The reporting on budget cuts is just all wrong. The [newspaper: Times] reports that the House is set to cut $60 billion, but doesn’t really go into detail on what those cuts include.
Among the cuts that it does describe are an amendment to deny funds to Planned Parenthood. Now, this is really stupid. As of 2008, only 3% of Planned Parenthood’s expenses went toward abortion; about 13 times that much went to contraception, and 9 times more toward STD treatment.
So what does a “smaller budget” in the Planned Parenthood context mean? It means more unplanned pregnancies. This may or may not increase expenses in the future (you can imagine scenarios under which it increases, and others under which it decreases), but you miss the entire picture if you focus narrowly on how much avoids going into the budget today.
Or take the IRS, everyone’s favorite bad guy. The GOP is predictably going after it. But we know what happens: cut from the IRS budget, and more people avoid paying the taxes that the law requires them to pay. If you think the tax burden is onerous, fine; then change the law so that it’s less so. But if you want to enforce the tax law, that enforcement costs money. The IRS budget pays to enforce the tax law. If you think that a marginal dollar of IRS expense leads to less than a dollar in taxes recouped from cheats, then suggest ways to improve the ratio. The way the press talks about the budget, however, avoids discussing benefits, and the GOP is in no rush to debate the merits of a marginal dollar in IRS expenditures. (Far be it for me to suggest that the *very point* of cutting the IRS’s budget is to make it easier for wealthy people, the GOP’s natural constituency, to cheat on their taxes.)
Or take the $131 million the GOP wants to cut from the Securities and Exchange Commission’s budget. Greater SEC oversight might have prevented the financial crisis that we’re just now digging out of. That would have saved us trillions of dollars in bailout money. If a marginal dollar of spending on the SEC yields more than a dollar of savings, we should spend that dollar; if it doesn’t, we shouldn’t. But narrowly focusing on expenses without focusing on results is the essence of foolishness.
Everyone loves to attack regulation of the sort that the SEC engages in. And yes, it confers costs on businesses. When the EPA fines firms for dumping toxic waste into the water, that’s regulation too, and that’s an expense. But it also saves money: keeping toxic waste out of the water keeps people safer, lets them live longer lives, keeps them in productive economic activity for more hours every day, etc.
The SEC’s and the EPA’s budgets are visible costs: the numbers are written down in a book and debated. Their benefits — birth defects prevented, financial crises averted — are longer-term, and the connection is not always visible. In fact, if government is working well, we often don’t notice the regulation’s benefits. Had the SEC been working perfectly, we might have avoided a financial crisis altogether. When FEMA fell apart under the Bush administration and New Orleans drowned, we noticed that failure; had FEMA done its job, there would have been nothing to notice. We had 30 or 40 years of financial stability after the Great Depression, in no small part because banks were kept highly regulated and boring. I suspect this invited people to think that regulation was unnecessary, because the world seemed to do fine without it. But that doesn’t mean the regulation went away; it just means the regulation was invisible.
Invisible, properly-functioning regulation — from FEMA, from the SEC, from the EPA — means invisible benefits: cities that don’t flood, financial crises that don’t drive us into recession, rivers that we can swim in without thinking of the agencies that made it possible. The costs, though, are there for everyone to see in the budget books every year.
To every decision there are costs and benefits, but somehow government policies are treated as though they conferred costs and never benefits. This same refusal to see the forest for the trees came up when the Affordable Care Act was being debated. Democrats insisted on keeping the cost of the bill below an arbitrary limit of $1 trillion over 10 years. But don’t focus on “how much the government spends on health care”; focus on “how much the average taxpayer is spending on health care”; whether the taxpayer’s expense comes out of taxes or from his wallet is largely immaterial. Presumably when the government spends $1 trillion on health reform, that’s going to lower the amount that we consumers have to spend out of pocket. So it’s just transferring expenses from one bucket (out-of-pocket health-care expenses) to another (taxes). Does a dollar taken from taxes reduce out-of-pocket expenses by more than a dollar? If so, there’s a good argument that we should spend that dollar; if not, there’s less of a good argument.
Granted, you could argue that government expenses are *always* worse than personal expenses, no matter the ratio. This is an argument from principle, which you get from dyed-in-the-wool libertarians, and it’s crazy. I think most Americans would reject it out of hand, and it absolutely wouldn’t sell. Suppose a dollar of government health-care expense, or a dollar spent regulating the private insurance industry, saved $10 off the average American’s out-of-pocket health expenses. Would you be willing to let the government handle this and charge you your dollar of tax? I know I would; I hope you would too.
Sometimes what government gives us for our taxes is something that the private market just couldn’t provide. Medicare provides insurance for old people, which they *couldn’t get at any price beforehand*. Here it’s not even a question of how much it costs the government to provide something that the market also provides; it’s the government creating a functioning market where none existed before.
Again: to every policy there are costs and there are benefits. We live in a time when government policies are assumed to consist solely of costs with nary a benefit. Republicans rejoice in this assumption, which allows them to talk about “cutting $60 billion” without having to answer the question: are they also cutting more than $60 billion in benefits?
We need to stop considering government expenses in their own separate bucket. At the very least, we need two expense buckets: out-of-pocket expenses and tax expenses. We simply cannot view the federal budget in isolation from the rest of the economy.