Why is it hard to cut government programs?
Photo from ‘March of Dimes Ball,” 1934. Source: FDR Library
One reason is the “March of Dimes” problem. Back in 1934, FDR helped start the March of Dimes as a way to raise private money to fight polio. They were tremendously effective: during the post-war polio epidemic the March of Dimes helped over one third of all polio victims nationwide.
After the development of the Salk vaccine, the number of Polio cases fell precipitously. Today, polio has been almost totally eradicated. But the March of Dimes organization didn’t declare victory and disband. Rather, they adopted new causes and initiatives: arthritis, infectious diseases, premature birth. Their expanding mandate is a classic case of mission creep.
The same thing can be seen in public budgets. An example is Fire Departments. In many major cities, the number of large fires has fallen dramatically. In Boston in 1975, there were over 400 major fires; last year there were 40. But their firefighting budget has gone up from $140 to $180 million during that time. So firefighters have taken on other causes like emergency medicine, as automatic sprinklers and better building codes reduce the need for their core mission.
If the city tries to reduce spending, though, the firefighters just need to take out an ad with a picture of a burned-out home and claim that if their budget is cut, children will die. It’s hard to negotiate with heroes.
But public budgets are subject to the same financial limits as anyone else. If a government agency can’t be reigned in, it’s the taxpayers who get hosed. Milton Friedman once quipped nothing is so permanent as a temporary government program. Mission creep and the costs of success are a big reason why.
Douglas R. Tengdin, CFA