SMALLER GOVERNMENT MEANS FEWER SUBSIDIES – ARE WE READY FOR THAT?

I hear a great deal these days from the tea party followers, and from a few of my friends, about smaller government. We must, they argue, get government out of the business of trying to level the human or business playing field. Robbing from the rich (taxes) to give to the poor (welfare, Medicare, Medicaid, food stamps, and other subsidies for the have-nots) is ruining this country and running up a national debt our children and grandchildren will have to pay.

This is akin, they argue, to the bumper sticker popular with many of our RV friends: SPENDING OUR CHILDREN’S INHERITANCE. We frequently saw this sticker on the motor homes of our traveling friends. These friends, or course, were usually retired and had enough money to own an RV and to travel around the country. Their wealth may have come from actual hard work and smart investments, but as often as not the life style they enjoyed was possible because they had a defined-benefit pension plan and social security – and large mortgage payments on their RV.

The cry to privatize Social Security, to reduce taxes, or to eliminate government subsidies to the poor comes exclusively from those who have money and secure jobs. True, they went to school, worked hard and deserve the position and pay they receive. I never understood, though, how they could so easily dismiss those who, through no fault of their own, need a helping hand. Granted governments – well, politicians actually – frequently get carried away with the welfare thing and too often give away more than the nation can afford. They never seem able to establish programs that that provide temporary assistance and do not promise life-long support.

That said, we have to face the fact that some people will need support for the rest of their lives. Ignoring this fact will return us to the era of poor houses, Oliver Twist-like children begging (or stealing) in the streets, the elderly or injured dying prematurely because of inattention to their health, and other bad socio-economic conditions we have long-since put behind us as a nation.

Are there people who will take advantage of any system you set up? Certainly. Are there bankers who presently take advantage of loopholes in banking regulations to make millions for themselves while allowing their stockholders to lose money? Getting government out of people’s lives makes as much sense as getting government out of regulating banks.

Actually, we all try to “beat the system” when we fill out our tax returns and list all the legal exceptions. How so? Well, the fact that the government allows exceptions invites all of us to look for every deduction we can find – even sometimes if we have to bend the rule just a little to make it fit our circumstance. We do it and companies do it. Companies even go so far as to hire teams of lawyers to find every loophole they can to save money on their taxes. Few, if any, of us ever opens the tax form, fills in the personal information, lists our total income for the year and turns immediately to the tax table to see what we owe. That would be stupid.

Can you then blame the person on SSI, food stamps, unemployment (yes, unemployment benefits are a government subsidy), welfare, Medicaid or any other government program for trying to get from it all they can?

And that brings us to all those other subsidies the government provides: tax breaks to businesses to relocate, subsidies for tobacco farmers, subsidies to cotton growers, subsides to honey bee ranchers, subsidies to corn growers, subsidies to railroads, subsidies to keep the price of milk from dropping too low, subsidies to maintain the interstate highway system, subsidies to the aero-space industry, and so on.

Consider the CRP program for farmers and ranchers. According to the U.S. Department of Agriculture, “The Conservation Reserve Program (CRP) provides technical and financial assistance to eligible farmers and ranchers to address soil, water, and related natural resource concerns on their lands in an environmentally beneficial and cost-effective manner. The program provides assistance to farmers and ranchers in complying with Federal, State, and tribal environmental laws, and encourages environmental enhancement. Farmers receive an annual rental payment for the term of the multi-year contract. Cost sharing is provided to establish the vegetative cover practices.”

The annual rental payment varies depending upon a variety of factors, but farmer with 300 acres in the CRP program may receive as much as $100 per acre or $30,000 a year for essentially doing nothing but planting, say, Lespedeza (a member of the pea family) and mowing it once a year. That’s a government subsidy for farmers than the rest of us never get to participate in.

Like all subsidies, it makes sense, or did at one time. Maybe it still makes sense. Not all government subsidies make sense, however.

Froma Harrop in her October 18 column points out that Mayor Bloomberg of New York City is being criticized by some for wanting to stop people from using their food stamps to buy “Coca-Cola and other sugary, fattening drinks.” He is not. Moreover, she adds, he does not want to stand between all New Yorkers and their cans of soda. “But he would end the taxpayers’ role as enabler of poor nutrition choices.” Further, she reminds us, “There’s a difference between a government ban on something and its refusal to subsidize it.”

That makes sense to me. If I lend you money because you can’t pay your mortgage or buy groceries for your kids, I sure as hell will resent it if you take some of that money to buy a case of beer or, worse, spend a weekend at a nearby casino. When you are using other people’s money (the NYC taxpayers, in Bloomberg’s case), you have to expect some oversight and restrictions on how you spend that money.

There is a difference also between what Medicare or Medicaid insurance will pay for (subsidize) and what medical care you may have. You may have any medical procedure you want and can pay for. Insurance is agrees to pay only for specified procedures.

Regardless, smaller government (which I favor) means fewer subsidies. The problem is that not many of us are willing to give up the various government subsidies we receive. How many subsidies are you willing to do without? Before you answer, you may want to take a few minutes to review the subsidies you now receive: unemployment insurance, school tax relief, road maintenance, police and fire services, insurance and banking regulation, meat and produce inspection, etc. All of these are important, but in simpler times, when taxes were lower, some of these services did not exist or existed in a greatly reduced form. Are we ready to return to those days?