Addicted to Spending

by Don Boudreaux on February 23, 2007

in Politics, Trade

Mark Schmitt (HT: Greg Mankiw) and Sebastian Mallaby are just two of the many people who argue that Uncle Sam should increase the amount that he taxes American citizens.

Reasonable persons can (and do!) disagree over the appropriate role of government.  Some people want more of it, some people want less of it, and I suppose that some people think that the amount we have at the moment is just right.

But those who want more of it — or even those who want government to do more of some things and for government to do less of other things — seem to have a fetish for higher taxes.

I paste below a letter that I sent on Monday to the Washington Post in response to Mallaby’s column that ran that day:

Even if Sebastian Mallaby is right that government programs – such as efforts to retrain workers – are justified as the price to pay to weaken political resistance to freer trade, he’s wrong to argue that these programs must be funded by higher taxes (“Matching Free Trade With Taxes,” Feb. 19).

Uncle Sam today takes from Americans’ pockets more than $2.5 trillion per year.  In real dollar terms, this sum is 50 percent higher than what Bill Clinton’s government took during its first year in office and 25 percent higher than what George W. Bush’s government took during its first year.  Surely, Uncle Sam already has on hand more than sufficient funds to pay for whatever programs are needed to mute opposition to trade.

Sincerely,
Donald J. Boudreaux

Why doesn’t Mallaby — who is sensible, smart, sober, and informed — think to call instead for getting the revenue (to pay for the programs he endorses) from elsewhere in the budget?  Is it plausible that the country needs Uncle Sam now to spend nearly $3 trillion annually?  Why not call for eliminating farm subsidies?  For ending the “war on drugs”?  For selling off what is valuable in Amtrak and scrapping the rest?  For privatizing the U.S. Postal Service?  There are lots of programs that are horrendously wasteful.  Funds for any programs plausibly worthwhile as a means of reducing political resistance to freer trade can be gotten by cutting or eliminating even just some of these other programs.  (Cato’s Chris Edwards, here and here, details many ways for cutting Uncle Sam’s bloated budget.)

I recall this blog post in which Neil Buchanan complained about the GOP being “addicted to tax cut politics.”  I’m sorry, but if there’s any fiscal addiction at work in Washington it is not one that keeps taxes falling; instead, the addiction is one that keeps spending rising.

Think about it.  I’m sure that Sebastian Mallaby can find in the federal budget hundreds of billions of dollars currently spent on programs that he believes to be wasteful or even downright unjustified — programs that, if anything, make Americans poorer and increase wealth inequalities.  The reason, I suspect, that he doesn’t think to seek to get the funds for more trade-adjustment programs by taking them from these unjustified programs is that he understands from the get-go that nearly all programs currently in operation have a kind of political sacredness.  They become almost immediately locked-in; each one becomes very difficult to kill.

Now that’s closer to an addiction than is the perfectly understandable desire of (most) people to want to keep more of their own money.

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{ 7 comments }

Forbes February 23, 2007 at 6:08 pm

It must be some sort of learned effect–perhaps even something hard-wired–that leads some people to believe that government, and therefore government spending, is the solution to many of the issues of our time. Yet, many of these gov't programs, whether called re-training or subsidies, are simply income transfers paid to mitigate market risk. This leads to the consequence of converting market risk to moral hazard risk, whereby the risk of loss is shared across the tax base, and therefore, few, suffer from loss or failure. This strikes me as obvious.

True_Liberal February 23, 2007 at 9:01 pm

Take the mint for example: WHAT is their objective in manufacturing coinage whose face value is less than scrap value?

Grzesiek February 23, 2007 at 10:16 pm

“Why doesn't Mallaby — who is sensible, smart, sober, and informed — think to call instead for getting the revenue (to pay for the programs he endorses) from elsewhere in the budget? Is it plausible that the country needs Uncle Sam now to spend nearly $3 trillion annually?”

“I'm sorry, but if there's any fiscal addiction at work in Washington it is not one that keeps taxes falling; instead, the addiction is one that keeps spending rising.”

Don,

In my opinion, guys like Mallaby and Mankiw do not call for spending cuts because they’ve resigned themselves to the fact that government cannot cut back on spending.

So they feel by increasing revenue through taxation more dollars will flow into the government with some feeding entitlement programs and other dollars feeding pork projects.

They really refuse to deal with the problem head on. That would be the problem of wasteful spending.

The Dirty Mac February 24, 2007 at 7:40 am

Well, here in Connecticut they may just have it right. Despite a budget surplus and job growth that has been consistently at or near the bottom of all states for several years, a tax increase is being contemplated. Maybe its partly because after numerous years of minimal private sector expansion, government is increasingly looked upon as the engine of growth.

Russell Nelon February 24, 2007 at 9:37 am

A chief presumption behind the idea of raising taxes is that it's always the other guy who is paying them.

Russell Nelon February 24, 2007 at 9:44 am

So how are we to EVER get back to a small government if spending cannot ever be cut?? Revolution? Secesession?

Martin February 25, 2007 at 4:47 am

"…the addiction is one that keeps spending rising."

The day has arrived when I agree with Don Boudreaux.

Deo Gratias.

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