and has subsequently largely disappeared from the news flow.
This year’s follow-up federal reform effort is the Task Force to Eliminate Fraud, headed by Vice President Vance. It is aggressively pursuing fraud that is endemic in many federal programs and was created as a follow-up to the fraudulent activities identified in Minnesota and California. However, it is making the same mistake that DOGE did by grossly overestimating its actual savings.
To once again establish fiscal rules and rein in the federal government, the President should create a Government Transformation Task Force by Executive Order. This Task Force would be much more strategic than the President Reagan’s Grace Commission (1982–1984) and President Clinton’s Reinventing Government efforts (1993 to 2001).
This new Task Force would involve public and private sector experts with direct transformation experience. It would examine what the federal government is doing compared to its constitutional role. It would also compare what various departments and agencies are doing as compared with their statutory charges. Importantly, it would develop a set of key outcome-based national performance indicators. These performance indicators would include economic, diplomatic, national security, and domestic metrics.
The resulting national indicators could be used as a basis to determine where we stand, where we are going, and how we compare to other countries. National indicators can be used by state and local governments as well. In fact, some state and local governments already use outcome-based metrics for budgeting and assessment. National indicators can also be used by the Executive Branch and the Congress to assess how the various federal departments and agencies are contributing to the achievement of the desired outcomes.
The Task Force could establish a new fiscal Constitution, which would eliminate the problems associated with flying blind. It would be able to make recommendations to the President and the Congress with regard to potential consolidation, termination, devolution, privatization, partnership, and expansion actions.
Steve Hanke is a Senior Contributing Columnist at Fortune, a professor of applied economics at The Johns Hopkins University, and a member of the Board of Directors at the Federal Fiscal Sustainability Foundation. He is also the co-editor, with Barry W. Poulson and John Merrifield, of Public Debt Sustainability: International Perspectives (Lexington Books, 2022). David M. Walker is the former Comptroller General of the United States and the Chairman of the Board of Directors at the Federal Fiscal Sustainability Foundation.
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