Tuesday, January 26, 2010


The country faces a fundamental disconnect between the services the people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services.
Congressional Budget Office Director Douglas Elmendorf. Entitlement Spending and the Long-Term Budget Outlook.
While I would expect that Director Elmendorf is fundamentally correct, I would offer a slightly different take on his words:
The country faces a fundamental disconnect between the actual costs of the services the people expect the government to provide, and their impression of the amount of tax revenues available to the government to finance those services.
That is to say, that rather than (intentionally or not) being too cheap to pay for the services that they expect (or just as often, deride) from government, the average American can't understand how a pot of money as large as the annual budget of the United States fails to pay for everything they feel needs to be paid for. Therefore, they have trouble understanding why either taxes should be raised or services diminished, and this allows politicians to conscript the old hobgoblins of waste, mismanagement and fraud (a.k.a.: programs that benefit someone else) to rally public anger over funding requests (usually for programs that will benefit someone else).

It's easy to understand why this is the case. Governments routinely deal in amounts that most of us can only imagine, and even that not very well - even if we can imagine quite a lot. For most of us, the concept of one billion dollars is more of an abstraction than a fabulous amount of money. If one heads down to the Sodo (South Downtown) area of Seattle and looks at the two stadiums that stand there, it can be hard to really wrap one's brain around the idea that several hundreds of millions of dollars went into those structures. Somewhere along the line, just as it did when we were children, large numbers quietly fade into "infinity," and we can no longer conceptualize of just how one would go about reducing a number with so many zeroes after it to just plain zero. (Although I'm pretty sure that I could manage to do in a billion dollars, given the chance.)

The game of politics is a large part of the problem. Liberal politicians promise benefits and Conservative politicians promise tax breaks, each with the understanding that when they implement it, it will be an investment that will automagically reap greater rewards than the costs. Aid to the poor will enable them to become taxpayers, and contribute more to the economy than is given to them. Lower tax rates will increase the volume of taxable transactions enough to pay for itself and then some. Both of these articles of faith have their limits, which no-one ever want to test to see if we have reached. But then again, faith only succeeds to the degree that it not subject to tests of proof, and so the myriad failures of such policies to work out the way they were promised through the past are conveniently ignored, chalked up to the viciousness or vacuousness of the opposition or dismissed as lies spread by people somehow brain-damaged enough to have a sincere aversion to wealth and prosperity.

And we, as the overall public, are the rest of the problem. We become attached to entitlements, "sugar cookies," as my friend Curtiss so aptly terms them, and, especially once we start planning our standards of living around them, feel that it would be an unwarranted hardship to do without them. Of course, someone, sooner or later, is going to do without them. The system is unsustainable as it is, and we've started looking around to see who weaker then ourselves can be made to bear the costs, without reaping the benefits. That's unlikely to be a workable plan, and to the degree that politicians advance it, they should be (but likely won't be) roundly punished.

But the ledger must be balanced, and the two sides reconnected. We can either do it for ourselves, or have it done for us. Or should that be to us?