Thursday, June 24, 2010

Interview with Sara Burrows

Did an interview yesterday, sitting in my beach chair under my umbrella, taking a break from reading, and talking to the lovely Sara Burrows.

And here today it is published on-line for the world to see. I think this whole internet thing is going to catch on.


States have to maintain balanced budgets, according to their constitutions, while the federal government can run a deficit for as long as it likes. So when states spend too much they have no choice but to raise taxes or ask for federal funding, Munger explained. Since raising taxes is not popular, federal bailouts offer state politicians an escape from being held accountable.

But federal bailouts lead to federal deficits, Munger said, and deficits are nothing more than future federal taxes.

“There’s this fiction that there are two different taxpayers — the state taxpayer and the federal taxpayer. There are not. We’re all both,” Munger said.

People who think they are receiving some sort of gift from the federal government are being deceived, he added. All they are incurring is a different form of taxation.

If voters really thought it was worth spending an average of $1 billion more per state than they are taking in to rescue teachers, police, and firefighters, they would agree to an immediate increase in state taxes in a referendum. State elected officials know higher taxes are not popular, so they use a roundabout method to secure the funds.


eightnine2718281828mu56 said...

If voters really thought it was worth spending an average of $1 billion more per state to rescue teachers, police, and firefighters

States wouldn't be spending $1 billion 'more' on teachers, etc.

They have deficits because tax revenues contracted due to the recession, not because they went out and spent $1 billion more by hiring new teachers, police, and firefighters.

Anonymous said...

Disagree w/89. They [the broke states] have deficits because they blew their tax receipts on bureaucrats' (the vast majority of which are paper pushers; not teachers, police, and firefighters) pensions. That's the 'more'/'rescue' part. They've been paid once for the services they did or did not provide.

Mungowitz said...

Never said the states increased spending. I said they are "spending too much" given that they have a balanced budget requirement.

And in any case, if you think the spending is good, why not raise taxes?

So, I am making two points, 89 (I think more commenters should use their IQ as their ID, it is very helpful, so I applaud you for that!)

1. Spending patterns are dumb, and should be cut.

2. If I am wrong about #1, it is still true that state officials should be honest enough to raise taxes, rather than use the military power of the federal government to borrow on the credit of the American public, at gunpoint.

eightnine2718281828mu56 said...

Your claim:

Never said the states increased spending.

Your quote:

spending an average of $1 billion more

IQ as their ID

By your reckoning my IQ would be 892718281828, which enabled me to adduce your use of the word 'more'.

Dirty Davey said...

This still leaves the question of what to do when voters have inconsistent preferences--e.g. when a clear majority simultaneously wants spending level X and tax level Y when Y cannot pay for X.

To claim that "If voters really thought it was worth spending an average of $1 billion more per state to rescue teachers, police, and firefighters, they would agree to an immediate increase in state taxes in a referendum" is to pretend the voters preferences are consistent.

(One could just as easily say, "If the voters thought it was not worth paying an extra $1 billion in future taxes, they would agree to an immediate cut in money for teachers, police, and firefighters in a referendum.")

To say that the "right response" is to not provide the $1B is to say that, when voters' tax preferences and spending preferences are inconsistent, we have an obligation to respect the tax preferences and ignore the spending preferences.

I do not know that there are any particular grounds in democratic theory to treat the tax side of inconsistent preferences as somehow more sacred than the spending side of those preferences.

Mungowitz said...

89, you are right. You are not dumb. You are a criminal. You truncated the quote.

I said "more than they are taking in". That is not the same as "more," like an increase.

As for DD, I see your point. My problem with the policy is that this IS a tax increase, but it is being done in a cowardly way.

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