Thursday, May 4, 2017

The Government Pays For It? No, YOU Pay For It!

When someone says "the government should pay for it!" they are talking about the money in your wallet.
One of the problems of our Federal system of government, is that we have these two levels of government at the Federal and State level, and often people think the Federal government is a separate entity unto itself.

The Federal government collects taxes and then disperses that money to the States for various programs.  This gives people the idea that somehow the Federal government is the source of money that's unrelated to themselves.  Whenever you hear State and local government planners talk, they discuss getting "Federal money" for a project as if they were asking for a loan from their Dutch uncle.

What they fail to realize, is that this is their money they're spending not somebody else's.  It's not government money so much as it is taxpayer money.

And this effect trickles down to individual citizens as well.  I recounted before when we lived on a private road, there were many acrimonious discussions on how to pay for paving the road, which no one wanted to pay for.  No one wanted to spend their own money to pave the road but would rather spend someone else's.  One of the owners on the road, who actually had advanced college degrees asked "couldn't the government pay for it?" as if the Federal government had some sort of program for rich people who live on a lake to have their private roadways paved.  Sadly, for all I know they're probably is such a program.

Similarly, when condominium development had problems with the balconies falling off and huge assessments had to be levied to pay for the repairs, there was much pulling of hair and rending of garments.  Again, homeowners asked "couldn't the government pay for this?" as if the goverment were some other entity than themselves, and as if condominium owners have a right to ask their fellow citizens to pay for repairs to their homes.  It is funny, but owner of a free-standing house would never think to ask the government to pay for the repairs.  Of course there are programs that you have tax deductions and tax credits for various energy improvements, so I guess there is precedent.

The problem is exacerbated by politicians.  Senator Klaghorn brings home the bacon to his district and has a new bridge named after him.  He tells his constituents that he brought the money to the district to get these infrastructure improvements done.  What he fails to acknowledge was the money he brought was money the taxpayers paid in the first place.  It wasn't his money, nor was it the Federal government's money, it was the people's money.

Similarly, when new road construction goes in, there is often the big sign put up with the signature of the governor or some other politician, saying how they promoted this project is if they paid for it out of their own pocket.  Even President Obama got into this act during the height of the recession and had signs put up wherever road construction was done, highlighting that the project was part of his plan for National Recovery, and not merely a spending of our own money.

This mentality of government money is so well ingrained in our society, that we often fail to notice it. Again in any discussion or argument, the first thing to question is the underlying premise.  Here, the underlying premise is that government money belongs to some separate entity other than ourselves.

Of course, some folks recognize this when it is favorable to their own political positions.  For example, much has been made over the fact that "Blue States" contribute more money to the Federal government than they get back in program grants, while the "Red States" pay less to the Federal government and get more back.  This argument assumes that each State is somehow a separate country and that each State should have its own separate accounting for Federal tax money.

This effect, however, has more to do with the economic tax base in each State then anything else.  It's not a matter of red-state people being greedy or blue-state people being generous, but rather the fact that states that are wealthier tend to have more liberal social values and tend to vote Democratic.  And as more and more people move to "Red States" to find jobs, I suspect this is a trend that may reverse itself, particularly as rust-belt states end up with fewer jobs and more people collecting government assistance.   And of course, if you are counting Social Security, well, old people tend to be conservative and tend to move South when they retire, so maybe the whole statistic is hooey.

As I noted, part of this problem is intractable due to our Federal system of government. We will always have this dichotomy of sovereignty between States and the Federal government, even if the Federal government acquires more and more power that the States cede to it.

So what's the point of all this?  Only that it is a good idea to bear this in mind when you hear promises of politicians who claim they will bring "Federal money" to your district.  They are not getting someone else's money, they are promising to give you back your own money, which isn't much of a promise.  Similarly, when you see a road sign with the name of the governor on it, proudly proclaiming that he built the road you're driving on, you should think in the back your mind that he's bullshitting you.  The road was paid for by your tax dollars not by some independent government entity with its own source of income.

And I guess also, it pays to think about this when thinking of other types of government programs as well.  Too often, people tend to think of "government money" as some bottomless purse they can be drawn upon to pay for whatever program sounds like would be a nice thing to do - even if it would be a nice thing to do.

Whether it is Obamacare or so-called "basic guaranteed income", proponents argue that "the government" can pay for the cost of these programs, not realizing that "the government" is indeed us. So it's nice to say that mental health coverage should be covered under Obamacare or that  deductibles and co-pays should be kept low, but this in turn raises the cost of the premiums, which are paid for by tax credits (except for the poor bastards making more than $63,000 a year!).  And tax credits are paid for by "the government" which means you and me.

But this goes right down the line to any government program.  Right now many in the government are calling for increased military spending, and indeed President Obama even wanted to spend more on the military.  However we do have the most expensive military in the world, spending more than the next eight largest countries combined.  This is nearly four times as much as our next nearest competitor, China.

So when people say "the government" should spend more on the military, what they're really saying is that you and I should spend more on the military.  Unfortunately you and I don't get to address this question directly in a representative form of democracy - more on that later.

But it begs the question, if we are spending such an enormous amount of money on military spending, far more than Russia China put together, why do we need to spend more?  Or maybe the question should be phrased, why do you need to spend more?  Because it's your money not somebody else's.

So the next time you get into a discussion about "the government should spend more money on..." - whether it is social programs, law enforcement, or national defense, think about where that money is actually coming from. Would you be willing to pull out your wallet and spend 20 to 30% more in taxes to pay for these things? Or pay for these things in terms of inflation caused by more deficit spending?  Because it is your money we're talking about not somebody else's.