Discussing the massive failures of the $14.6 billion Big Dig project in Boston, Massachusetts governor Mitt Romney told reporters, “I’d be embarrassed if I didn’t always ask for federal money whenever I got the chance.”
Cato at Liberty
Cato at Liberty
Email Signup
Sign up to have blog posts delivered straight to your inbox!
Topics
Tax and Budget Policy
The Unseen Sighted in Western Maryland
For supporters of limited government, Bastiat’s What Is Seen and What Is Not Seen summarizes our fundamental lament:
When a government official spends on his own behalf one hundred sous more, this implies that a taxpayer spends on his own behalf one hundred sous the less. But the spending of the government official is seen, because it is done; while that of the taxpayer is not seen, because—alas!—he is prevented from doing it.
This difference leads to bigger government because the electorate is lulled into believing that big government offers great benefits to society while limited government and private decisionmaking offer little. If it were not for government, the thinking goes, people could not respond to emergencies, or the poor and unfortunate would have no protection and assistance, or there would be no economic development and community life.
But once in awhile, we can see what usually goes unseen. Credit my hometown of Washington County, Maryland, for a recent example.
Related Tags
“Pelosi Promises Fiscal Restraint If Democrats Win”
That’s the headline House Minority Leader Nancy Pelosi managed to get the Wall Street Journal to run after an exclusive interview. She told the Journal’s reporters that if Democrats take control of the House next year and raise taxes, they would use the money to reduce the federal deficit. And she promised to reduce the use of earmarks: “Personally, myself, I’d get rid of all of them,” she said. “None of them is worth the skepticism, the cynicism the public has… and the fiscal irresponsibility of it.”
If Republicans are going to spend like Democrats, it would be nice to think that Democrats might save like Republicans. But let’s take a reality check.
According to the National Taxpayers Union, in the first seven months of this Congress Nancy Pelosi introduced 22 bills that would increase spending and only one that would cut spending. Admittedly a better record than some Democrats: Rep. Charles Rangel (D‑NY), who would be chairman of the Ways and Means Committee in a Pelosi-led Congress, introduced 80 spending bills and three cuts, for a net budget impact of $1.6 trillion. Even the misnamed Rep. Adam Smith (D‑WA) introduced 44 spending bills and one cut. Another NTU report showed that Pelosi voted in the interests of taxpayers only 11 percent of the time on tax and budget votes. And her fiscal conservatism has been declining the longer she has been in Congress. In her early years in the House she sometimes voted for taxpayers as much as 25 percent of the time. But not recently.
For taxpayers, it looks like the fall election will be a choice between the devil we know … and another devil we know.
Related Tags
Good Time for Tax Reform?
From the Washington Post, July 12:
The Internal Revenue Service headquarters will remain at least partially closed until January while department officials attempt to repair tens of millions of dollars in damage wrought by last month’s storms, the IRS announced yesterday.
Related Tags
Budget Discipline: The Democratic Theme for ‘O6?
Remember when some of us limited-government types were wondering when the Democrats would finally realize voters were fed up with the GOP’s massive federal budgets and start talking about fiscal discipline? Well, it’s finally happened — the talking, at least. House minority leader Nancy Pelosi just gave an interview to the Wall Street Journal (subscription required) in which she professed that Democrats would launch a campaign to reduce the number of budget earmarks if they won a House majority in November.
She even sounded a bit like Jeff Flake at times: “Personally … I’d get rid of all of them. None of them is worth the skepticism, the cynicism the public has … and the fiscal irresponsibility of it.”
Most of the time, her message degenerated into standard Democratic tones. Pelosi still hopes to eliminate the Bush tax cuts for high-income taxpayers and hike the minimum wage. Yet even her support for the latter seemed to be focus-group tested: “We will not support a raise for Congress until Congress supports raising the minimum wage.” But that’s hardly a concession to fiscal discipline — it’s a hellacious twofer! (If you like this bad policy, you should love this even worse one!)
Frankly, I can’t help but be skeptical that Pelosi is really interested in getting federal spending under control. Nor am I convinced that she could keep her troops in line in such a battle. She and other Democrats had their chance to rail against earmarks and the GOP spending explosion during the past five years, but most — with very few exceptions, like Rep. Jim Cooper of Tennessee — sat out that fight.
What Pelosi really wants, of course, is to regain Democratic control of the House. The good news is that she feels like she has to talk even a little like a fiscal conservative in order to do it.
The GOP spending explosion has been awful to behold. Perhaps the fact that the public’s outrage over it is loud enough to entice a San Francisco Democrat to try to sound a teensy bit like a budget hawk might be worth savoring.
Related Tags
Why Tax Credits Are Better than Vouchers
A recent post at the popular conservative blog RedState argues that government-funded school vouchers are a bad idea. It points out the merits of having people pay for their own children’s education and the problems that government funding introduces. Fair enough.
But what to do for the millions of families who cannot afford a good independent education for their kids?
The answer is a nonrefundable education tax credit system applied to state and local taxes. A complete education tax credit program has two parts: a credit for parents to use against their own expenses, and a credit for individuals and businesses that donate to private scholarship-granting organizations (SGOs). The first part helps middle-income families pay for their own children’s schooling, and the second part ensures that low-income families also have the resources they need to participate in the education marketplace.
Under this system, no one is compelled to fund anything to which they might object, and the direct financial responsibility of parents is maximized. The personal credits involve people spending their own money on themselves, and the donation credits allow taxpayers to choose the SGO that receives their donations. No government money is used, but universal access is assured.
I give an exhaustive treatment of the differences between tax credits and vouchers in a paper titled “Forging Consensus.” Two critiques of that paper, along with my responses, appear here.
It is possible to ensure universal access to the education marketplace without sacrificing the freedom that makes markets work.
Related Tags
Bush Administration’s Reputation for Truth-in-Medicare Sinks. Even. Lower.
I just received a blast email from our friends at the federal Centers for Medicare & Medicaid Services. The subject line reads:
Medicare & Medicaid Spending Projections Are Down Again
Medicare spending is down? HUZZAH! A joyous day for taxpayers, one and all. Wait…what’s that you say? Go beyond the press release and read the actual report the administration released? Okay:
At $2.696 trillion, outlays for 2006 are now estimated to be $12 billion lower than the level estimated in February, accounting for 10 percent of the reduction in the 2006 deficit. The lower estimate of 2006 outlays results primarily from reductions in the projected growth rates for Medicare and Medicaid, particularly estimates of the cost of Medicare’s new prescription drug benefit program… However, in the traditional Medicare fee-for-service programs, projections of increased spending outstrip these savings in the long-term and as a result, total spending in the Medicare and Medicaid programs continues to grow at unsustainable rates.
What? Projections of increased spending outstrip these savings in the long-term? Sometimes I get this wierd feeling that the Bush administration is trying to mislead me.
(My colleague Jagadeesh Gokhale will evaluate the Bush administration’s claims about Medicaid spending in a subsequent post.)