Tuesday, December 2, 2014

More, Not Less Government

           The federal government’s largest expenditures are on insurance and defense. Through Social Security, Medicare, and Medicaid, the federal government takes care of the sick and poor old. Through the Departments of Defense, State, and Homeland security the people of the United States are protected from outside threats. So much of what people would like to remove for their own ideological ends are rather incidental when it comes to the overall budget. Some on the right are not fans of the Federal Reserve or the Departments of Education and Energy. Some on the left would see the Defense Department or the various law enforcement agencies shelved.
            One problem is that politically, none of the agencies will be closed even if a large number of people wanted them to be. There are so many incumbents who will rise to protect their own turf and justify their position’s existence, even if there are duplications over what they do and another person does – and they both draw paychecks from the federal government. The other problem is that some point along the line there were debates on certain expenditures that were justified at the time and the expenditures were voted on through our democratic process, no matter how messy it is. So we have the government in the citizen’s lives in so many ways that the government is just part of the air to be breathe instead of an intrusion – see the worries about the government involvement in health care and the old woman wanting the government to take their hands off their Medicare.
            This is important, because even though looking at the budget and wanting to strike through different line items, it illustrates an important point. The government is not some separate foreign body, but the government at the federal level is the agent of the people as a whole. The government is the collective will of the people. By banding together, government leverages the money and the abilities of the collective to build roads and to defeat Hitler. That is not to say that sometimes the leaders of the government forget that they are serving at the will of the people and not at their own will. Fewer bullets should be bought for the soldiers and fewer soldiers should draw paychecks, but the people need protection and to say otherwise would be utopian dreaming.
            The debate is what levels of spending should there be and where to prioritize that spending. Could the federal government spend less on defense and keep us safe? Most likely it could be. The real question is where the government is failing to provide goods where it could be the most efficient provider. The most obvious is in education. Most schools for primary and secondary levels are funded at the local level. Tertiary education had been funded largely at the state level with assistance from the federal government in terms of subsidized loans and direct grants. The issue is that the federal government uses these loans not as a cost center, but receives income from them when their rates are greater than what the government can borrow for.  The current state is that the cost of education is born by the individual. The problem is that it lowers spending on goods and services and prevents household formation. If the federal government would instead fund education directly, youth would have a better start to their lives instead of worrying about an overhang of debt. By investing in human capital, the government could make the country better down the line by making it more productive and more capable. This could come from all new spending or it could come from cost shifting in a shifting of some priorities.
Overall, there is no one place the federal government needs cut. Government is good, and there is not enough of it.