Which Makes More Sense to You?

There’s a lot of talk in politics comparing government budgets to family budgets. How many times have we heard politicians talk about how government has to tighten its belt just like families do when times get lean? This comparison is going to be important in the fall campaign. Mitt Romney and the Republicans are going to insist on austerity by cutting government spending…except that spending that exists in the form of tax cuts for the wealthiest Americans, and naturally, defense. The center piece of this is Paul Ryan’s budget, which has been labeled, not unfairly, the “bombs not bread” budget.

On the other hand, Obama and the Democrats are calling for a more progressive budget by calling for tax increases on the wealthiest Americans and stimulus spending in the form of support for infrastructure, police, fire fighters, teachers and the like. If the Ryan budget is the centerpiece of the GOP plan, the centerpiece of the Democratic plan is the American Jobs Act, which the House refuses to put up for a vote.

The Republican argument is that our government debt is too high, and it’s a drag on the economy. Accordingly, we need to cut spending (but maintain low taxes on the rich so they can “create jobs”) and deregulate so that business can do whatever it wants to lead our nation out of the recession.

Of course, the problem with this argument is that businesses are not in the business of leading our nation. They are in the business of making money for their investors. Putting aside questions of social responsibility for the moment, this is as it should be. We don’t elect businesses. We don’t empower businesses to tax us or to spend tax dollars or to maintain the commons. That is the job of We the People, otherwise known as the government.

The Democratic argument is that government spending meets commitments that our government has made to provide for the common defense, to ensure the safety of our communities, to educate our children, and to provide a social safety net. In so doing, that spending provides jobs, expanding the economic base, both in terms of private sector spending and tax revenue.

So, what is the right answer? Well, what you have to ask is this. When we put money into our schools, when we fund effective law enforcement and public safety, when we spend money on infrastructure, do we consider this spending expenses or investments?

Shockingly, this question is a pretty muddy one, and the answer has to do with how the money is spent. For example, money spent on law enforcement for incarceration or increasingly military grade weapons is largely an expense, although there could be multiplier effect or the contractors that provide equipment and services, so there is a level of investment involved. On the other and, things like drug courts, community policing and public outreach and education represent more of an investment that has the potential to pay dividends in lower crime and incarceration rates, as well as improved police/community relations. In either case , hiring cops (or teachers, firefighters, nurses, social workers, etc.) is definitely an investment in the communities where those government workers work, live, shop and pay taxes.

Choose whatever form of stimulus targeted at the middle or working class you want. Road crews improver traffic, resulting in greater fuel efficiency ad productivity, and the spend their paychecks in the economy. Teachers educate children. Firefighters protect us. Nurses heal us. Social workers are there to help us back up when we all into the social safety net.

So, when we sit around our national kitchen table and debate how we want to get through our current fiscal straits. The way I see it, the Republican plan is the equivalent of a family cutting retirement savings, college savings as well as switching from costlier healthy food to cheap junk food while spending money on lottery tickets and gambling in hopes that good fortune will trickle down to them and thy will hit it big.

The Democratic plan is akin to that family carefully budgeting to weed out unnecessary spending and protecting the areas they need to protect. Maybe someone takes a second job to increase revenue. Maybe they take their cable subscription to a lower level or dial back holiday shopping. But they still send their kid to preschool or make sure their car is in working order so they can get to work reliably.

Which plan seems smarter to you?

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About Andrew

I'm a Christian, American, liberal, geeky, thoughtful, Northwest-transplanted Angeleno husband, father, and pundit who writes about anything he can think of.
This entry was posted in Economics, Politics and tagged , , , , , . Bookmark the permalink.

2 Responses to Which Makes More Sense to You?

  1. Ironica says:

    Here’s the thing… it’s all well and good to compare the nation’s budget to a family budget. But, you have to make it an honest comparison.

    First, you have your starting budget, income and outgo. You’ve got more of the former than the latter, as it should be.

    Then your income goes down. Your job is keeping you in the office too many hours, you don’t have time to spend with the kids… so you get a different job that pays less.

    At the same time, you REALLY want that cable channel with the MMA fighting. It costs more, but dammit, it’s WORTH IT, that’s some good stuff!

    Now your outgo is more than your income. Gotta fix this. But how?

    You could get another job to restore the income. You could cut that cable channel, scale back your cell phone plan.

    But instead, you tell your 17-year-old that when he has his birthday, instead of a party, he needs to get his own place and get the hell out. You’re done taking care of him. He’ll have to figure his own way to pay for rent, let alone college. YOU certainly can’t afford to support him all his life! (Meanwhile, you start lobbying to get the age of majority lowered, because your younger kid will be 16 soon, and that’s old enough to work; why should *you* still have to support him?)

    BTW, don’t call it “tax increases” on the wealthy. It’s not. It’s a partial restoration of past taxes. We don’t want to go back to the 90% top bracket of the 1930s, as much as it would help; just back to a 40-something% bracket. Because, fact is, if you’re pulling in several million a year, you cannot possibly spend it fast enough to boost this economy in any measurable way… but if you turn that around into tax breaks for the poorest households, that money will IMMEDIATELY be spent on goods and services, and that’s what creates jobs.

    • Andrew says:

      Hmmm…if I were more ambitious, I’d try to convert your whole family budget scenario to examples of government policy, but I’ll settle for assuming tat changing the age of majority would be akin to increasing te retirement or Medicare eligibility age.

      Thanks for the entertaining comment. 🙂

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