Friday, June 22, 2007

Utahns are Not (Fiscally) Conservative

For all of the mouth-frothing over the “blind” and “stupid” conservatism of the “sheeple” in Utah, I must conclude that most Utahns are actually quite moderate. Let me put that another way. Utah leans strongly conservative on certain (not all) social issues but isn’t very conservative at all on many fiscal issues.

Despite being quite moderate (some would say liberal) fiscally, Governor Leavitt enjoyed a very high approval rating, except among serious conservatives — a group he pretty much ignored until they forced him into a primary election going into his third term. Of course, he trounced his opponents in the primary and general elections that year, showing the he could ignore conservatives with impunity.

Governor Huntsman enjoys even higher ratings than did Governor Leavitt. But fiscal conservatives have got to be scratching their heads as they try to figure out how the Governor can possibly be a Republican. His positioning on climate issues and government spending, among many other things, show that he is a fan of big government. Of course, the Governor is not devoid of throwing a bone or two to the folks on the conservative side. But he’s a long way from being aligned with them.

The Governor a moderate (arguably more liberal than Gov. Leavitt), at least fiscally. He is Republican out of convenience (as are many legislators). And that is perfectly all right with the vast majority of Utahns. The Governor is pushing the limits (of his constituency and the legislature) when it comes to his approach to climate policy. But most legislators and Utahns either agree or just shrug when the Governor says he knows what to do with the impending $260 million taxpayer overcharge (budget surplus): spend it.

That’s a play right out of the progressive handbook. Oh, I know all of the arguments. This or that is under funded. Government needs to solve this or that crisis. If we don’t ‘invest’ now, it will cost much more later. We’ve got to take care of the unfortunate among us. We’ve got to build a soccer stadium now. And so forth. The arguments for increasing government spending are never ending. It is always so impossible to find efficiencies in the current budget that spending increases are the only way to accomplish what “needs” to be done. None of these issues can ever be appropriately addressed outside of government.

And the arguments against returning overcharges to the taxpayers are just as ubiquitous. Look at the horrendous contortions our elected officials went through to accomplish what amounts to a paltry tax cut in 2006 and a relatively minor tax cut in 2007. And Utahns have yet to actually benefit from either of these cuts.

This follows the standard progressive agenda, which implements this rule of thumb: Once government has your money, it will only be returned to you under extreme duress. The underlying assumption is that the money belongs to the government, not to you. Many editoralists whine whenever the legislature considers cutting taxes that the politicians are merely pandering to their constituents because they fear a backlash at the next election. I’d like to point out that this is precisely the way it’s supposed to work. Our representatives are supposed to satisfactorily represent their constituents or get tossed out at the next election.

Bill Bennett notes in his book, America: The Last Best Hope, Vol. 2 that; although, FDR won the 1940 election by an electoral landslide, “It had not looked that way early on election night.” FDR sequestered himself in his Hyde Park residence “[g]rim-faced and sweating … until victory was assured.” Bennett concludes this vignette by asserting, “It’s a good thing for the leaders of this great republic to fear the people.”

Governor Huntsman, riding high in his approval rating, clearly does not fear his constituents. As long as he doesn’t commit adultery, grand larceny, abuse or murder, he could probably get away with just about anything politically short of instituting martial law and still be able to win his next election. Many legislators are also quite secure in their districts and have little fear of their constituents.

Still, the situation is markedly better than in national politics. The state must still balance its budget, while the federal government, not content to merely spend your tax Dollars, has found a way to spend those of your yet-to-be-born posterity as well. Although both houses of Congress switched party control in the last election, relatively few representative seats are competitive and McCain-Feingold further insulates incumbents from having to fear their constituents.

If I had my wishes (which I don’t because I have not sought to become an elected official), the upcoming $260 million overcharge would be partially returned to the taxpayers and partially invested in the rainy day fund. We have acted with the recent surpluses as if no economic downturn or budget shortfall will ever occur in the future. We’re acting like some Mormons that look at their leaders’ counsel to do food storage with a “What, me worry?” attitude. Our recent spending increases will come back to bite us in the long run. Booming economies are cyclical.

But then, I must remind myself that I am in the minority in Utah. Fiscal conservatism is clearly not a high priority among the voters of this state. If it were, we’d have different people running the executive and legislative branches of our state government.


Jesse Harris said...

The problem with growing states is that they usually incur budget growth far above and beyond the rate of population growth combines with the rate of inflation. The problem is that the economy of scale starts to be diminished by the inefficiencies of excessive management. We often witness the same thing happen to school districts and fast-growing start-up companies.

The first gut reaction by most folks is that more money needs to be spent. This often overrides the more logical conclusion that whatever is causing the inefficiency should be eliminated or marginalized before talk of spending more money. I'm inclined to believe that an ambitious program to streamline operations could yield even higher surpluses than we've been seeing even if the economy cools off.

That said, there are some legitimate times when waiting to spend money can make things more expensive. A good example would be the land where future highways and roads will be going. It's not going to get cheaper and it will definitely hurt a lot less to buy it now rather than buy it later, especially if we can skip the interest of a bond. If you had an unexpected surplus of money in your own home, it would make more sense to buy that new car now rather than get a loan for it.

Unfortunately, legitimately good one-time expenditures like this are drowned out by and lumped in with calls for increasing funding for a wide array of social programs. "Schools need more money!" "We aren't spending enough on health care!" "It's only a few million dollars!" It's hard to figure out what expenses are legitimate because there are too many voices telling you that they need money.

That spurs an opposite natural reaction to oppose all increases in spending without a thorough evaluation of what is truly needed. This tendency to dig in our heels on all new spending can be as crippling as spending wantonly. In either event, the problem is caused by a lack of diligence in determining what true "needs" are and if a program is best handled at the state level or more efficiently at the local level.

I agree that Utah is not nearly as conservative as the stereotype would lead you to believe and that there are a fair number of Republicans that could just as easily be Democrats in other states. For this reason I don't buy as many of the arguments concerning single-party dominance as I used to.

Scott Hinrichs said...

Jesse, thanks for your comments. You are, of course, correct that some spending growth makes sense and is even healthy. But much spending growth is unhealthy.

Having worked for a time in government and having studied organizational behavior, I can tell you that it is nearly impossible to streamline government bureaucracies. Bureaucracies take on a life of their own and defy attemps to remedy problems. And frankly, we don't seem to do much to incentivize our elected officials to force through the needed changes.

Jesse Harris said...

You're dead-on there. Trying to get everyone on the same page of reducing waste is a radical change in culture, something that could take a decade or more to effect. Just look at how long it takes for some large companies to correct the course. (Maybe Lou Gerstner would be up for the task? He did a smashing job with IBM.)

A big part of that problem is that we elect the top part of the leadership and expect them to impose order upon the lower levels. That's the backwards way of fixing bad culture. What it would take would be a massive hiring of effective managers at very low points on the chain with incentives for them, not legislators or the executive, to clean things up. I'm thinking sharing a cut of any costs they managed to cut during the year while maintaining the same service levels. It can be done (look at how some country offices are doing heavier caseloads with less staff working the same hours), it just takes more local control.

But our legislature wouldn't know much about that, would they?

Scott Hinrichs said...

For all the whining our legislature does about how much the federal government sticks its fingers into the state's business, they seem to have little compunction about sticking their fingers into county and municipal business.

Each appropriate function of government (some things we have government do are inappropriate for government to do) should occur at the level of government that achieves optimum results. Many functions are handed too high up, so they cannot work efficiently. A few functions must necessarily be handled up the ladder to work at all. But only a few. And we haven't learned that yet.