David Post: Budgets are a lot like relatives
Budgets are like relatives. If they live a long way away and belong to someone else, itís easy to be critical. Distant relatives seen mostly at weddings and funerals have some connection, so care is often taken since criticism can bite back in the future. Close relatives are the fabric of daily lives and safety nets.
Budgets act the same way.
Washington is distant, so itís easy to complain ěThe federal government wastes money. Cut the spending.î State budgets support schools, highways and health care, the stuff the public almost takes for granted daily, and local budgets touch us and our neighbors daily.
Budget cuts have a different feel when they are a long way away. Cutting the federal budget is considered fiscally responsible, but when local governments fire teachers and police officers to cut their budgets, communities moan.
The federal government doesnít really spend money. Other than paying its employees, itís really a gigantic transfer machine. Defense, Social Security and health care compose the large majority of federal spending. Much of defense spending is paying companies in the private sector to build and manufacture. Social Security transfers resources from the working generation to the retirement generation. Medicare and Medicaid transfer dollars mostly to private hospitals, doctors and pharmacies.
The federal government also transfers dollars to state and local governments. For example, one-third of North Carolinaís budget comes from the federal government including about $9.5 billion, or over half, of the state health care budget, and another $2.5 billion, or 25 percent, of the stateís public school budget.
Some in Washington argue that cutting federal spending will lead to economic growth in the private sector. If so, that should work at the local level as well, where dozens of teachers and other public employees are being fired. The idea is that a fired teacher who loses her $40,000 that she spends in the local economy will start a new business, earn more than the lost $40,000 (plus health care and retirement) and hire more people and provide them with health care and retirement. Thus, a win-win for both the teacher and the community, right?
ěIím one of those new small businesses,î ěUncle Billyî griped last week at his nieceís graduation. ěI was an assistant in the physics department at State for 23 years,î he explained. ěI was fired three years ago. Now physics classes have 250 or more students each. Some classes have kids sitting in several lecture halls watchingon a TV. Does anyone ever wonder why we produce so few math and science students?
ěI couldnít find work and finally started a carpet cleaning business. Iím 59, earn less than half what I used to make, lost my health care and retirement. Somehow, the public thinks this is good. Government statistics count me as one of those new small businesses that will grow the economy. Go figure.î
How many Uncle Billys are there? A bunch. According to the Census Bureau, there are 28 million businesses in the United States. But 22 million have no employees other than the owner, and that number went up by a few million last year. Lots of carpet to be cleaned. Current U.S. budget policy apparently prefers this Uncle Billy model, eliminating public sector jobs in favor of carpet cleaning.
The language of taxes by federal and local governments is also different. Half of Congress has taken a ěno tax increaseî pledge, including what seems to be a sensible provision that says if spending goes up on one line item, it must come down on another. Because of that, the federal government is refusing to provide assistance to tornado-ravaged areas in Alabama and Missouri where hundreds of people were killed and billions of dollars of property was destroyed unless those costs are replaced by other budget cuts. Notice to the public: avoid disasters. We, the taxpayer, are not there to help.
At the local level, the term is ěrevenue neutral.î That means that taxpayers pay the same amount of tax. If property values decline, tax rates go up. If applied at the federal level, that would mean a 25-30 percent tax rate increase. Ironically, the same public servants who support revenue neutrality at the local level would never support a tax increase at the federal level.
Your tornado is terrible, but not our communityís problem. You see, distant relatives are different than close relatives.
David Post lives in Salisbury and is one of the owners of MedExpress Pharmacy and Salisbury Pharmacy.