Yes, we can . . . cut spend­ing

The Washington Times Weekly - - Commentary -

When I hear politi­cians say they can­not cut gov­ern­ment spend­ing and we must have tax in­creases, I know they are ei­ther cor­rupt or in­com­pe­tent. Any­one who has ever been around gov­ern­ment agen­cies knows that they tend to be over­staffed and in­ef­fi­cient com­pared with op­er­a­tions in the pri­vate sec­tor. But we also know that many gov­ern­ments do a much bet­ter job in man­ag­ing tax­payer dol­lars than other gov­ern­ments. At a min­i­mum, we should de­mand that our po­lit­i­cal lead­ers man­age the gov­ern­ment they are re­spon­si­ble for as well as other po­lit­i­cal lead­ers man­age their gov­ern­ments.

Pres­i­dent Obama and many of his fel­low Democrats say we can­not re­duce our debt prob­lem to man­age­able lev­els with­out in­creas­ing taxes. I say, why not? Some other coun­tries spend less per capita and yet pro­vide higher lev­els of gov­ern­ment ser­vice. Both Aus­tralia and Switzer­land have higher per capita in­comes than the United States. (Note: The per capita fig­ures for both Aus­tralia and Switzer­land are some­what over­stated be­cause of the re­cent fall in the dol­lar ver­sus their cur­ren­cies, but the fact of higher real in­comes in those coun­tries re­mains.)

Fur­ther­more, both of these coun­tries have lower un­em­ploy- ment rates, lower lev­els of to­tal gov­ern­ment spend­ing per per­son (fed­eral, state and lo­cal), much lower debt and deficits as a per­cent­age of their gross do­mes­tic prod­ucts, less corruption, equal or more eco­nomic free­dom, and longer life spans than the United States. It is only re­cently that the Aus­tralians and the Swiss have had real per capita in­comes higher than Amer­i­cans. The ques­tion is, if the Swiss and Aus­tralian gov­ern­ments can spend less per capita than Amer­i­can politi­cians and get bet­ter out­comes, why don’t our rep­re­sen­ta­tives re­duce and re­form spend­ing, rather than in­crease taxes, which will slow eco­nomic growth?

Over the past 15 years, Aus­tralia, Canada, Swe­den, Switzer­land and some other coun­tries have all re­duced the rel­a­tive size of their gov­ern­ments and have seen their per capita in­comes and other mea­sures of cit­i­zen well-be­ing rise rel­a­tive to the United States. The Swedes man­aged to cut the size of their gov­ern­ment by 20 per­cent, and now they have about the high­est growth rate in Europe. If the U.S. did the equiv­a­lent, much of its debt/deficit prob­lem would dis­ap­pear.

Mr. Obama claimed that if the Repub­li­cans did not in­crease taxes, Amer­i­can chil­dren and the el­derly would be left with­out ad­e­quate food and med­i­cal care. How­ever, Swiss and Aus­tralian chil­dren and the el­derly who are in need get help from their gov­ern­ments. If they can do it, why can’t we? The an­swer is too many U.S. politi­cians and gov­ern­ment bu­reau­crats are cor­rupt and/or in­com­pe­tent. When he was run­ning for of­fice, Mr. Obama promised to ex­am­ine ev­ery fed­eral spend­ing pro­gram and cut out waste, fraud, abuse, etc. — but he has never done it.

The same ex­cuse-mak­ing is true at the state level. New York spends al­most 65 per­cent more per capita and Cal­i­for­nia more than 30 per­cent more per capita than Vir­ginia does. New York and Cal­i­for­nia have big bud­get deficit prob­lems, and Vir­ginia is run­ning a sur­plus. Vir­ginia re­cently has been rated “best for busi­ness.” A few decades ago, Vir­ginia was much poorer on a per capita in­come ba­sis than New York or Cal­i­for­nia. So why has Vir­ginia suc­ceeded? One rea­son is that Vir­ginia has a part-time leg­is­la­ture, which is lim­ited to meet­ing just a cou­ple months a year. This has proved to be plenty of time to get the state’s busi­ness done while lim­it­ing the time that leg­is­la­tors have to come up with use­less and coun­ter­pro­duc­tive pro­grams. Vir­ginia also has been blessed with more com­pe­tent gov­er­nors (Democrats and Repub­li­cans who can serve only one term) and more ca­pa­ble elected of­fi­cials than Cal­i­for­nia or New York.

Texas, Florida and sev­eral other states have no state in­come tax and are lead­ers in job cre­ation. When you see politi­cians in Cal­i­for­nia, New York and else­where say­ing they need to in­crease taxes, you know they are cor­rupt or in­com­pe­tent.

The Repub­li­cans should de­mand that the pres­i­dent up­hold his cam­paign prom­ise to ex­am­ine ev­ery ex­pen­di­ture and cut out the waste, fraud and du­pli­ca­tion be­fore in­creas­ing the debt limit.

Richard W. Rahn is a se­nior fel­low at the Cato In­sti­tute and chair­man of the In­sti­tute for Global Eco­nomic Growth.

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