SMALLER GOVERNMENT, HIGHER TAXES

Occasionally, you see arguments over whether the conservative movement sees smaller government as an end or a mean, that is, whether they support the privatization of public services only when it results in cheaper and more efficient outcomes or whether they'll allow greater expense and inefficiency in order to satisfy an ideological distaste for government. Over at the IRS, we're seeing evidence for the latter:

Unless Congress steps in to stop it, the IRS is set to begin implementing a wildly inefficient plan to outsource the collection of past-due taxes from those who owe $25,000 or less. IRS employees could collect these taxes for about three cents on the dollar, comparable to other federal programs' collection costs. But Congress has not allowed the IRS, which is eliminating some of its most efficient enforcement staff, to hire the personnel it would need to do the job. Instead, the agency has signed contracts with private debt collectors allowing them to keep about 23% of every taxpayer dollar they retrieve. Employing these firms is almost eight times more expensive than relying on the IRS, but, according to IRS Commissioner Mark Everson, it fits in with the Bush administration's efforts to reduce the size of government.

Over 10 years, the companies hired are projected to collect overdue taxes totaling $1.4 billion, $330 million of which the companies keep as fees. According to the IRS' own estimates, over those same 10 years, the agency could collect $87 billion in unpaid taxes at a cost of just under $300 million — if allowed to hire sufficient personnel. In total, utilizing the private sector instead of augmenting IRS personnel would leave in the hands of delinquent taxpayers more than $85 billion owed to the federal government.

This is really a rather important test case: I've no particular investment in whether IRS employees or outside firms conduct tax enforcement. I would, however, like to save money and collect taxes. Similarly, I'd happily support a health care system expanding private options and offering vouchers for private insurance if I'd seen any evidence that such a structure would offer cheaper or better care. The problem is, there are too many examples of conservatives outsourcing government functions simply because they loathe government, and seeking ways to rationalize or justify the added expense and inconvenience because they're unwilling to deviate from the ultimate goal of a reduced public sector. The changes underway at the IRS are merely one example.

Pay close attention, also, to the news that Congress simply won't appropriate the funds to fully staff the IRS. We're seeing this at the Patent Office, the FDA, and a variety of other government agencies as well. The right refuses to allocate the necessary money for them to function properly, and then points to the inevitable mistakes or inconveniences of an understaffed, underfunded department as proof that their duties should be handed over to the private sector.