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My how history repeats itself, I remember back in the late 80s how regulatory agencies had been downsized to save money. In fact almost all levels of government were cutting back because the economy had faltered in the tax revenues and everything had gone to hell in a hand basket. Of course, one of the problems with government agencies is that once they are started, they just keep growing out of control, each year they need more and more money, and their budget just keeps growing. If there are robust periods in the business cycle, they expand to spend all that extra inflow of money they get, but they never save for a rainy day as you or I have to do with our own personal budgets.
Any, I do remember in the late 80s that many of these agencies had to write more fines, tickets, and collect more fees to pay for the lack of money they were getting from their various levels of government; city, state, county, and federal. So what did they do? Well, they figured out a way to increase enforcement, and use that money to buy more vehicles, so they could hire even more people to give out even more fines, and charge even more fees, and buy more vehicles to drive around and harassment businesses .
Now then, I see history repeating itself, and despite the Obama Administration put forth a budget which is $ 1.3 trillion more than they can collect in tax revenue, you can bet if Obama were lucky enough to get referenced, he would then have to cut all of these budgets for all of these agencies after that election.
At that point these regulatory agencies will go do what they've always done – they will start trying to generate their own revenue by putting the screws to small businesses, and to larger companies. In fact, a case in point might be that the largest federal agencies such as the FDA, SEC, FAA, DOT, SEC, and a dozen others will be out in full force going after all these large corporations with millions of dollars in retained earnings . In a way it is a form of tax, but in spirit it is really extortion. Elliot Spitzer is a great case study in how this works, and it just keeps repeating. Since when did the United States government decide that extortion tactics against the business community were appropriate?
How can we on one hand, demand more jobs, less off-shoring and outsourcing, and then go attack the companies that have made profits – and because they are afraid to spend the money because they do not trust the government – we will take that money away. It's a never ending vicious cycle. Corporations are not going to spend that money that they've been saving if they can not trust the government, and the government will need that money because it will not be getting any taxes, or increased economic activity, therefore it will go use extortion tactics to steal the money back.
Worse, we have a populist president who is promoting this notification of the 99% versus the 1%. By promoting that somehow the 1% minority that is wealthy is bad and evil, it gives an excuse for people to vote for these types of activities by the government, literally giving them a prenda-mandate to act like Robin Hood, who by the way was a thief and he was a socialist (FYI: Adolf Hitler was a socialist too, cite: WikiPedia).
The title this article is apropos; "beware of regulatory agencies that grow too big and then have their budgets drastically cut," because that's what's about to happen, and these agencies are not about to reduce their size, cut huge swaths in their payroll, or go on a diet. The blob of bureaucracy only knows how to do one thing; grow larger. But there's something I fear in this. At some point if the government grows too big, it no longer needs the people, and therefore we are expendable.
Likewise when regulatory agencies that grow so big and so powerful, they no longer need the businesses that they are looking over, and at that point those businesses are expendable (in their eyes), but if we take out our business community, we take out all the jobs and our economy goes to hell in that same proverbial hand basket.