Washington Monthly | The Tax Day Outrage You Don’t Know About
Conservatives love to lament wasted taxpayer money, but cuts to federal workers are costing the U.S. billions.
If you like to leave things until the last minute, you probably know April 15 as the day to squint at a 1040 tax form or rush through TurboTax. In the past, conservatives have also used this occasion to rally against Big Government, or to write listicles chronicling “six of the more infuriating ways that [tax] money has gone to waste.”
But the lesser known fact about Tax Day is all the money that doesn’t come in. ProPublica estimates that every year, the public misses out on $18 billion in revenue thanks to a whittled down workforce of government tax auditors. Hamstrung by eight years of budget cuts, the Internal Revenue Service has shed staff dramatically. As of 2017, the organization had 9,510 auditors—a third less than it had in 2010. That means fewer bookkeepers to investigate shady claims or to go after people who don’t bother to file taxes. No wonder the department’s inspector general estimates that the amount of lost revenue has gone up by at least $3 billion each year.
It’s just one example of how politically popular calls to cut federal workers often don’t pan out to be the straight-forward, belt-tightening measures they’re pitched to be.
“It’s been two years since we’ve hired anyone,” one Department of Labor bureaucrat told Rachel Cohen, writing for Washingtonian. “We’ve lost 25 percent of our staff, and our employees know nobody is being hired—but we’re not allowed to admit it.”
That Trump’s bureaucracy is riddled with vacancies is intentional. Soon after taking office in 2017, the president announced a freeze on hiring federal workers. He reversed that decision 79 days later, but Trump’s budget director Mick Mulvaney (now doubling as his acting Chief of Staff) solicited recommendations on how to rebuild the executive branch “from scratch.” Mulvaney said that Trump wanted to start with “a literal blank piece of paper.”
He’s hardly the first president to push for an overhaul of the executive branch. Bill Clinton’s ‘Reinventing Government’ initiative called for eliminating hundreds of thousands of government positions, and he followed through. Regan and George W. Bush pressed for cuts too. Sometimes the rationale is belt-tightening; sometimes it’s making government more competent. Often, it’s both. But simply cutting the government work force, both in executive agencies and in Congress, often achieves neither aim.
“Hiring freezes—not only in terms of explicit policy but also the struggle to hire when the budget is so uncertain—these have huge and dramatic implications for the federal government” said Donald Kettl, a political scientist at University of Texas at Austin. When staff are cut in government, agencies still have to find a way to complete their legally required duties. The Social Security Administration can’t not send out checks. The IRS can’t not collect taxes.
Enter private contractors, hired to help the government do its work when federal employees have been whittled down. Writing for this magazine, Gilad Edelman showed that while the U.S. population has balloonedsince the mid 1960s, the federal work force in 2016 was about the same size as it was in 1966. What has gone up, however, is the number of contractors the government uses. They tend to be more costly than civil servants, sometimes dramatically so, which is why just cutting federal workers doesn’t always save taxpayer money.
It’s also vital that the government have enough staff to oversee those contractors. But often, they don’t. When the U.S. went to war in Iraq and Afghanistan, for example, it dramatically increased the cost and complexity of its private defense contracts.A government report found that the work of the federal employees who manage these contractors increased seven-fold. But the number of defense contract managers was cut in half in the mid 1990s, and it continued to decrease even when their workload went up. Partially as a result, cost overruns for weapons systems contracts went from an average of 6 percent in 2000 to 25 percent in 2009.
Sometimes, regulatory agencies actually turn to the industry they’re overseeing for extra manpower—in effect asking private companies to help regulate themselves. The Federal Aviation Administration, for example, has for years enlisted Boeing’s assistance in inspecting and approving the company’s own planes. That policy of delegation has come under scrutiny after two crashes involving Boeing’s 737 Max 8 jets. “It seems pretty clear that the FAA didn’t have the capacity to be able to review the plans that Boeing was putting forward,” says Kettl.
But this problem isn’t just limited to the executive branch. It’s an issue for Congress, too. As I wrote for the most recent issue of the Monthly, legislators’ struggles with technology can be traced back to staffing cuts in the 1990s, when Republicans won both houses of Congress for the first time in 40 years and called for budget cuts across government. They eliminated the Office of Technology Assessment, which helped educate legislators and their staff on science and technology. They cut a third of staffers in the House who work on committees—where much of the policymaking happens. And they cut support agencies, like the Congressional Research Service and the Government Accountability Office, by about a quarter.
Those numbers haven’t rebounded, and current staffers feel it. A recent survey of senior aides found that 84 percent thought “high-quality, nonpartisan, policy expertise within the legislative branch” was “very important,” while just 24 percent were “very satisfied” with the status quo.
With fewer policy and research staff available, and without in-house science and tech wonks, lawmakers will continue to struggle to understand some of the most pressing issues. But this is a fixable problem: Congress controls the whole federal budget and could easily decide to allocate more money for its own staff. While they’re at it, they could increase funding for the IRS—and help recoup billions in the process.