[Vision2020] State Budget Deficits

[Kenneth Marcy]

On Tuesday 04 January 2011 14:52:23 Jeff Harkins wrote:
>   On the face of it, the argument for raising taxes seems to be a
> suitable measure.  However, one must keep in mind that when money is
> taken from money earners in the form of higher taxes, that transfers the
> spending capacity from the individual to the government - where some
> bureaucrat or politician will use their own self aggrandizing view of
> collective choice to usurp the choices that the individual money earner
> would make.

I find it troubling that you appear to conflate, coalesce, and compress entire 
governmental agency planning, executive budgeting, legislative appropriating, 
and administrative disbursing functions into the self-aggrandizing view of 
some bureaucrat or politician which results in usurpation of individual 
choices in favor of collective choices. While the implication of pejorative ad 
hominem may be entertainingly impolite, the prospect of the realistic truth of 
a public resource recognition and allocation system so restricted, and, for 
all practical purposes, so closed to significant public participation is worse.

When the nameless, faceless bureaucrat is viewed as an exercise of power by a 
unitary executive for the purpose of directly controlling the government, and 
indirectly controlling the electorate, the situation degrades from worse to 
unacceptable to an empowering electorate expecting discourse and recourse.
 
> Government has clearly demonstrated that it is incapable of making
> rational, transitive and reflexive choices when it receives money from
> taxation.

This statement is at least confusing, if not simply wrong. Governments, more 
specifically legislatures, use the sovereignty granted them by the electorate 
to make choices, which are thereby defined as legally rational, however 
disagreeable, logically irrational, or immoral those choices may appear.

Many of those choices are clearly transitive in nature. For example, (a) the 
legislature requires some people to pay taxes to the state, (b) the state 
spends those tax dollars on state programs, so, therefore, (c) people paying 
taxes pay for state programs. (a) --> to --> (b), then (b) --> to --> (c), 
therefore (a) --> to --> (c), which is a transitive relation, by definition.

Reflexive relations concern characteristics that an object or entity has with 
itself. Governments appear to be reflexive on multiple dimensions. One branch's 
activities are acted upon, or reacted to, by another branch of the government, 
which activities comprise, by definition, the sovereign will of the electorate 
that created, elected, and tolerated the creature its lightning enlivened.

I don't understand why you would write that statement in the first place.

> The absolute failure of the TARP and TARA programs are a case in point.
> Remember "cash for clunkers"?  The unintended consequences are still
> surfacing.  Still a lot of folks driving their "free" golf carts.  And,
> the price of used cars has skyrocketed.

We're shifting vantage points from state to federal here, so it's important to 
differentiate one entity's financial dynamics from those of another, whether 
it's government level, auto maker versus new auto dealer versus used car 
dealer, or various consumer types. Different names atop of various sets of 
financial statements preclude sweeping statements of success or failure of 
programs that affected many types of financial entities.

> Instead of raising taxes, leave that money with individuals, who out of
> their own self interest will save, invest, spend and create wealth.
> Government is just not wired to do this.

Oh, really? It's beginning to look as if the federal investment in General 
Motors may return positive returns to tax payers who singly could not have 
done anything to help GM, but by collectively aggregating assets through the 
government, saved a major manufacturing industry and its ancillary economic 
affiliates. To suggest that major monetary mojo cannot have wealth-creating 
effects that favorably affect taxpayer-citizens ignores smart macroeconomics.

> This simple step will automatically increase revenues to the various
> government treasuries.

That might be the case if investors do not choose to do nothing with trillions 
of dollars of available investment capital, but to the extent that wealth 
holders refuse to invest, whether from economic timidity or petulant pouting 
about election results, there are no guarantees that cash flow through the 
macro-economy will be sufficient to satisfy even basic value investors, much 
less keep the coffers of government sufficiently full to fund its programs.

> The risk is that whatever the incremental resources the government
> gleans from us must be directed in reducing the National debt and the
> related state and local debt.

It's a risk to pay down the national debt, to pay the nation's bills? That 
makes no sense, unless the country is in such awful economic shape that 
failure to stimulate the economy instead of reducing the national debt is 
tantamount to allowing the national economy to fail.

Whether that has been the recent case in the USA is a matter for discussion, 
but it does appear that recent opportunities have presented themselves whereby 
federal investment has had positive stimulative and recovery effects. Whether 
the investments that have been made were the optimal ones from the vantage of 
economic and fiscal returns to federal taxpayers is also a matter for 
discussion, but whether major monetary and macro-investment moves were 
necessary from responsible governmental officials was, and is, beyond the realm 
of mere discussion and well into the reality of required federal intervention.

> I don't have the confidence that our elected officials are capable of
> that kind of restraint.

I find that the level of confidence, or lack thereof, of individual citizens 
toward their elected, appointed, and hired representatives in government is 
considerably less important than the levels of intelligence, education, 
experience, and overall competence of those officials to perform governmental 
functions as well as they can be performed. 

Governmental restraint is valuable and admirable only when there is nothing 
that can or should be done. Governmental competence to act. or not, as well as 
is possible is always valuable, and so is more important than mere restraint.

> We the people must impose that constraint on government!  Limit spending
> - it is the only way to assure a return to fiscal responsibility (sanity).

Silly rabbit! Trix are for kids! We, the people, must impose discipline upon 
ourselves to understand well enough to elect and to counsel with competent 
legislators and local officials. None of us as individuals has capacities to 
understand, consider and respond to all governmental concerns that affect us, 
so we must choose and cooperate with capable representatives for our own good.


Ken