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May 25, 2018

5/11/2018 7:29:00 AM
Toward a No-Spending Increase Pledge

There's no question that Wisconsin, under Republican leadership these past eight years, has been great in cutting taxes.

By the end of the year, according to the Walker administration, total tax cuts under Gov. Scott Walker and the GOP Legislature come to a proud $8 billion. That's their number, but whatever the actual figure, it is no doubt substantial, and that's money we would not otherwise have had in our pockets.

For the fatter paychecks, we can all be grateful. And yet ... and yet ... there is that nagging doubt in our heads that something is just not quite right.

Well, just look to the other side of the equation, and it's easy enough to figure out what's wrong. What's wrong is the spending side of the ledger, which continues to rise.

In the 2017-19 budget, for example, GPR (general revenue funds) spending is slated to rise by nearly $1.3 billion, or about 3.9 percent.

And, as the MacIver Institute points out, overall spending since fiscal year 2010, when Walker was elected, will have increased from $31 billion that year to $38.6 billion in fiscal year 2019, a rise of 24.5 percent.

That's a lot lower than under Democratic leadership, but it's still a lot, and the ramifications are severe when taxes are being aggressively cut. Sooner or later, lower revenues and higher spending will catch up to us.

Democrats of course want to raise taxes to pay for the spending, and then spend even more and tax even more, and the cycle goes on, all the while sucking not only money but growth and prosperity out of the private sector.

Republicans take a different tack but it's usually just as irresponsible. The say they can keep on spending because their tax cuts will spur growth and tax collections and the state will grow itself out of any deficit and debt.

It never happens. Growth creates some short-term compensation for higher spending, but the record tells us it always leaves a yawning gap. Sooner or later, taking more money out of the economy than the public sectors returns will drag down economic growth.

All of which means the inevitable gap between lower taxes and higher spending has to be financed by some form of borrowing, and that debt has to be paid for sooner or later, either through higher taxes for our children and grandchildren or through a lower standard of living or both.

To be sure, Republicans also like to talk about cutting spending, mainly because there's too much unnecessary spending for special interests, and GOP lawmakers know that the public knows that. Too much of it is just talk, though, or, even worse, smoke and mirrors.

For instance, this past budget cycle the GOP made much of cutting 175 state GPR positions in the Department of Transportation. There was dancing and high-stepping in GOP press releases.

Unfortunately for the rest of us, it was the GOP that added those positions in the first place, several years ago when they hired 180 full-time engineers in the DOT to inexplicably move away from private sector contracting to a bureaucratized workforce - a plan The Lakeland Times warned about at the time.

To be sure, there were conflicting studies about whether the state workers were cheaper for specific projects, but everyone knew they were surely more expensive in the long run when pensions and benefits were factored in. The projects end, but a bureaucrat in a full-time position lives on in the taxpayer's pocket, even after he or she retires.

What's more, the government engineers-cum-bureaucrats are far more inclined to go along with expensive and expansive federal (and anti-business) guidelines for construction projects than are private sector engineers. So this past year's cuts weren't so much cuts as they were fixing a mistake the GOP made.

That's just the tip of the iceberg. Spending remains out of control, and government keeps growing unnecessarily, camouflaged by accounting tricks, transfers, and debt. Something is badly needed.

That something is a no-spending increase pledge for all candidates, much like Grover Norquist's no-tax increase pledge that most Republicans sign.

We have no qualms with the no-tax increase pledge, but it doesn't avert trouble unless politicians also stop spending. To say all this another way, we can cut taxes all we want, but unless we embrace a Cut-Spending Pledge and attitude, we're going to continue to produce steep deficits, and that's a tax increase on future generations one way or another.

Here's how Milton Friedman put it so long ago, from a highly cited 1980 speech: "Keep your eye on one thing and one thing only: how much government is spending, because that's the true tax. ... If you're not paying for it in the form of explicit taxes, you're paying for it indirectly in the form of inflation or in the form of borrowing."

The truth is, the state is spending wildly because it wants to, not because it has to. Not only can spending be reduced to meet evidence-based revenues, it should be. While the state is looking at regulatory costs imposed on the private sector - a worthy initiative if ever there was one - it is not doing an equally good investigative job in looking at its own books.

Questions need to be asked: Are we sustaining bank accounts that continue to grow but whose principals can never be touched, and what is the justification? Are we propping up state agencies and programs that could be abolished or split, so that segregated funds cannot be surreptitiously and inappropriately transferred to other accounts?

What are we doing with savings from vacant positions, and have we eliminated all duplicate and unnecessary positions? Have we truly reformed the civil service to reduce the cost burdens of mechanisms that all too often are designed to protect unproductive and even counterproductive workers?

The questions go on and on, but the answers are few and far between. It's time for them to be answered, though, and it is time for lawmakers of both parties to be held accountable.

Let's start with a no-spending increase pledge, and further demand that our lawmakers actually reduce government spending, so that the private sector - and prosperity - can flourish.

Not least, smaller government means larger individual liberty, and that's prosperity for the human soul, a worthy dividend in and of itself.





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