Current Spending is Unsustainable
Government at all levels – federal, state and local – has been spending beyond its means for years. Politicians have been running up a tab in our name and it will soon come due. These trends are irresponsible and unsustainable, and will have serious consequences for taxpayers. In a sign of the times, Congress failed to fulfill one of its most basic responsibilities this year, refusing to write, let alone pass, a federal budget. This year, the federal government will borrow about $12,500 per household to pay for its spending. Instead of stimulating the economy and generating jobs, their spend-and-forget policies saddle our children with debt and increase our daily cost of living.
It’s the Spending, Stupid.
The government is over-spending, but not only in the sense that they are spending more than they collect in taxes. They are also spending far more than we can afford. The President’s budget proposes record deficits as far as the eye can see, but – contrary to arguments made by advocates of bigger government – these budget gaps are clearly driven by too much spending, not too little revenue. To cover the long-term commitments Congress has made on our behalf, they have to double income tax rates. There is no way to get around it – we face a spending problem, not a revenue problem.
Spending is Hurting Growth and Destroying Jobs
The federal government’s unsustainable policies are driving uncertainty and hurting confidence. As politicians have repeatedly pointed out, we are in the midst of the worst economic crisis since the Great Depression. Americans expect Washington to govern responsibly and create an environment that will foster growth and job creation. The opposite has been true. Despite claiming that the $862 billion stimulus package would keep unemployment below 8 percent, it is hovering around 9.5 percent with few signs of improving. The problem for job seekers is that the private sector is not confident enough to create new jobs. The lesson for spendthrift politicians is that you can’t force feed the economy with borrowed money. American business owners are uncertain about a lot of things, but they know one thing for sure: if the government keeps spending beyond its means, they are going to be hit with the bill sooner rather than later.
Government Spending is Inherently Wasteful
It’s regarded as a virtual truism that no one spends someone else’s money as well as they spend their own. The only people who seem to disagree are politicians. Almost every day a story hits the press about the latest wasteful stimulus project. Half a million dollars to study ants, a million to turn an abandoned train station into a museum – and the height of absurdity – millions of dollars to put up signs to advertise the wasteful projects themselves. You can’t make this up.
Spending Picks Winners & Losers
When individuals spend money on a particular product, they do so because it does what they like it to better than the alternatives. When politicians spend money, it’s only natural that politics becomes part of the equation. The history of Washington is the history of politically-favored issues, industries or products du jour receiving taxpayer money. Not only is it unfair that we (and our children) are left to pick up the tab, it’s unfair to the other issues, industries or products that just happened to be in the wrong district or use the wrong lobbyist. Americans almost universally detest special interest favors. Decades of case studies suggest that the only way to reduce the amount of money politicians spend picking winners and losers is to reduce the amount they have to play with.
Government Spending Builds Constituencies
When most people hear the word “constituent,” they think of voters. Politicians look out for constituents, right? True, but not always in the way you might think. The government spends a lot of money, and that money goes to a lot of different groups. Each American pays a small portion of the amount spent on any one group, but it’s a big deal to those who receive it. This is what economists call concentrated benefits and dispersed costs. Groups – whether private businesses or government departments – have an interest in keeping the money flowing. They are often willing to spend a lot of time and money to make sure it does. Every time the government spends, it risks building a new constituency that will fight to keep taxpayer-money faucet on. This ratchets up government spending and is partly responsible for our current predicament.
Public Sector Pay Outpaces Private
Government over-spending is driven by many factors, but one of the reasons it is so out of control is the unreasonably-high salaries and pension benefits received by public sector employees. Americans were outraged when they heard about exorbitant salaries in Bell, California, but unfortunately, Bell is just a symbol of a more widespread problem. In 2008, public employees earned about $7,500 more per year than private sector employees in comparable roles. Once you factor in pension benefits, the difference becomes even more dramatic. No, compensation is not the largest part of the federal budget, but at about $224 billion per year, the discrepancy between fair-paying private sector jobs and comparable public sector positions really adds up. If the government wants Americans to start trusting their budgetary decisions again, they should start close to home by bringing public sector salaries and benefits in line with the private sector.
