“Mid-level scrutiny” by John Edward

John Edward, a resident of Chelmsford who earned his master’s degree at UMass Lowell and who teaches economics at Bentley University and UMass Lowell, contributes the following column.

We cannot afford to blindly accept all government expenditures as worthwhile. We need to examine government spending with “mid-level scrutiny.”

In a previous column, I described how we should apply the Supreme Court’s strict scrutiny standard to evaluate spending on tax incentives.

Strict scrutiny requires a compelling state interest with an absolute focus on purpose.

Mid-level scrutiny sets the bar lower than strict scrutiny. When the court applies the mid-level scrutiny standard, they consider legislation “quasi-suspect.” The legislation is valid only if:

1. There is an important state interest, and
2. There is a demonstrable and substantial connection to purpose.

In other words, the legislation must address a specific goal that is important to society. In addition, there must be reason to believe the legislation has a good chance to achieve the goal.

We should apply mid-level scrutiny to federal, state, and local spending programs.

Total spending in the 2013 federal budget was $3.8 trillion. Of that, only $565 billion was spent on actual government programs – what budget accountants call non-defense discretionary spending.

Discretionary spending includes vital programs such as education and transportation. The private sector will not make these investments. However, they are vital to our long-term economic health.

Still, $565 billion is a lot of money. Our national debt is now over 100 percent of our Gross Domestic Product. We need a long-term plan to bring that down to encourage private investment. Private investment is also vital to our long-term economic health.

We need to use discretion when spending money on discretionary programs. We need to subject federal spending to mid-level scrutiny.

The Cato Institute has identified specific areas where they believe the government should cut spending. They describe themselves as “a public policy research organization – a think tank – dedicated to the principles of individual liberty, limited government, free markets and peace.”

For example, the Cato Institute recommends cutting over $20 billion in annual farm subsidies. Ten agri-conglomerates get most of the money.

Growing the profits of agribusiness conglomerates is not an important state interest. Paying “big farma” to grow, or not grow, corn or wheat does not have a substantial connection with a purpose of promoting a healthy farm industry. Congress should apply mid-level scrutiny and remove subsidies from the farm bill voted down last week.

Massachusetts has a $34 billion dollar state budget. That is a lot of spending. Not all of it would pass mid-level scrutiny.

As an aside, my hope was to embrace an idea offered by one of the more fiscally conservative advocacy groups. I checked the websites for the Massachusetts Republican Party, the Tea Party, Citizens for Limited Taxation, Center for Small Government, and others. There were many ideas for cutting taxes. I found no comprehensive or thoughtful plans for cutting state spending.

The best source I found was the Alliance to Roll Back Taxes. They described themselves as “a non-partisan, grassroots campaign committee formed to [support] Question 3, the 2010 Massachusetts ballot initiative to Roll Back the Sales Tax to 3%.”

For example, the Alliance targeted money the state spends in the name of “economic development.” Developing the economy is certainly an important state interest.

However, much of the money spent on economic development programs does not have a demonstrable connection to the intended purpose. Moreover, the intended purpose in some cases appears to be to promote the interests of individual legislators.

During the 2014 budget process, the Massachusetts House of Representatives added almost $20 million for economic development programs. Spending under the Massachusetts Office of Travel and Tourism more than doubled.

Tourism may be an important state industry. The state spending may help hotels and other individual businesses. However, it is not clear these earmarks develop the economy in a manner that promotes the common wealth. There is a lack of evidence that the spending has a substantial connection to purpose.

Worse yet, much of the additional spending is not under the control of state agencies. Rather, Representatives dictated spending for specific programs and events in their districts. The Massachusetts Office of Travel and Tourism, and economic development programs in general, should be up for an audit.

Fortunately, we now have a very pro-active State Auditor – Suzanne Bump. Her office produces reports on a weekly basis scrutinizing wasteful or inefficient (or possibly corrupt) state spending. Each report carries her signature message — Making government work better.

Governor Patrick and the legislature should use these audits as a basis for applying mid-level scrutiny. I will elaborate on the importance of the Auditor’s role in an upcoming column.

The Lowell City Council recently approved a $317 million budget. The vote was unanimous. They spent well over a half million dollars on software and almost a quarter of a million on postage for the Treasurer. Did the council apply mid-level scrutiny?

The City Council is up for re-election in November. I have no doubt many candidates will talk about “tax relief” and “fiscal discipline.”

In my last column, I challenged members of Congress to take the fiscal discipline litmus test. The litmus test for City Council candidates is to apply the mid-level scrutiny standard to the Lowell budget and propose specific spending they would cut.

We should examine government spending at all levels under mid-level scrutiny. Taxpayers will support government spending if the money is well spent. Voters need to focus less on making government smaller, or larger. We need to make government work better.