December 26, 2009

From Whence the Perpetual Budget Deficit?

Filed under: Politics — Bob Gifford @ 9:52 am

We have a persistent federal budget deficit because Americans consider themselves consumers, not citizens. Hence, we want what we want. And what we want is stuff. We want stuff from the government. So no one wants any middle-class entitlements cut, or a smaller army and less interventionist foreign policy, or poorer schools. We want the economy to always grow, the prisons to be full, and the freeways to be traffic-free.

And as consumers, we want to pay as little as possible for all this stuff. No one wants taxes to increase, and any tax cut is a good tax cut because it means we get our stuff for less.

Most politicians get elected by promising us more stuff for less money. It used to be the Democrats that promised to give us more stuff without us having to pay higher taxes. So they financed increased spending and people were happy. Then the Republicans started promising us that the same amount of stuff would cost less. So starting with Reagan, they kept cutting taxes without ever quite managing to cut spending (actually, Bush dramatically increased spending). And the electorate is happy. The same stuff, or better yet, more stuff, for less.

The debt has grown under both Republicans and Democrats, but I would argue it has been far worse recently under Republicans. Just look at the national debt at the beginning and the end of each administration. Clinton ended with a surplus, but Bush blew a hole through that by giving huge tax cuts. Obama’s stimulus and TARP are not paid for, because we’re in a recession and increasing taxes would hurt the economy. It’s basic Keynesian economics that is working as it should. But the health care reform package is paid for. So between Republicans increasing debt because of tax cuts or Democrats increasing debt because of spending, I think the Democrats have been more responsible over the past 30 years.

But neither is ideal. If you want to solve the problem, then that means we have pay for what we get — every increase in stuff the government provides needs to be matched by an increase in taxes. I would be happy with a system where every year the marginal tax rates floated to precisely match the spending, as long as there was an out for economic stimulus during recessions. People wouldn’t like paying more taxes or getting less stuff, but they’d be forced to choose what government spending was worth paying for. You want to give corporate farmers subsidies? It will cost you another $x in taxes. You want to send casual pot smokers to prison? It will cost you $y.

But I would argue this alone isn’t enough. People have to see themselves as citizens, not consumers. A consumer wants what they want for as little as possible. A citizen realizes that we’re all in this together and we have to make decisions for the good of the whole country, i.e. the common good. So maybe I don’t benefit directly from a given government program, but it makes our country a better country, and is therefore worth paying for.

Of course Tea Partiers will argue that I just want to pick their pocket. That’s because they view themselves as consumers, not as citizens. They seem not to care about the well-being of the country as a whole, just their personal bubble. They don’t want to pay for stuff that they benefit from every day, like an economic system that has produced the greatest concentration of wealth in the history of humanity. They’d be happy to have poor people die in their homes from treatable diseases instead of helping to pay for their health care, because they are not members of their tribe.

But we are all in this together. And “we” in the United States means people that don’t look like us, speak like us, or worship like us. So it can be very difficult to think of the entire US as “we”, but to be a citizen demands exactly that. It means we not only pay for the stuff we get, but help pay for stuff that other people get because the common good, the well-being of the entire country, demands it.

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