Tuesday, January 17, 2006

Please, Keep My Money

“There is no such thing as government money, only taxpayer money.” – William Weld

The State of Utah currently has a large revenue surplus. According to the KSL Editorial Board (here), “Most Utahns are less interested in getting money back than in seeing their tax dollars directed toward resolving issues related to the state’s burgeoning growth.” Let me understand what they are saying. Most Utahans would prefer that the government spend their money for them, right?

How does this reconcile with numerous long-term polls that show that most Utahans want limited government? By this reasoning, you give the government more money and it magically gets smaller. What does this say about the quality of our education system?

The editorial board statement also brings to mind a question has been running around in my head for many years. Utah has been experiencing population growth for some time. Presumably, with that growth comes a commensurate growth in tax revenue, so governments have more money as a result of that growth. Yet, somehow, there are always voices clamoring that government needs more money due to population growth.

What’s up with that? The big government reasoning here is that, we have more people so we have more money, but we need more of each person’s money because we have more people. You’d get whacked in a high school debate for using circular reasoning like that. Besides, doesn’t having more people allow government to take advantage of economies of scale, thereby, reducing its per-person cost?

Of needs and wants
I have been amazed at the number of “conservative” legislators that have recently made comments to the effect that taxes should not be cut or should only be cut in a limited way because there are so many “needs” and “under funded” items. To me, this means that government is funding too many “items.” If we limited government to only what it should actually do, there would be fewer “items” to fund, thereby, reducing under funding.

Our problem is that we are accepting creeping socialism. Every year we expect government to do more – to provide more services and to develop more infrastructure. To be sure, there are some things that only government can do and a few things that government does better than any other institution. But how many things does this list include? We are confused about needs and wants.

It amuses me when politicians and the media constantly use the word “needs” to describe existing or potential government programs. To paraphrase, the needs ye have with you always (see here). The clamor for more government involvement, expanded government programs, and more government-sponsored infrastructure will never go away.

Why limit government?
We constantly hear people say, “The government should do something about that.” In the next breath they say that government has become too big, unwieldy and intrusive. Well, folks, you can’t have it both ways. LaVarr Webb eloquently pointed out here that a government that is not limited becomes ungovernable. He suggests that this is the source of many of our problems with government and politicians today.

Isn’t it possible that reducing the funds available to government might force some efficiency and innovation? We might, for example, end up with more public-private partnerships on various efforts – maybe even (this might be blasphemy) in public education.

One more point. Has anyone stopped to consider the economic effect of a tax cut? Why is it that when we debate tax cuts we act like the economy will remain static regardless of our choice, when all evidence shows that this is not true? Regardless of what detractors say (and regardless of my differences with the Bush administration), the booming U.S. economy owes much of its vibrancy to the Bush tax cuts. It has caused a real increase in total tax revenues. (Unfortunately, spending has increased to more than consume the revenue increase). A well-designed Utah tax cut can also have a positive local economic and tax revenue impact.

Back when the Bush tax cuts were originally being debated, I saw an interview with a groomed middle class couple on one of those inane morning shows that I usually avoid watching. These people seemed very sincere in stating that the federal government should spend the money rather than return it to them. I had several responses to this.

First, I wanted to vomit. Having once worked for the federal government, I know first hand how inefficient it is and how poor of a tool it is for many of the efforts to which it is applied today. Mind you, the state government doesn’t rank much higher. Second, I thought, “Well, if you love government spending so much, put your money where your mouth is. Send your tax refund back, but don’t tell me what to do with mine.” Third, I thought, “You know, if most citizens think like these people, they deserve the sprawling government that results from this kind of thinking.”

There seems to be a general disgust for “lobbyists” and “special interest groups,” but has anyone stopped to consider that the efforts of these people have proliferated primarily due to the expansion of government? If government didn’t cover so many programs and control so much money, there wouldn’t be as many people out there that make a buck off of professionally holding their hands out to government. Many of our corruption problems would diminish or disappear.

Mark Steyn magnificently argues here that affluence and socialism combined beget a selfishness that results in a lower birthrate that will lead to the demise of Western culture. He argues that limiting government can help combat this malaise, but he pretty much gives up on Western Europe as a lost cause. Gerald Ford famously said, “A government big enough to give you everything you want is big enough to take away everything you have.”

Check the mirror
Certainly, there will always be arguments for expanding government, but there are also valid arguments for limiting government. When Rex E. Lee was president of BYU, he said (can’t link to talk, but you can search for it here) that the American people only have great leaders when they themselves are great. He said that the leaders reflect the people, and that immoral and poor leaders are only a reflection of our society as a whole. If most Utahans truly want the government to keep their money, we deserve what we get.


Bradley Ross said...

I hear a lot of talk about spending a lot of this surplus money on transportation. That seems like a very legitimate use of one-time money. You seem to imply that to spend some or all of this surplus money will necessarily grow the government. I think we can purchase stuff that won't necessarily make the government bigger and that that would be a good thing here. Let's put some of these 10 or 15 or 20 year transportation projects on a 3 or 4 year timeline and free up the future money for ongoing tax cuts.

Scott Hinrichs said...

I did not call for the entire amount to be refunded or for a departure from reality. But simply dumping the money into transportation projects to get them done sooner will not help limit government. If we continue to fund transportation the way it has always been done, it will not help limit government.

If we got government out of the areas it doesn't belong, there would be more money for transportation. If we limit available funds, it will help legislators and UDOT realize that they need to innovate and look for more efficient methods. Many (not all) transportation projects are prime targets for public-private partnetships like those that are working well in other parts of the country.

Anonymous said...

I'm afraid that we might forget that today's record surpluses can become tomorrow's record deficits. It doesn't take much change in the economy to make this the case. Government seems unable to adapt to rapidly changing economic situations to shed expenses when it needs to. So it is imperative in good times to not increase the goverment's size very rapidly.

Scott Hinrichs said...

I remember the rainy day fund that was established years ago when there was a surplus. Where is that kind of vision today?