Democrats and Republicans are diametrically opposed in so many ways but I think it comes down to a couple basic factors. As I noted in the The Left and the Right – Shoulds and Coulds, the Left tends to argue with emotion while the Right tends to argue with logic. I think most on the Left start with good intentions and end in poor implementation. I summed up the article thusly:
Liberal policies tend to tell you what to do. Conservative policies tend to motivate you to do something.
When I engage in discussions with Democrats I always seem to come away from the conversation having just heard a mandate of some kind.
Conversely, they seem to feel that I am always arguing for doing nothing – or doing less.
Dems: “We should do something about Climate Change. We should make Healthcare available to all. We should provide cheap housing. We should, we should, we should…”
Me: “Why? And how are we going to pay for it?”
The problem with all these nice and well-meaning ideas is that there’s never any details – at least not any that hold up in the face of basic economics. Nor is there any cohesive discussion of how these ideas will actually be funded. There seems to be no sense or grasp of cost.
Here’s the tough news for my fine Democratic friends:
We live in a finite world. We continuously have to make hard fiscal choices. Resources are not unlimited.
Money spent in one place cannot be spent on other areas. When you spend money on one program you are deciding not to spend that money on other programs. Resources are finite.
Take Climate Change, which – despite mainstream views – is not a decided science. Climate Science is in its infancy. No one can tell you how much the earth is warming or exactly who or what is causing it – or why warming seems to have showed no certain trend for the last twenty years. But we sure are spending a lot of money on Climate Change. The OMB says we have spent $77 billion domestically between 2008 and 2013. The Federal Climate Change Expenditures Report to Congress noted direct federal spending of $22 billion in 2013. The Climate Change Business Journal estimates the global Climate Change Industry encompasses $1.5 trillion per year in total expenditures. That’s as much as is spent globally for online shopping.
And that’s a whole lot of cash that can’t be spent on other issues – like healthcare, defense – or the reduction of our nation’s crushing debt levels.
America is like one giant household. It has monthly operating expenses, it has a mortgage – and it has a budget. Sure, the federal government can raise taxes and the Fed can print money but those are still closed loop systems. When taxes rise, productivity drops – and you can only raise taxes so far. When the Fed prints money we ultimately pay for that too – through a rise in inflation. Prices move upwards to follow the rise in the supply of dollars. Just like any household, when we spend money in one place we are by definition taking money away from another area.
We are making allocation decisions even if we don’t know we are.
And to me that’s the major difference between the Left and the Right. Conservatives tend to be fiscally focused. Democrats tend to be issue focused. Conservatives want a smaller government because government is expensive and wastes money. Liberals want a bigger government because government is expensive and wastes money.
Government spends money on issues. But government does not spend money efficiently. Government spending is the single least efficient means of allocating resources.
Look at it this way. Government produces nothing – it only spends the money of others. Government is a politicized allocator of other people’s resources. Government fundamentally misallocates resources because government spends other people’s money and because government is politicized.
The only skin the government has in the game is yours.
But it actually gets worse. 45.3% of Americans pay no income tax. 26.9% of Americans pay zero or negative total taxes (receive a net benefit) when you factor in payroll taxes. And this is a big problem. If you are not paying any of the bills it’s awfully easy to ask for more spending. Why try to curtail spending when it’s not your money being spent? You can support your causes – and do so with someone else’s budget.
The eight-year budget deficit under President Obama of $7.8 trillion was twice the level CBO projected in January 2009 when he took office – a projection that already incorporated the recession. Our national debt doubled – literally doubled – to $20 billion under Obama.
Which brings me back to a focus on the costs of government programs. It’s why President Trump’s budget is looking to finally make National Defense a priority while it goes after the federal bureaucracy. Our Defense Budget has fallen by 22% since 2010. Meanwhile, the State Department budget grew 30% under Obama. Trump’s budget proposes to cut nondefense discretionary programs by $15 billion in 2017 and by $54 billion in 2018. It’s a start.
But this portion of the budget is related to discretionary programs only. The real problem lies with our entitlement programs and our national debt. As Brian Riedl at the Manhattan Institute for Policy Research notes in his report on the CBO Budget Outlook, “Social Security, health-care entitlements, and interest on the national debt comprise 57 percent of current spending but will be responsible for 82 percent of all new spending over the next decade.”
Some hard financial decisions are rapidly approaching. As I noted earlier, we are making allocation decisions even if we don’t know we are.
At least we finally have a President who understands this basic fact.
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