Budget Cure: Pie or Bile? (Tapscott Replies)

Neither Republicans nor Democrats dispute that governments at all levels are generally spending more than they’re taking in, that favored programs are strained, or that fixes are needed. Republicans generally call for tempered spending, particularly on social programs, and creating more tax revenues through increasing incentives to produce, particularly through lowered taxes. Democrats generally call for increased spending, particularly on social programs, and paying for it through increasing taxes on our most productive.

It’s not difficult to see that as Democrat promises run up against budget deficits and increased resistance to more taxes from stressed taxpayers that Democrats have a problem in fulfilling the expectations of their constituency. It’s more difficult to see what Republicans can do with that.

Mark Tapscott writes that,

We have created a federal Leviathan that promises to deliver something for everybody, with its regulations and taxation directing virtually every corner of daily life. There is no way any government can do that, so failures are inevitable. But over a period of time, as the failures in particular arenas multiply, there comes a point when the many specific failures merge into one general mood of dissatisfaction.

Within the next decade, as the seriousness of the entitlement crisis becomes more evident, it is likely that the general dissatisfaction with government that promises everything and delivers nothing but higher taxes, more waste and policy paralysis is going to grow more intense and deeper rooted.

This widespread dissatisfaction with the inability of Big Government to deliver on its promises presents conservatives with an historic opportunity to refocus public debate to redefine what is expected of government, to slim it down to more manageable proportions so that it can deliver on the most important things.

In short, the coming decade could be the greatest opportunity this generation is likely to see to make the case for a rejuvenated federalism of limited government. We simply have to find new ways to speak the timeless message of Ronald Reagan's first inaugural:
…"Now, so there will be no misunderstanding, it is not my intention to do away with government. It is, rather, to make it work -- work with us, not over us; to stand by our side, not ride on our back. Government can and must provide opportunity, not smother it; foster productivity, not stifle it."

In an exchange of emails with Mark, I pointed out that all the beneficiaries of government spending defend their own. Mark replied that, “when everybody is mad, they are more open to a discussion about priorities.”

That may be so, but experience shows that, more often, anger leads to more entrenched defenses. Rather, Reagan's optimism and focus on enlarging the pie was and is a winner.

For example, California – as usual leading the nation – has spent its increasing revenues of the past prosperous decade faster than tax revenues have grown, falling into serious deficit.

The new outlook from nonpartisan Legislative Analyst Elizabeth Hill is for a $1.9 billion shortfall this fiscal year and an $8 billion gap in the following year.

“The key thing to remember is that all the easy solutions are gone,” Hill said, referring to years of tight budgets. “To get revenue and spending lines into balance will require some really tough choices.”

California’s deficit is supposed to be frightening its legislators and interest groups into greater responsibility. If you believe that, I've a bridge over San Francisco Bay for sale.

In recent years, a strong economy and a surge in personal income taxes had brought extra cash to state coffers, helping to mask the imbalance. State spending is projected to increase 7 percent next year while revenue will grow only 4 percent….

Assemblyman Roger Niello, R-Fair Oaks, vice chairman of the Assembly Budget Committee, called the forecast a wake-up call for lawmakers.

"We cannot continue to put off the tough decisions required to get our fiscal house in order without facing serious consequences for our state," Niello said.

Senate President Pro Tem Don Perata, D-Oakland, said in a statement the governor and lawmakers should begin "an honest dialogue" that "must include exploring all options."

We’ve heard this hollow talk before, from Washington to the state capitals. But, when it comes down to actually doing something, borrowings increase – to be paid by our children, taxes increase – increasingly burdening the middle-class where most of the money is, and the neediest suffer – as social programs are trimmed.

The San Diego Union-Tribune’s editorial today points out the main culprits:

The budget crisis inevitably is going to turn into a nasty partisan scrap. It won't be long before Democrats depict their objections to a slowdown in spending as a noble attempt to protect California's neediest.

Don't believe this self-serving posturing for a second. Perhaps the most underreported state government story of all is how the Democrats who run the Legislature left the needy out during their recent spending binge.

Over the last five years, the budget for the state Department of Social Services – which handles child and family welfare programs, aid to the blind and deaf, food stamps and more – has gone from $8.15 billion to $9 billion. But, after adjusting for inflation, the budget for the needy folks served by this department is actually less than it was in 2002-03.

Over the same span, however, the education budget went up 42 percent and the prisons budget went up a staggering 88 percent.

In public, Democrats may say the poor and the disabled are California's neediest people. In practice, however, they act as if the neediest are the teachers and prison guards represented by powerful unions.

Of note is that the fastest growing unions are public employee unions, now about half of all union members in the U.S.

California teacher unions are set to scrap over which’s members will benefit from a stressed budget. It’s indicative of the shape of more budget battles, between Democrat constituencies.

The community college measure on the Feb. 5 ballot is shaping up to be a battle royale between California’s biggest teachers unions.

On one side is the California Federation of Teachers, the state’s second largest teachers union, which has been the biggest financial backer of the campaign to lower community college fees and set aside a percentage of the budget for community colleges…. On the other is the California Teachers Association, the largest teachers group in the state…

Tapscott may be correct that anger will lead to greater reason, but this example -- and many other experiences -- isn’t promising. There’s little reason to believe that tigers will change spots. There is, however, reason to believe that onlookers – especially when likely to get mauled – may cage the tigers.

The Republican message that resonates is not one of bile, which stirs partisans but doesn’t persuade fence-sitters. The Republican message that resonates is of a bigger pie that comes from enlarged opportunities and ability to profit from them.

That doesn’t just mean lower taxes. It requires a positive program of enlarging opportunities. When Republicans have focused on that, they’ve been rewarded at the ballot box. When Republicans just grumble about spending, especially when it’s evident they’ve been loose with spending, it has allowed the field to Democrat promises, no matter how empty or fallacious.

Some Republicans will argue that programs that enlarge opportunities are short-hand for more spending, and proponents are RINO’s. There may be some validity in that for unimaginative “me-too” proposals.

However, that’s just a reflection of how bereft of imagination most Republican leaders are, and how timid to confront the tigers. Then, there’s enough, and growing, pie for the rest of us.

Mark Tapscott Replies:

Hmmm. Since I absolutely agree with that last graph [one about expanded opportunities over bile], maybe I need to go back and rephrase some things to make clear that I am not simply recommending the traditional green eyeshade GOP approach of complaining about deficit spending.

What I am talking about is recapturing the ability to make the case that government should work for people, not lord it over them. For example, forget about cutting spending on one massive federal welfare program. I'm talking about creating and empowering thousands of community based welfare programs at the local level that represent a partnership between individuals, local officials and the organizations - churches and private charities - that are closest to the people in need and most familiar with how best to help them.

And, I almost absolutely agree with that last paragraph, as long as we tighten up on tax-deductible charities, to ensure that those who are supposed to be helped actually are. The IRS “May Step Up Efforts To Identify Ineffective Charities,” according to the Chronicle of Philanthropy. And, the IRS is meeting resistance from some in this well-organized interest grouping. Here’s an example of a Republican, Senator Grassley, who has been leading the fight for more accountability, which taxpayers and donors should applaud in itself, and to expand opportunities for the neediest.