Bracing for Change at HHS
In a new Wall Street Journal/NBC poll, more than half of respondents, 52 percent, said that Donald Trump will either not change the way business is done in Washington or will bring the “wrong kind of change.”
This may sound negative, but the fact that 48 percent believe positive change will occur points toward a meaningful note of hope and optimism.
With the nomination of highly motivated reformers, like Rep. Tom Price to head up the largest department in the federal government, Health and Human Services, we should feel hopeful. But history and experience should also keep us sober. Change in Washington is very hard.
President Reagan pledged to close down the departments of energy and education. But both departments survived and spending today for both departments is higher today than when Reagan took office
When President George W. Bush was re-elected in 2004, he placed reform of Social Security front and center in his campaign. He devoted almost one-quarter of his state of the union address in 2005 discussing the importance of reforming Social Security.
Yet, despite his Republican Party controlling both houses of congress, President Bush failed in his efforts to reform the Social Security system.
The point is not to be cynical but to stay in touch with reality. There is a joke that government programs are like nails without heads. Once they are put in it’s almost impossible to pull them out.
HHS, where Rep. Price is headed, has 72,000 employees and a budget of almost $1.1 trillion — $8,800 per every American household. It consumes one-quarter of the federal budget and is twice the size of the defense department, the second largest department in the federal government.
From 1970, HHS has grown by a factor of 10, from $103 billion to $1.1 trillion.
The lion’s share of this budget is Medicare and Medicaid, but it also includes the whole array of welfare and anti-poverty programs, including Temporary Assistance for Needy Families, Head Start and Low Income Energy Assistance Program. These are operated through 19 different offices and 529 different subsidy programs.
All of these programs are in great need of reform. Most have been around for years. Medicare and Medicaid go back to the 1960s and still operate basically the same way today as 50 years ago, despite dramatic changes in the country and technology. Projections show spending on these two programs, coupled with Obamacare, doubling over the next 10 years, taking an increasing percentage of our GDP.
Who ever heard of a business that doesn’t change how it operates over half a century?
In contrast, American Enterprise Institute economist and blogger Mark Perry reports that only 12 percent of the Fortune 500 firms that are on the list today were on it in 1955. Change and competition wash out the old and bring in the new, including among the biggest corporations in the world.
Yet Medicare, which in total spending is about the same size as Wal-Mart, the largest corporation on the Fortune 500 list, is doing business essentially the same way today as it did a half century ago.
Rep. Price wants major reform in all these health care and welfare programs. These are badly needed reforms, as our economy is becoming increasingly weighed down by excessive and wasteful government.
But there is no internal mechanism in government entities to self-adjust, as there is in business and a free market. The opposite is true. Every program spawns armies of special interests that fight change and mobilize to protect the status quo. It’s why there should be great resistance to starting these programs to begin with.
Great ideas are on the table for how to reform these massive programs. But a very tough fight lies ahead.