You are invited to read this commentary from the Free Enterprise Foundation. It will make you think!

Let’s Have a New Grace Commission

“The first 2/3 of the income tax is either wasted or lost. Of the remaining 1/3, every dime of IRS income tax goes to private lenders for interest only on the exponentially escalating national debt. This fact was revealed by the Grace Commission (PPSS) in the Reagan Administration. Not one dime goes to reduce the national debt or run our government.” Fred Durland summarizing a finding from the 1984 Private Sector Survey on Cost Control (Grace Commission)

It has been 26 years since Peter Grace, head of W.R. Grace & Co., responding to the call of President Ronald Reagan in 1982 to assemble a group of experts from industry to study the Federal Government in order to ferret out “waste, fraud and inefficiency,” completed what is the most thorough top to bottom outside review of government operations ever conducted. Formally it was the President’s Private Sector Survey on Cost Control, but it has become known simply as the Grace Commission. I had the honor of heading the Land Team of the Commission, and my company’s CEO, Darwin Smith, was part of its small senior management group.

We were part of a cooperative effort by 36 coordinated task forces and 161 senior corporate executives and over 2000 volunteers provided at a cost of seventy six million dollars to corporate America. It was turned over to President Reagan gratis to make sense out of the confusing, self defeating, wasteful, fraud prone, inconsistent and even contradictory processes mandated by the vast federal bureaucracy wasting our tax dollars in the people’s name.

Together, if fully adopted, we documented 424 billion in 1984 dollars over three years of savings, rising to 1.9 trillion in annual savings in the year 2000. The Commission provided 2,478 cost cutting revenue-enhancing recommendations that asserted they would not raise taxes weaken America’s defense build-up or harm existing social welfare programs.

More than two decades have passed with only partial adoption of its suggestions, and we are in even deeper soup just as it suggested we would be if we did not follow through. In fact we are several leagues beyond anything the Commission even conceived of in fiscal jeopardy due to our own profligacy. Any rational society would have long ago reigned in its appetites, re-examined its approach to social services and sharpened its management pencils.

What do we do, instead? Cast over a trillion dollars to the wind in the form of so called “stimulus” and adopt an additional $2.5 trillion in a new “entitlement” based on knowingly false assumptions, leading to further erosion in the stability of our currency and the ability of the nation to retain its international standing. So much for rationality!

We appear to neither have the national consensus nor the political will to take those actions required to save ourselves from the disaster looming just over the horizon. Keynesians are thrilled that production and spending are on a “V” shaped recovery fueled by government spending, while Von Miseans (…is that a term?) are noting the costs to our economy in high unemployment, social fracturing deficits, looming increases in the cost of national credit and the threat of an assortment of new taxes that will further erode the ability of the nation to recover. It is ironic that it was during the administration of President Reagan, who so wished to limit the size of government, we began this inexorable march to the brink of disaster.

In a recent article, I noted that during World War Two our Gross National Debt as a percentage of Gross National Product exceeded 100 percent for the first time in modern memory. It fell sharply during both the Truman and Eisenhower administrations and reached less than 30 percent of our Gross Product in the Nixon-Ford-Carter Years before beginning its ascent under Reagan and Bush (41.) Under Bush (43) and Obama, it will more than quadruple the level in the year 2000, and while some count differently from my approach, which recognizes debt held by the GSEs as public debt, I believe we have already exceeded our Annualized Gross National Product without having the pent up demand left by a World War to fuel our escape this time around. Quite frankly we have disregarded just about every rule of prudent government and prudent personal management ever taught to us by our parents and our own common sense. We should be ashamed.

It is unclear whether the more than 100 new agencies of government to be created to carry out the new health care initiative will ever be funded, but even the existing governmental structures are woefully in need of a sharp management knife to prune waste, inefficiency and fraud from their administration. While lamenting the total irresponsibility in growth of government, in calling for a new Grace Commission, we can still hope that government does what it can to carry out its ill conceived programs in a manner as devoid of waste, inefficiency and fraud as possible. A new Grace Commission would help.

The original Grace Commission has left a legacy to push its recommendations. The Council for Citizens Against Government Waste (CCAGW) was created by Peter Grace and columnist Jack Anderson to continue his effort to assure good government. CCAGW annually publishes its “Congressional PIG Book” of waste. With more than a million members nationwide, CCAGW is a candle against the darkness that threatens to overwhelm us. It continually also publishes its recommended “Prime Cuts” and documents over a trillion dollars in accumulated savings since 1984 as a result of this effort. _._

Copyright © 2010 by Robert E. Freer, Jr. All rights reserved

About the author: Robert E. Freer, Jr., is president of the Free Enterprise Foundation. He is also the first BB&T Visiting Professor in Ethics and Free Enterprise Leadership at The Citadel. A regular contributor to the Mercury, Prof. Freer may be reached at robert.freer@citadel.edu. If you would like him to appear before your group or organization to speak on any of the subjects about which he writes, please contact him at The Citadel. Copies of his earlier columns may be found at The Free Enterprise Foundation