Cheap Government

My man Andy Cassel wrote another good column today. This time, it was
about our federal government's rising debt. Seems the classic
conservative's approach to reining in big government by cutting taxes
(so as to force legislators to curb spending) is not only not working
but is having the opposite effect. With historic tax cuts have come
historic spending increases, and not just on big-ticket military items
like Iraq and Afghanistan. And you know what happens when you cut tax
revenues and increase government spending? Bigger and bigger debts,
debts we're paying interest on now and debts our children and
grandchildren will eventually have to settle.

What happened? Cassel references a libertarian think tank's report,
which states that Americans, having been the grateful recipients of
tax cut after tax cut, have concluded that government is cheaper than
it actually is. And what happens when something's price is
artificially low? You buy more of it than you really ought to. And
that's exactly what has happened. Our demands reflect an incorrect
perception of the cost of doing government. And the bill is
skyrocketing.

Now as a fiscal conservative, I'm generally a proponent of what's
known as supply-side economics, which basically means that lower taxes
are an important driver of economic growth. But my allegiance to
Reaganomics only goes so far. In this space, I've railed about other
things whose price is artificially low, and whose overconsumption has
had deleterious spillover effects. As taxpayers, it's not that the
price of government is artificially low per se, it's just that it's
been so easy to finance our debt that we forget that when we spend a
dollar and only bring in seventy cents, eventually we have to find
that other thirty cents, plus interest. Instead, we've grown
accustomed to being able to spend that whole dollar.

I forget when I wrote this (I assume shortly after the 2004 election),
but even as a Republican, I was fearful that Republican control of the
White House and both houses of Congress would lead to rampant
overspending. But the blame rests on both sides of the aisle. For
you're always more popular when you spend for your people, and you're
always committing political suicide when you call for higher taxes
and/or reduced spending. So we continue to cut our taxes and up our
spending, and in the process we've deluded ourselves into thinking
government is cheaper than it really is and we're clamoring to consume
more of it than we can really afford.

Thank goodness that in our old age, when we've so bankrupted our
federal system that our children and grandchildren can't take raise
enough in tax revenues to take care of basic services for themselves,
let alone for us old fogies, that we have Social Security. Oh, wait a
minute . . . that's a topic for another post.