Government Spending

After the Sept. 11 Attacks

A chance for smaller government?

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The Sept. 11 terror attacks have spawned a new cliché. The media establishment is saying, over and over, that Americans love big government again.

R.W. Apple Jr.'s "White House Letter" in Friday's New York Times carried a typical headline: "Big Government is Back in Style." The headline on a Christian Science Monitor op-ed by Daniel Schorr was, "Government's Back, Big Time"; on a Los Angeles Times piece by Ronald Brownstein, "The Government, Once Scorned, Becomes Savior."

This is wishful thinking by the punditocracy. Yes, the public trusts government to fight terrorism, and it's willing to give the military and domestic-safety agencies more money and power. But Americans are not going to hand Congress and the president a blank check to expand the welfare state.

In fact, the result of the terror attacks may be to reduce government. Two prominent vestiges of a command-and-control vision of the U.S. economy are now—because of the war—is serious jeopardy. As institutions protected and subsidized by taxpayers, the U.S. Postal Service (USPS) and Amtrak—at least as we now know them—may be on their last legs.

Postal Service: Postal workers have been victims of bioterrorism, and they deserve praise for their courage. But the attacks have also prompted Americans to ask how much traditional postal service they really need.

It all reminds me of a 1997 episode of "Seinfeld," where Kramer gets fed up with the mail service and goes to the post office to cancel delivery permanently.

"What about your bills?" asks Newman, the postal clerk.

"The bank can pay 'em," says Kramer.

"The bank…. What about your cards and letters?"

"E-mail, telephones, fax machines, Fed Ex, telex, telegrams, holograms…."

"All right," says Newman. "It's true! Of course, nobody needs mail. What do you think? You're so clever for figuring that out?"

It may be inertia that has kept Americans from using the technology to improve on the absurd practice of writing things on pieces of paper, addressing them, stamping them, walking a few blocks to stick them in a box, having the box emptied and the envelope brought across the country by plane, truck and foot, etc., etc.

Now, it seems, bioterror may trump inertia. What to do about the mail service? First, end the U.S. Postal Service monopoly on first-class letters; second, end the USPS monopoly on the use of the letter slot (yes—by law, the feds own the slot in your own door, and companies like Federal Express are prohibited from using it); and, third, end all government subsidies for the USPS and make it compete on an equal footing with UPS, Fed Ex and others.

Amtrak: A scathing report, issued by the Amtrak Reform Council (set up under a 1997 act that kept the railroad alive for five years) stated Nov. 14 that "Amtrak has made no significant progress toward self-sufficiency" and concluded, "America has a critically flawed rail passenger company."

Amtrak is losing about $1 billion a year, but, worse, as ridership and revenues rise, so do losses. Amtrak, like the USPS, survives because of its political connections. The USPS has far more employees (798,000 vs. 25,000), but Amtrak's crazy route structure runs through 45 states. Members of Congress talk tough, but they always give Amtrak—which has never made an operating profit in 30 years—more money, to keep a tiny group of constituents happy.

A well-run private service could serve constituents, too—and probably better. Again, there is a simple solution, laid out in Derailed, an excellent book by Joseph Vranich, former director of the National Association of Railroad Passengers. Following a model used in Britain, Japan and other countries, the government should auction off selected routes to the private firms that require the smallest subsidies. Other routes should be shut down. The Northeast Corridor should be a goldmine, but Amtrak can't make it pay.

Ending subsidized mail and rail government monopolies fits well with new public attitudes since the attacks. Americans, now more serious, have less patience for programs that don't work. When the pundits talk about a return to big government, what they really mean is a return to more government spending on national security. That's nothing new. It goes back to Hobbes and Locke: government's first and most important job is national defense and domestic safety.

Increased spending on antidotes to bioterrorism, the creation of a new Office of Homeland Security, federalizing airport security guards, emergency funds for New York, even providing grants and loans to the airline industry (and not, say, to the hotel industry)—all of these steps were taken to improve security of Americans in a time of danger.

The Sept. 11 attacks put pressure on our institutions. Some, including the White House and the military, have risen to the challenge. Others have not. A Gallup Poll, taken Nov. 8 to 11, found that 89 percent of those surveyed approved of President Bush's performance in the crisis, and only 8 percent disapproved. But for the news media, only 43 percent approved and 54 disapproved.

There's not much that can be done about the media, but it's unlikely Americans will tolerate the continuing poor performance of the postal service and passenger rail. Both need free-market therapy, and this is the time to provide it.