Americans have gotten used to paying only 85 cents for a dollar’s worth of government.
Mark Antonio Wright makes the essential point that the reason people keep voting for an expansive federal government is that they don’t have to bear its cost. “The American people are not feeling (at the moment, that is) the effects — the very real pain — of Big Government because they’re not paying Big Taxes.”
Even excluding interest costs, Americans get to pay only 85 cents for every dollar they enjoy in federal spending. And much of that 85 cents is hidden from us, such as through the “employer’s side” of the payroll tax (really paid by workers) or the corporate income tax (really paid by shareholders).
Meanwhile, that dollar’s worth of spending goes mostly to things that most Americans love: Social Security checks, Medicare and Medicaid, the military, assistance to the poor, tax credits, veterans’ benefits, infrastructure, education, and so on. In fact, they want to spend more on all of those things!
Would voters still be so spendthrift if they had to fully pay for everything they wanted? Probably not. The Cato Institute has found that — surprise, surprise — Americans support costly programs less when they’re the ones who have to pay for them: “Advocates often present policymakers with polls that show popular support for some proposed government program — the Green New Deal, paid family leave, child care, free college, etc. But those polls never seem to point out the costs of the free service. When a poll does note costs, support tends to drop by a lot.”
I am not usually one to criticize the presidency of Ronald Reagan. But one of the Gipper’s worst legacies was to define the measure of big government in the public’s mind as how much they paid in taxes. By cutting taxes without cutting spending commensurately, he made big government cheaper and habituated Americans to getting a discounted lunch, if not a completely free one.
Milton Friedman, with the luxury of not being a politician, knew better: “Keep your eye on one thing and one thing only: how much government is spending. Because that’s the true tax. Every budget is balanced. There is no such thing as an unbalanced federal budget. You’re paying for it. 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.”
Better to pay for our government now rather than later, as delaying the cost of that “true tax” only makes it larger.