Wednesday, February 16, 2011

TANSTAAFL in todays political landscape

A series of pieces on NPR's Morning Edition today reminds me of TANSTAAFL (There Ain't No Such Thing As A Free Lunch; the phrase Heinlein repeated in many of his novels). In today's era the governments are facing severe budget problems and political leaders are proposing deep budget cuts. That's causing an uproar from the groups supporting the programs slated to be cut. But budget realities speak about the need to reduce the deficit, and for some governments they are legally required to not run a deficit. But when the person who protests the cut budget item is asked whether they'll pay a fee to use the service, they say "no". In other words we the people are asking for free public services so long as we don't have to pay for the services.

It's not possible to have it both ways. We enjoy a government with a large array of public services. Somehow those services must be funded. There are many voices complaining about "high taxes" and demanding tax cuts, but when tax cuts are enacted without a matching cut in services it's a recipe for government financial disaster. Like the disaster we're currently facing.

In Balancing The Budget: The Problem Might Be You they discuss government spending on infrastructure (a.k.a. highways) saying:

But even the most ardent supporters of highway spending hit the brakes when pollsters started asking if they would be willing to help pay for it.

"Where support did start to drop off — and did so quite dramatically — is when voters themselves are asked to help foot the bill," Campbell says.

Survey respondents rejected the idea of paying for roads with higher gasoline taxes by a better than 2-to-1 margin. Additional toll charges were almost as unpopular.

They want their free highways, and don't want to pay for them. Or, as the article said: In other words, if you build it, Americans will come, so long as they don't have to pay for it.

In Just Don't Call it a Crash Tax (part of the Feb 16 episode of The California Report) discussed fees which some are calling "crash taxes". In some California cities when someone has a car accident, the city will send out a bill for fees related to responding to the accident. Cities obviously incur costs when they respond to an accident, but traditionally this service has been free. Due to budget cuts cities are seeing it necessary to charge fees for this service (and maybe others). But it's being seen as a "tax" and since "taxes are bad" is a common meme, it means cities are being put on the defensive about these fees.

One of the libertarian ideas is to cut taxes deeply, and replace taxes with fees for government services. Government would be funded by fees rather than taxes. I suppose the theory is if the fees are priced fairly it would give us users of those services a better appreciation of their value. That would mean rather than ubiquitous free roads, to instead have ubiquitous toll roads. Yes?

Alan Simpson: Cut Entitlements, Defense; Don't Touch Aid To Poor is an interview with (former) Sen. Alan Simpson, who was on the fiscal responsibility commission who unveiled a report last November. That report pointed to Entitlements and Defense spending as the principle place to find budget cuts. The Obama Administration's budget proposal for this year leaves Entitlements and Defense spending uncut, and is instead focusing on cutting discretionary spending.

Sen. Simpson spends a lot of the interview defending the programs like free lunches for poor children, and other "social safety net" programs. Those programs are primarily considered discretionary spending, and are probably included in the cuts proposed by the Obama administration.

The libertarian ideal (rather than taxes, fees) would, one would think, force a fee to be paid by the poor children who are being given the free lunch. Or, perhaps cancel the free lunches entirely, and make the poor children pay for their lunch the same as the other children. But it's known that families of poor children often cannot afford food for proper nutrition, and that the benefit of paying for lunches is children who get proper nutrition during a critical phase of their life where their brain/body is still forming and that down the road those children will have better brains than the ones who had insufficient nutrition.

It sounds like a great analogy for the bigger picture. Fees for services sound like a good idea until you look at how it affects poor people. The result of fees for services would be to lock poor people out of access to government services.

Getting back to the main topic of this posting... TANSTAAFL ... Sen. Simpson had something to say along these lines:

SIMPSON: We found stuff in the Defense Department that you can't believe. Here's one for ya. There's a DOD health system, its separate for Veterans Administration, its separate from Obamacare. It affects 2.2 million military retirees.

Their premium is $460 a year and no co-pay and includes their dependents and the cost to the U.S. is $53 billion a year.

STEVE: So maybe people ought to pay in a little more that's what you're saying…

SIMPSON: And, I'll tell you what, you mention that, here come the reserve officers, here comes the VA, the veterans groups and they'll rain boulders on your head.

That's how you pass or kill something in this country, you use emotion, fear, guilt or racism, and I've been in them all – I did immigration, nuclear, Social Security, aging – I learned where the long knives are.

And as long as people are buffaloed by that, and fogged by that on the basis of protecting their hide from any peril, as H.L. Mencken once said, we're in deep trouble.

That pattern of "propose cutting a program" followed by "special interest groups raining boulders on your head" is where one has to respond with TANSTAAFL.

To be clear on this - I myself am 100% against government debt. Debt in general is bad because it forces you to pay interest on the debt you take out. That interest payment is a total waste of ones personal resources. When a government goes into debt it forces its population to waste their collective resources through interest payments.

The solution to this budget mess is not to increase deficit spending. Government budgets must be brought into balance. And, during the Clinton years the budget was brought into balance. It was during the Bush years where the federal budget was sent back into deficit spending. For some reason it is the Republicans who are most loudly demanding to rein in deficit spending, thumping their chests claiming to be fiscally responsible, when it was their party who created the deep deficit spending pattern of the 2000's. Hypocritcal idiots.