Monday, March 12, 2012

Come on and Take a Free Ride

Last week, I referred to a paper on the deficit bias, in which we see chronic under-taxation as an inevitable state of affairs in democratic nations because the perpetuity of election cycles and the influence of lobbying leads to constant tax cutting.  On the other side of the budget equation, Capital Gains and Games posts why spending is equally impossible to reduce:
"federal spending" is popular until you get to the specific programs. Then, with only a few very small exceptions, it becomes impossible.
While many polls have shown that large numbers of people want to reduce "government spending" and reduce the budget deficit, a new Harris Poll finds that only rather small minorities of the public want to cut most of the biggest federal government programs. Only 12% of the public want to see a cut in Social Security payments, 21% want to cut federal aid to education and 22% want to cut federal health care programs. The only programs of the 20 listed in the poll that majorities of Americans want to cut are foreign economic aid (79%), foreign military aid (74%), subsidies to business (57%), spending by regulatory agencies (56%), the space program (52%) and federal welfare spending (52%).

Of course this is not a new phenomenon (Krugman); it's cognitive dissonance at work (Bartlett) and it involves an extraordinary amount of ignorance about how much things cost--both overestimating things like foreign aid and how much money government wastes, and underestimating things like defense and medicare. 

Note that if the U.S. cut 100% of federal spending on foreign economic aid--that apparently most vile of all federal expenditures, it would produce a savings of about 1% of the federal budget and some impossibly small percentage of the national debt, and this is what you'd be cutting off.  That dog don't hunt.

On this topic last year, Bartlett laid out the many polls and many misperceptions (link above) and concluded:

Presumably, if people simply had better information they would make better judgments. It certainly seems obvious that if people didn’t grossly overestimate foreign aid spending they would be less inclined to think that is the only program worthy of cutting. Perhaps then they would pay more attention to the really important contributors to deficit spending such as Medicare. 
Unfortunately, the political science literature suggests that it may not matter. . . . giving people correct information not only had little effect on changing their misperceptions, in some cases it actually increased them.

People want and like and maybe even cherish the safety net, and people dislike paying / prefer to free ride to get it.  

1 comment:

  1. Why is "foreign aid" such an easy target to cut? Because we know it is not going to be us that feels the cut? Is it some abstraction of the benefits theory/"fairness" - i.e. they obviously don't pay any taxes, why do they get a benefit?

    The problem with the spending and tax issues aren't going to be solved by either party, unless Ron Paul has his way.

    We'll have to hit a crisis point before we take action. And, of course, by then the cost of any action will have risen greatly. I think this is why Krugman is so mad all the time.