The Joys of Spending OPM (Other Peoples’ Money) — March 7, 2011

We are about to witness the unedifying spectacle of a knock-down Washington donnybrook over spending.  And it will play out in phases: first the recurring fights over the Continuing Resolutions as Congress tries to finish the budget work for Fiscal 2011 that the 111th Congress – the one with the big Democratic majorities – failed to accomplish; then the battle over raising the debt ceiling, which will ultimately pass, and the real question is the price Republicans will extract for its passage; and then we’ll have the debate over President Obama’s 2012 Budget, which was sent up a few weeks ago to a rousing chorus of Bronx cheers.

Played out against a backdrop of terrifying deficits, a weak economy, and a calendar marching inexorably toward the 2012 elections – and to background music provided by the Tea Party – these will be among the most important political battles of this decade.

But I want to dig a little deeper into the subject of governments and spending, and discuss how this is the Achilles’ heel of representative democracy.  Because politicians see themselves as representing their constituents as beneficiaries but not as taxpayers.

In other words, politicians pride themselves for bringing home the bacon – if you’re Robert Byrd, you’ll have some 30 Federal projects, buildings, institutes, highways, etc., named after you just to make sure people don’t forget.  But rare is the politician who spends any political capital at all ensuring that the taxpayer is getting his money’s worth.  Senators John McCain and Tom Coburn have been obstreperous gadflies, but until the Tea Party gave them the strength of a “movement” they were tolerated with a bit of a pat on the head, but their cause never made much headway.

As the saying goes, if you’re not at the table you’re on the menu.  And the American taxpayer has been lunchmeat in Washington for decades.

Exhibit A is the report issued earlier this week by the General Accounting Office, which passes for an auditor in our government bureaucracy.  They found scores of programs housed in multiple agencies that basically did the same thing: 100 programs dealing with surface transportation issues, 82 addressing teacher quality, and so forth.  In Washington, programs are designed to address problems, not to solve them, and when a problem persists the solution is not to do away with the program that failed to solve it but to erect a parallel edifice in another agency.

It is no surprise that spending grows like Topsy.  For one thing, politicians who spend other people’s money freely tend to get themselves re-elected.  For another, the fire hose of government spending is the currency that lies behind most of the legislative sausage-making in DC.  Pols swap favors, which usually means spending, in order to grease the way for a favored legislation.

But the link that nobody seems to make is that, if a politician brings more money to his district than was sent in taxes in the first place, then taxpayers in other parts of the country are footing the bill.  While there is clearly an indirect benefit for all taxpayers in certain goods the government provides, such as safety and the rule of law, it is harder to say with a straight face that the taxpayers of Nebraska are well-served by having some of their money funneled to New York for a museum to celebrate Woodstock.  Isn’t that something New Yorkers should pay for, and if so, why go to the expense of routing the money through Washington?

It is an implicit compact that is essentially corrupt: politicians spend other citizens’ money for services that benefit their own constituents.  But the corruption goes deeper than that.  Spending comes in many forms – tax breaks, for example, while they might be a more fiscally orthodox tactic (don’t conservatives love lower taxes?), often are disguised spending – particularly “targeted tax cuts,” which are really the same as shoveling money from certain taxpayers to others.

Subsidies, as well, are forms of government spending that take from some and give to others.  And this is even more insidious, because not only are taxpayers forced to pay for, say, an ethanol industry that will never pay for itself, but the market for such products and its competitors is distorted by the insertion of non-economic political money that will ultimately lead to sub-optimal use of the economy’s resources.  This basically robs everybody.

Government has grown so large and powerful that its decisions affect every business, every taxpayer, every organization in the country in myriad ways, and every organization that can do so must lobby in Washington to ensure that those decisions cause the least harm.  Often that means getting their share of the spending, tax breaks, subsidies, regulatory allowances coming out of the government spigot – or at least making sure it doesn’t go to a competitor.  And that in turn often means helping the sympathetic politician get elected.  And down that road lies every temptation for thinly-disguised bribes.

Thomas Payne wrote, “That government is best that governs least.”  And the poor management of taxpayer money is one principal reason.  The larger government grows, the more remote its spending decisions become from the source of its funding, the taxpayer.   And the more remote it becomes from this wellspring, the less it truly represents the people.

This is the message of the Tea Party, and it is the motivation behind many GOP representatives that, finally, are starting to pay attention to their citizens.

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