Economics makes my brain itch. When I was a young policy wonk and had to spend my days deflating constant dollars and reading the Federal budget, I would often give myself paper cuts all over my face just to remind me I was alive. When I was writing for The Street.com I would often wake up in the morning re-enacting the Martin Sheen freak-out scene from Apocalypse Now.
Still, I am so baffled by the debate over the surplus that I feel I must wade into those unfriendly waters. For over a year Al Gore has been saying, in one form or another, that Governor Bush endorses a “huge risky tax scheme that would completely blow the surplus.” If you search Nexis, you will find dozens of such examples. According to Gore, the Republicans want to “squander,” “give away,” and “waste” the extra dollars in the U.S. Treasury. The media usually let the assumption — i.e., that having a surplus is inherently a good thing, and not having one is inherently bad — just fly over the plate.
Of course, I have no desire to actually dissect the real numbers being put out there by either side. Almost all of these scenarios — Republican and Democratic — are based on wildly optimistic projections (Paul Krugman does a pretty good job of explaining all of this in today’s New York Times). Instead, let’s keep things in the nice comfy world of hypotheticals and first principles.
Repeat after me: The government is not a business. The government is not a business. The gover…oh, you get it by now.
Say you make a hundred dollars a month. You hire someone to collect your garbage and mow your lawn for ten dollars a month. To make things easier, you agree to have him just take 10% out of your monthly paycheck. If you get a raise to $200 a month, why exactly does the garbage man deserve to double his income because you’re doing better? Well, you could say, because you’re richer you generate more garbage. But that would be stupid. And besides, when the people get richer, there should be less, not more, for the government to do (of course, the history of the United States has gone in exactly the opposite direction).
Anyway, if the garbage man had kept collecting the extra money you’d be peeved. If, when you asked for your money back, he said, “Sir, I cannot condone your risky scheme to squander my surplus” you would be squarely within your rights to smash him over the head with a croquet mallet.
Even this analogy is misleading. Because — I repeat — the government isn’t a business. And therefore, the surplus is not a “profit.” I know that journalists who are left with extra money in their budgets at the end of the year think its fine to blow it on a big trip or a new desk, but that’s not how government is supposed to work. When the government has extra money it means it took too much from the people who earned it. Already the average American pays 100% of his wages from January through the middle of May just to pay all of his taxes — federal, state, and local. “The taxpayer,” observed Ronald Reagan, “that’s someone who works for the federal government but doesn’t have to take a civil service exam.”
The government didn’t earn the surplus (it didn’t even earn its normal revenues) and is not entitled to blow it on shiny new toys. It’s your money. Remember, the government doesn’t really have any money of its own. It is more properly seen as a distribution center — albeit a bloated, arrogant, inefficient, and often corrupt distribution center — for the money you earn. That’s what President Coolidge (cue harp strings) meant when he said “collecting more taxes than is absolutely necessary is legalized robbery.”
Keep this in mind when you hear Bill Clinton and Al Gore talk about the budget. “There’s a lot of evidence you can sell people on tax increases if they think it’s an investment,” Clinton once said. And he’s right, alas. But invariably what the government is “investing” in are programs that will perpetuate the need for more and higher taxes. They claim to be investing in “our” future, when they really mean they are investing in the government’s future. That’s why, by the way, they constantly suggest that if you don’t have a surplus you will have a deficit. This is real “do not pass go” thinking. The budget isn’t a light switch with only two settings. There’s also this thing called a balanced budget, but that’s a different story.
When Gore and Clinton talk about tax cuts they say cuts will “cost” too much. Cost whom? Not you or me; we make money from tax cuts. It wouldn’t even cost the government anything in terms of things it’s doing right now, because a surplus is, by definition, extra money. No, the only cost is to government-types, people who want to spend it on new things.
NOTE TO READERS: There are two fun articles up on the site I would hate for you not to see. The first is by Rich Lowry. The other day Al Franken challenged Rich to a public fistfight. I’m not making this up. Read about it by clicking here. I think I will be writing about this more on Friday and it’d be nice if you were all up to speed when I did.
The other item is the two-part diary by our undercover undercover cop. He was in the thick of the fight between civilization and barbarism out in L.A. during the conventions and his diary makes for a great read.