About Me

I am Associate Professor and Chair of the History Department at the University of Massachusetts-Dartmouth. I am also the Academic Director of the Clemente Course in the Humanities, in New Bedford MA. Author of "Social Security and the Middle Class Squeeze" (Praeger, 2005) and the forthcoming "Saul Alinsky the Dilemma of Race in the Post-War City" (University of Chicago Press), my teaching and scholarship focuses on American urban history, social policy, and politics. I am presently writing a book on home ownership in modern America, entitled "Castles Made of Sand? Home Ownership and the American Dream." I live in Providence RI, where I have served on the School Board since March 2015. All opinions posted here are my own.

Wednesday, June 29, 2011

Penny-wise, (Rand) Paul foolish -- or, why government often matters

It appears, at times, that American conservatives seem to even deny the possibility that government spending or regulation might actually save money -- either save the government money (a secondary consideration) or save the country money (presumably, the primary goal).  As I noted yesterday, there is now ample empirical evidence that environmental regulation (along with Medicaid) has decreased infant mortality; for decades now, scholars have argued that the 1944 G.I. Bill more than paid for itself as well.  Spending large sums of public money on high quality universal pre-school would reduce all sorts of other economic and social costs, both for the government and for the nation as a whole.  There are, of course, far too many other examples to recount here.

It should be said that cost-benefit analysis should not be the only rubric for measuring whether a government program, tax or regulation is worthwhile.  Take the estate tax, for example:  as Andrew Carnegie and Theodore Roosevelt argued early in the 20th century, the goal was in large part to break up concentrated wealth.  "The man of great wealth owes a particular obligation to the State because he derives special advantages from the mere existence of government," Roosevelt told Congress in 1906.  "The prime object should be to put a constantly increasing burden on the inheritance of those swollen fortunes which it is certainly of no benefit to this country to perpetuate."  The revenue it generated was a side benefit.  It is important for liberals to continue to stress that in most cases, most of the time, government works.  Post-New Deal liberalism was founded on 2 core ideas, both of which made sense to many Americans who came of age in the 30s, 40s and 50s:

1)  that disaster (economic, natural, medical) can strike any of us at any time, so we should be willing to share or pool risks; and
 2) that we can and should collectively build and maintain common institutions and goods through the instrument of government.  Like American liberalism more generally, these two assumptions are as conservative as they are liberal -- this explains much of their appeal, in fact.

While one can translate those two core ideas into a purely economic calculus, I think this misunderstands them.  More to the point, it ignores the fact that there are other justifications for government action that are valid as well:  justice, for example.  Public or common goods must be created, protected and enhanced, since private action is unlikely to do so.  And this must be done even if we cannot sufficiently calculate or determine a monetary benefit.  There is a danger, a slippery slope for liberals (and the country) in arguing that only a 'return on investment' constitutes a valid rationale for state action.  For one, if a healthy return cannot be demonstrated, it feeds public resentment of taxation (see my taxaphobia post of a few days ago).

One result has been a surprisingly bi-partisan denigration (and de-funding) of the IRS over the past decade or so.  Little money has been or can be saved by trimming the IRS budget.  Indeed, one can convincingly argue that a big chunk of the present deficit could be erased simply by beefing up IRS capacity, so it can go after individuals and corporations that aren't paying their fair share.   The Government Accounting Office (GAO) recently estimated that approximately $330 billion in federal taxes had never been paid as of the end of fiscal year 2010.  A good chunk of the tax evaders are individuals with "substantial personal assets" including multi-million-dollar homes and luxury cars, the GAO reported.   For every dollar the IRS spends on audits, liens, and property seizures, the government brings in more than $10.  If we spend less on IRS enforcement, as Republicans demand (and to which Democrats too often acquiesce), it costs us.  Obviously it costs our government revenue, but there is another cost, too:  it slowly undermines public faith in the rule of law.  Surely this is an odd position for conservatives to take.  A society that cannot tax itself, and that undermines popular belief in the effectiveness of government, will generate a politics that slowly devours itself -- like an autoimmune disease.  We have certainly reached this point now, haven't we?

The common assumption that any dollar spent by government is inherently wasteful simply flies in the face of evidence, historical and contemporary.

In keeping with this theme, Steven Benen of Washington Monthly usefully points us toward an exchange between Sen. Bernie Sanders (I-VT), Sen. Al Franken (D-MN) and Sen. Rand Paul (R-KY) earlier this week, during a subcommittee hearing on funding the existing Older Americans Act.  Sanders made the point that spending $2 billion to prevent hunger among the elderly should be considered an investment, because it would ultimately save money (for the feds, and overall) on health care and nursing home costs.

Paul was incredulous that any federal program or regulation could be considered an investment.  "It's curious that only in Washington can you spend $2 billion and claim that you're saving money.  The idea or notion that spending money in Washington is somehow saving money really flies past most of the taxpayers."

The brief exchange is worth watching:

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