Tag Archives: spending

Budgets and Austerity

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The Italian coalition government (interesting in its own right, consisting as it does as a teaming up of the far left 5 Star Movement and the far right Liga) has decided to increase government spending and decrease taxes.  This has been projected to produce a 2.4% budget deficit.  For a government already badly in debt, this deficit isn’t good.

Cutting taxes has been decried by others as being the cause of such deficits and debts.  Spending cuts cannot be allowed, say the same folks, because that would be an austere measure.

They’re wrong.

Cutting taxes leaves more money in the hands of the citizenry, the folks best positioned and best suited to make decisions concerning how their money should be used.

Cutting spending—a necessary measure to stay within the taxes collected—far from being an austerity measure, would enable Italy’s economy to burgeon. Getting the government out of competition with the citizens and businesses of the Italian economy for that economy’s resources will reduce price pressure, and it will leave those resources more available to the private actors, who will use those resources more efficiently than any government can achieve.

Italy’s move to cut taxes and increase spending is a half measure.  Spending needs to be cut to fit within the revenue the taxes will produce. Make no mistake on a related matter, too: the burgeoning economy will produce a net increase in revenue to the Italian government.

Greece and Austerity

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Greece finally is out from under its EU/IMF bailout yoke, and now it wants give its citizens relief from the austerity measures it implemented during its years-long crisis.

[Prime Minister Alexis Tsipras]…announced ambitions to cut taxes as well as increase spending to boost employment and on welfare programs.

Reducing taxes is consistent with reducing austerity—provided the government also tightens its tax collection regime.

Increasing spending, though, increases austerity: it crowds out private businesses as government, which doesn’t have to worry about the cost of money, outcompetes businesses, both for sales and for the resources needed for production. That increased spending also drives up the cost of money for those private enterprises.

Rescissions and Politics

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Senator Richard Burr (R, NC), recall, voted against a rescission of $15 billion  in unspent money because he wanted to preserve $15 million in unspent money in the Land and Water Conservation Fund.

The good Senator, objecting to The Wall Street Journal having called him out, wrote a Letter to the Editor, explaining himself.  The center of his argument is this:

The LWCF isn’t, as you suggest, a “slush fund” or a “land grab.” Nor is it a piggy bank Washington should raid at its convenience. Instead, it is a rare example of an effective government program that costs taxpayers nothing and benefits them entirely.

So, the Senator voted to tank a multi-billion dollar reclama of unspent money over a bit of trivium with a value of a bare one-tenth of one per cent of the total being reclama-ed.  Never mind that if the LWCF were all that useful, it would have been spending that pocket change, and that if it were that valuable, it could be restored in the next budget.

In any event, the money, not having been used by the LWCF and having been reclama-ed, would have been lost to the LWCF not at all.

Brilliant.

Two Birds

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I’ve often argued against government spending on matters unrelated to the Constitutionally mandated payment of government debt, providing for the national defense, and seeing to the general Welfare (as defined by the clauses of Article I, Section 8).  I’ve also argued for privatizing the major social welfare programs of Social Security and Medicare.

Now Oklahoma illustrates the failure to limit the one and do the other at the State level, with Medicaid standing in for Medicare.

Following the nationwide trend, Medicaid has taken a growing toll on Oklahoma’s budget. In 2017 the health-care program that is supposedly for the poor consumed nearly 25% of the state’s general fund, up from 14% in 2008, as nearly 200,000 more people enrolled. Lawmakers are left with less money for everything else, not least education.

Which also means crowding out spending on voucher and charter schools, which means crowding out school choice and competition-improved schools—including public schools.

All that spending on Medicaid, too, instead of the State privatizing that—to an extent; this program, after all, is intended to help the poor, so their contributions can’t cover all their medical costs—means Oklahoma’s citizens have less money to spend on their own needs and wants, which depresses economic activity, which reduces revenues to the State, which reduces monies available for programs like Medicaid….  And this chain doesn’t even address the addition of those 200,000 folks since 2008.  That was the year the Panic began, and it may be that most of those added to the Medicaid rolls then truly should have been—but do all of them need to be on the rolls today, or is it time to re-tighten the eligibility criteria?

Taxing vs Spending

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In a Wall Street Journal piece about Tennessee’s required closure of failing bridges problem, a Leake County Democrat supervisor, Joe Andy Helton, had this:

…he was frustrated by politicians being afraid to raise taxes—even to pay for basic services like roads and bridges.

“There’s only but one way to fix things on the local, state or federal level and that’s taxes,” he said.

Of course. Reallocating spending is utterly inconceivable to him.

The two bridges in Helton’s county that must be closed until repaired would cost, at most, a bit over a half-million dollars, together.  That’s not pocket money for a rural county like Leake, but it’s not that much, either.  County and State spending could be (re)directed toward the repairs.

This is a local failure of performance, but rising taxes and no spending responsibility nationally are what we can expect if Progressive-Democratic Party politicians like this one gain the majority in the House this fall.