Gov's Girth - How Big Should It Be?
- When government prioritizes effectively, each additional tax dollar goes to less important uses.
- Government's record of managing surpluses is poor.
- Neither political party can look the taxpayer in the eye and say "We're doing the right thing for you".
Government's purpose is whatever the people in power decide it is.
Government's size, however, is determined like most people's wardrobes -- a series of spontaneous, independent purchases: "I'd like one of these (a nice pair of khakis / NASA), I need one of those (winter coat / the Air Force). Oh, this would look good on me (a flattering dress / Medicare drug benefits). But I CAN'T get rid of that! (a painting shirt / the Postal Service)".
How much government is right? There are as many differient opinions as there are taxpayers. MyGovSpending has a hunch, however, that all US government units are long overdue for a deep rethink.
"...Surpluses certainly would be handy in paying down the taxpayers' public mortgage."
The first dollars collected for the common good are critically important. If directed competently, those first dollars buy the most important public services.
When government prioritizes effectively, each additional taxpayer dollar goes to less important uses.
On the MyGovSpending Money Matrix (graph below), more public spending pushes your position to the right. More private spending pushes it to the left. Presumably, most folks will prefer to plot themselves somewhere along the diagonal line -- running sustainable, balanced budgets.
Most Americans reserve deficit spending for real emergencies. Arguably, they would prefer that government not be geared to run surpluses above those necessary to pay off past debts. Few would argue that the US government's record of managing surpluses is good. Witness the empty Social Security and Medicare trust funds: government program 'surpluses' that Washington has transformed into debt owed by future taxpayers.
MyGovSpending Money Matrix
Taxes increase moving the graph, spending increases moving to the right. Points away from the lower left - either up or to the right - indicate larger government. Anarchists dwell in the lower left corner. In the upper right corner, dictators Lenin and Mao made history.
At any point on the diagonal line, taxes equal spending -- resulting in that crown jewel of good government -- a balanced budget. Above the diagonal line, government generates financial surpluses. Below the diagonal line, government generates deficits. To be financially sustainable in the long run, all ideologies presumably would prefer to be on the diagonal line.
To be politically sustainable in the short run, both major American parties push policies that are decidedly below the diagonal line.
Libertarians, champions of individual freedom and narrowly focused government, would leave families a greater portion of their income to spend as they like. Libertarian policies are unavoidably saddled with a heavy reliance on individual responsibility. They fall in the lower left corner of the chart.
Socialists, champions of government mandated collective action, prefer that governments control the bulk of family spending. They believe powerful bureaucrats are the crucial to optimizing the human condition. Socialists support high levels of government activity and the spending necessary to fund them. Socialist policies rely heavily on coercion. Their territory lies in the upper right corner.
Special interest groups advocate subsidies for the citizens they believe they represent. These groups have little regard for the humble taxpayer, and are not particularly concerned with budget implications beyond their narrow cause.
Judging by the trajectory of US public finances, the deficit hawks, valiant and selfless as they may be, are too small in number to prevail. Deficit hawks may fall anywhere along the ideological continuum. They are defined by resting above the diagonal line (i.e. they prefer to balance the public checkbook).
The Democrat and Republican partnership seems to be part melodrama, part blood sport, part bazaar. The parties have little time for the nuts and bolts of competent financial management. As evidenced by their fiscal policies, both fall well below the diagonal line. Neither can look the taxpayer in the eye and say; "We're doing the right thing for you."
Controlling between 30% and 40% of all spending in the country, government's heavy hoof-print makes a deep impression in the economy -- probably for better in some areas (medical research), probably for worse in others (retirement savings, K-12 education).
What is government's optimal size? Lofty rhetoric abounds, but raw self-interest seem to be the driving force of ground-level politics. The fundamentals appear as valid as ever: Many people want to make withdrawals from the public treasury; few people want to make deposits.
Demographics seem poised to bulldoze the debate in a new direction. As the burden of paying for the Baby Boomers' golden years weighs on younger taxpayers, they may well form a different perspective on entitlements, all that term means, as well as government's role in society.
