All Commentary
Friday, September 1, 1995

Budget Debate, Washington-Style

To Balance the Budget, We Must Rethink the Purpose of Government

Mr. Bandow is a Senior Fellow at the Cato Institute and the author of The Politics of Envy: Statism as Theology (Transaction).

Only in Washington could the task of balancing a budget be perceived as so difficult. It’s been 26 years since Uncle Sam ran a positive fiscal balance, and even under the most optimistic budget plan before Congress it will be another seven years before Washington does so again. And that presumes proposed budget cuts, backloaded to occur two presidential, and four congressional, elections away, will actually take effect.

Policymakers offer many explanations as to why balancing income and expenses, which most families do every year, is so hard for government. Our society and its problems are complex. It would be a waste to cancel projects already underway. Cutting spending in one area, say, prenatal health care, would raise costs elsewhere, say Medicaid. Reducing outlays would force states to spend more. A growing portion of the budget is made up of “entitlements” and isn’t “controllable.” And so on. Excuse-making is big business in D.C.

A far more serious problem with Washington’s budget deliberation, however, is the absence of any moral component. Almost all legislators, irrespective of their party, believe that all policy outcomes are philosophically equal. To them, there is no moral difference in voting to spend, say, $10 million to subsidize American beekeepers, underwrite foreign dictators, train local activists to campaign for higher alcohol excise taxes, provide day care for middle-class parents, and to leave the $10 million with the people who earned it. One or another spending proposal may seem a better use of scarce resources or offer greater political advantage; none is viewed as being wrong in principle, an inappropriate use of political power.

This failure to see any moral issue with the taking of taxpayers’ money—something that would be recognized as theft but for the veneer of law—has proved to be the most important fuel for the growth of government over the past century and is proving to be the greatest barrier to restraining government today. The point is, people’s wants are infinite. Their desire for subsidies is almost as great. So long as legislators consider tax cuts to be merely one of several alternative uses of government money, rather than recognize government spending as the coercive divestment of earnings to which taxpayers are morally entitled, Congress is unlikely to seriously restrain spending or balance the budget.

Indeed, legislators need a set of clear standards to measure any appropriation or regulation. Such guidelines would help them fulfill their obligation to uphold the Constitution and ward off lobbyists and interest groups seeking special favors. The many possibilities include:

1. The measure must serve the general welfare rather than one or another narrow interest. The original Constitutional notion of the general welfare had real meaning. The concept goes to the proper purpose of government, which is to act when, but only when, coercive, collective action is necessary. Thus, the first question to ask about any expenditure or law is, who benefits? If the answer is a handful of mohair wool producers, a score of major exporting firms, or a few thousand small businesses, then agricultural subsidies, the Export-Import Bank, and the Small Business Administration fail to make even the first cut.

Of course, everyone contends that his or her program ultimately benefits everyone. And that’s obviously true in a sense—for instance, in return for a generous government grant I would happily promise to spend every cent, thereby enriching book publishers, antique dealers, and a host of other merchants. But this beneficial effect would have to be measured against the taxes taken from these very same people, as well as everyone else. There may occasionally be some close cases, but not often.

2. The purpose must justify forcing taxpayers to contribute. The mere fact that a measure would serve a fairly broad interest doesn’t mean that it warrants mulcting taxpayers. A program to provide everyone with gold-plated bathroom fixtures would, after a fashion, promote the general welfare. But there is not the slightest necessity for the program, as there is for, say, a defense against foreign foes. As a matter of principle government should not threaten to jail people in order to force them to pay for their neighbors’ fancy bathrooms.

This standard would weed out virtually any grant or transfer program that survived the first test. Just peruse the Government Assistance Almanac (published by Omnigraphics), an annual listing of available spots at the federal trough. There is, for instance, the Christa McAuliffe Fellowship program, which funds “outstanding teachers to continue their education, to develop innovative programs, to consult with or assist school districts or private school systems, and to engage in other educational activities.” Conceivably these fellowships benefit someone beyond the individual recipients. But how can one seriously argue that the gains are important enough to warrant conscripting taxpayers’ earnings?

3. The objective must not be achievable through private means. Even if a proposal survives the first two hurdles, that is not enough. Consider social programs such as Meals-on-Wheels and other services for the disabled and elderly. The government’s goals are good, but there are manifold private alternatives. Indeed, the federal Meals-on-Wheels was actually patterned after a private initiative; families, churches, associations, and neighborhoods are all better able to meet diverse social needs. Moreover, the sinews of community will be strengthened if private people develop such solutions rather than turn problems over to a distant government bureaucracy.

4. The proposed program must be likely to do more good than harm. The final point is perhaps the most obvious yet most ignored on Capitol Hill: Government should first do no harm. A half century of expansive and expensive government intervention surely has dispelled the notion that government works well. Criticisms of alleged market failure are meaningless if not compared to government failure, given how often thoughtless state interference, through taxes, spending, and regulation, has created and exacerbated social problems.

Consider, for instance, federal antitrust and civil rights laws. Generously assume they meet the first three conditions; they still flunk the fourth. Antitrust law has turned into an utterly perverse, anti-competitive and anti-innovative regulatory miasma that causes far more economic damage than it repairs. Similarly, the civil rights laws have created a racial spoils system that is inflaming racial passions, moving us further away from the ideal of a color-blind society.

Obviously not many programs (or regulations) would pass all four tests. But that’s the point. Today Republican and Democratic legislators alike tend to accept the legitimacy of most any government action. Yet a commitment to liberty and understanding of the usual consequences of state action should cause them to make government the last rather than first resort. And they should resort to it only under circumstances that are compelling both morally and practically. Until lawmakers rethink the whole purpose of government, we aren’t likely to see a balanced budget in seven, ten, or even more years.

  • Doug Bandow is a senior fellow at the Cato Institute and the author of a number of books on economics and politics. He writes regularly on military non-interventionism.