As the election season continues to heat up, I’m consistently amazed by the ways that politicians choose to argue. If you try to dissect the reasoning behind many fiscal conservative cries for spending cuts, it seems that they want to cut spending for the sake of reducing taxes. This “tax-first” mentality may resonate with people who think they want more money in their pockets, but it leaves out the bigger part of the picture.
Every person participating in this debate needs to first evaluate the following two questions:
- What are the services I expect from my government?
- What am I willing to pay for those services?
Anyone who reflexively says that they don’t want the government to take any of their money should be called on to define what minimum services the government should provide and then their answer for question 2 should be reconciled with that level of service. Anyone who comes up with a huge laundry list of services & social programs for question 1 should likewise be called to reconcile their answer to question 2 to a level reasonable to pay for those services.
Basically our entire complicated federal budget can be simplified to something like this:
(yes those bars are to scale, scary huh?)
Now there’s a large number of people who shout about the fact that the interest on our debt is going to bankrupt us. Let’s split out interest spending on the above chart to see how big of a part of the problem that is:
(note for data nerds, the purple box gets smaller if you discount the portion of interest payments to the Federal Reserve that get kicked back to the Treasury)
I think it’s safe to say that no matter what your political slant that we’ve got a problem in that the spending column _way_ overshadows the income.
Now how we _fix_ the problem is the subject of many debates. I think we collectively waste a lot of hot air shouting about how we’re going to fix things when we haven’t even come to a basic understanding about questions 1 & 2 above. If you and I have a difference of opinion about whether the Federal Government should maintain the road outside my house, the interstate I drive on to get to work & the railways that bring coal to the power plant that provides power to my home, then we’re never going to agree on what marginal tax rate, and progressive tax structure would be appropriate to _fund_ those things.
Now in reality, question 1 _is_ the major divisive question in many political debates, but framing it as a question on tax policy first is dishonest. Let’s discuss our differences on what we expect from the government and come to a legitimate compromise on what a reasonable level of government service is. After we have agreed to a compromise on what the government should do, it should be possible, though not easy, to begin the debate on how we are going to pay for it.