In Government, Nothing Succeeds Like Failure

The White House's decision to suspend enforcement of Obamacare's health insurance standards because of the website debacle was politically wise. (Its legality and implementation, however, remain uncertain.) But the main lesson we should draw from this incident is not that government can quickly change course in the face of failure. Rather, it teaches just the opposite: once Washington commits to a policy, it reverses direction only when waves of opposition engulf it.

President Obama's sudden about-face is most unusual. (The closest analogy is George H.W. Bush's abandonment of his dramatic "no new taxes" pledge). When Bill Clinton, now more popular than ever, urged him to honor his unequivocal proclamations that we could keep our insurance policies and doctors if we liked, many congressional Democrats immediately jumped ship.

But in the vast majority of cases, failed policies endure. Their immortality reflects institutional practices that firmly resist policy change regardless of actual performance. These practices include the short time horizons of politicians and appointees, resistance by interest groups and congressional subcommittees to rocking the policy boat, and the careful design of programs to combine concentrated benefits but diffuse costs. Farm subsidies, for example, are among the most inefficient, regressive federal programs. Born in the 1930s, they persist despite a vast decline in farm populations, the rise of agribusiness, and much off-farm employment by farmers who are now wealthier than non-farmers on average. Cash payments, price supports, loans, subsidized insurance, environmental protection subsidies, acreage limits, and other farm subsidies cost $256 billion between 1995 and 2012. In recent decades, fully 90% of direct and price-support payments went to the top 20% of farms (including many owned by members of Congress); the vast majority of farms receive nothing. These programs disproportionately benefit the largest farms, raise food prices for the rest of us, and waste scarce water supplies. Reform efforts proved short-lived; indeed, Congress added new tax-subsidized crop insurance programs which cost $15.8 billion last year.

The ethanol program also flourishes despite its multi-faceted perversity. The first Bush administration, eager to burnish its green credentials, promoted a biofuel, ethanol, as a cheap gasoline substitute. Congress then imposed a yearly quota, predicting that the U.S. would produce about 240 million gallons a year by 2011. (It turned out to be a mere seven million gallons despite lavish subsidies). But in a classic case of Murphy's law, the statutory quota made gasoline blends contain more and more ethanol even when market demand declined. Thus, huge quantities of corn were processed for gasoline rather than used for human food or livestock feed, yet corn is an inefficient ethanol feedstock compared with sugarcane, which Brazil uses to produce ethanol. And ethanol itself is not energy-efficient; its full production cycle actually lowers fuel economy. Still, the agribusiness-ethanol lobby prevailed -- and by 2012, the contrived demand for ethanol consumed almost half the corn crop, vastly more than Congress predicted. Since corn ethanol diverts as many calories from the world market every year as the worst famines and other supply shocks took away in the last fifty years, this price-raising diversion has increased world hunger in poor countries with corn-based diets. (Less tragically, the program has also raised U.S. gasoline prices, especially harming lower-income drivers). Last week, EPA finally agreed to stop -- at least temporarily -- its ratcheting up of the ethanol content.

These examples of the status quo bias are only the tip of the iceberg. At the behest of powerful Postal Service unions and rural interests, Congress continues to prohibit many changes needed to address the agency's insolvency. The Voting Rights Act's coverage formula has grown so out of date that the Supreme Court held it unconstitutional earlier this year. (The Court was right to see the formula as anachronistic, I believe, but wrong to invalidate it). Many tax rules urgently need revision. Although Congress mandated that No Child Left Behind be updated by 2007, it has not done so, forcing the Department of Education to grant the states broad waivers to keep the program afloat. Washington seems content to kick the Social Security and Medicare cans as far down the road as politically possible, making the eventual reforms all that more difficult.

Where federal programs are concerned, then, nothing succeeds like failure and rigidity. But it doesn't have to be this way. Promising proposals to reverse such policy failures abound from all points on the political spectrum. And more systematic remedies beckon. For starters, Congress should require cost-effectiveness analysis of established programs, not just proposed ones. It should revive the "paygo" rule that required new programs to offset their costs against savings elsewhere. Sunset reviews of existing programs should be standard. Popular mobilization for change through the internet can help to break the grip of entrenched programs over public needs.

Peter Schuck is a law professor at Yale and the author of 'Why Government Fails So Often, and How It Can Do Better.'