A central talking point of the recent dialogues about the size of government, the nature of our financial situation, and what it means to be conservative revolves around certain images of the budget. Much has been made of the analogy of "belt tightening" like "American households have to do." Now, there are real reasons to question this analogy, as the New York Times pointed out last week.
It's amazing how much our rhetoric runs away with us. Let's explore some ideas related to the budget debates.
First, the notion that American households manage their budgets has largely been a myth. For two decades we have been debt dependent. We're a nation addicted to instant gratification. The best evidence on household finance is that spending has been down because the recession caused folks to pay down their high levels of debt. Where did that debt come from? It came from buying big-screen HD Plasma TVs as we were encouraged through constant manipulation of the airwaves. It came because furniture stores gave us "no interest until 2013 deals". It came because we had to have the new Cadillac that leases for only $529 per month! (I've argued for 25 years that it would be a great paper to estimate the percentage of the viewing public that can actually afford the cars advertised during football games.)
Second, when and if families DO tighten their belts, they take a hard look at their options. The first question to consider is whether this is a short-term problem or a long-term situation that disrupts their entire financial situation. If it's a long-term thing like losing a job, then downsizing in some significant ways makes sense. In those situations, family members help out, you drop the cable, and you get help where you can. There are always stories of folks who fail to adjust their lifestyle, as an amazing financial assistance story in the LA Times demonstrated a few weeks ago. But if it's a short-term hit, it may make sense to simply draw down savings for a little while.
So what kind of financial situation do we have as a country? Many economists like Paul Krugman have argued that we our economic situation is directly related to the slowdown in revenues since the Great Recession. This argument suggests that we should do what is necessary, including deficit spending, until the economy recovers and the existing tax rates create the revenue streams they have in the past.
Third, it's important to keep the long-run in focus. It may be tempting to imagine that you should stop paying your auto insurance, but should something happen you're at great risk. It's one thing to stop going out to eat and another to decide to feed your children nothing but Top Ramen two meals a day. You may be willing to do without cable but giving up your phone may make it difficult to find the next job.
What is currently going on in Washington (and in states across the country) is that we are cutting spending on precisely the things that will cost us in the long run. Less money for heating assistance or head start will result in catastrophic health care costs and prison populations over the long run. Too many of the proposed cuts by either party have been aimed at stuff they didn't like in the first place. Not that these cuts amount to much impact, but they help demonstrate to political supporters that they acted. The analogy here would be the family who thought that the newspaper had been late too many mornings so they canceled their paper. That small amount doesn't dent the family budget and runs the risk of not having want ads or cost saving coupons available.
Fourth, budgets need to plan for the future. If the kids are going to college, it's necessary to set some aside (or rely on the home equity line on grandma's house). Scrimp on that and you don't have a future (which makes it hard to "win the future"). And we really ought to be concerned about the college expenses of all the kids, not just the oldest.
Consider how hopeless our conversations are about social security. We know we need to do something about the needs of future generations (the youngest child heading for college) but we are focused on not doing anything to disadvantage the oldest child. Now obviously it would have been better to have planned for all the kids at once, but we didn't anticipate the future demands. But to suggest that we create voucher systems so that the kids can do their own planning is to create a new system that breaks faith with what we've promised in the past.
What this all means is that budgets are long-term projects, they get modified over time, and we adjust accordingly. But when we engage in tropes like "it's our money" and "no new taxes", it's just not a realistic approach to budgets. Imagine if the employers of the family members simply said "no more raises because the stockholders need their benefits". Okay, that's a bad example but you get my point.
I could continue this series with more classes. There's much that would benefit folks from knowing Shakespeare, from knowing Science, from knowing Anthropology (talking to you Rep. Peter King!). The most important thing is that we stop pretending that we don't have choices. It's what sociologist Peter Berger called Bad Faith and it's got no place in civil discourse.
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