Monday, February 5, 2018

Should Wyoming Go with the Flow?

The threat of tax hikes is not over. We taxpayers won a major, first victory when the Revenue Committee killed the Taxmageddon package, but rumors - persistent rumors - suggest that most, if not all, of those proposals may surface as individually sponsored bills during the session. Other rumors hint of a special session, although we have heard those rumors off and on since at least June last year. I doubt our governor would make such a big mistake as to call a special session just to get tax hikes past. He strikes me as smarter than that.

That said, the persistent rumors about bills for higher taxes being brought individually are reason enough to be vigilant. Furthermore, we know that the statists in our legislature are just like statists everywhere: they will continue to push for bigger, more costly government regardless of how strongly reasoned arguments speak against them.

Therefore, we should continue to make our case for a small, efficient and fiscally sustainable government. If we give up; if we let our guard down; the statists will win.

What happens when they do? They keep growing government. Here are a couple of examples of what happens when they do.

Last week I wrote an article on one of the other pages of this blog, Larson's Political Economy, about the latest idea for a paid family leave program. This time, the contribution comes from conservative Independent Women's Forum. The IWF thinks it is a brilliant idea to let parents of newborns cash in on their Social Security benefits when their kids are babies. The proposal, they say, would be budget neutral - in other words, not require any new taxes - because when the same parents retire some 40 years later, they will have to postpone cashing in on their Social Security benefits until they have "compensated" the system for what they took out as young parents.

Aside the fact that this is a bizarre definition of budget neutrality, the idea of creating a new entitlement program is bad. All it means is that government now makes yet another promise to people, for which it will not be able to pay. (There is a reason why the solvency of the Social Security program has been questioned since at least the late 1990s.) Furthermore, once the left gets its hands on this program, they will expand it in every conceivable direction. Inevitably, we will all be faced with a giant tax hike to pay for it all.

There are several options for how Congress could go about implementing paid family leave. This model, from the IWF, is entirely federal; other proposals put most of the burden on the states. That would put us on hook for another big spending item for which we do not have tax revenue.

Paid family leave is just one new entitlement idea floating around in the public debate. Another is called "universal basic income", which essentially is "food stamps and pocket money for all". For a long time, this has been a pipe dream of the left, but it is now slowly becoming reality. World Net Daily reports:
The mayor of Stockton, California, is leading an experiment with “universal basic income,” which is set to start by giving low-income residents $500 a month, no questions asked. Mayor Michael Tubbs calls his city “ground zero” for issues like wage stagnation, rising housing prices and loss of middle-class jobs that affect the nation. The Central Valley city went bankrupt in 2012, and for decades it has been trying to diversify its agriculture-based economy. “I feel that as mayor it’s my responsibility to do all I could to begin figuring out what’s the best way to make sure that folks in our community have a real economic floor,” Tubbs said.

Asking taxpayers to give $6,000 per year to a select group of citizens is probably not the right way to achieve economic growth. Then again, spending tens of millions of dollars on a state-run airline project is not very good either. Rather than dismissing an idea as another could-never-happen-here non-starter, the way to go about this is to accept that this is an idea the left wants, and be ready to fight it when it comes here.

The paid-leave entitlement and the universal basic income idea are not only the subject of possible, future reforms here in Wyoming, but they also represent an expansion of cash-based entitlements. Compared to in-kind entitlements, cash-based ones are more addictive, for easily understandable reasons. Recipients - entitlees - adjust their lives more quickly and more thoroughly than they do to in-kind entitlement programs (such as Medicaid).

Once a growing population has changed their lives in accordance with the incentives of cash entitlements, they are highly vulnerable to any disruptions of those cash entitlements. Americans are, generally, not used to seeing systemic disruptions in government programs; this is understandable, simply because our welfare state is not yet of the size where it has encountered its first austerity episode.

That, however, is coming. In fact, we are experiencing one right here, right now, in Wyoming. If we don't handle it the right way, we will end up with destructive cuts to government spending - as opposed to thoughtful, proactive reductions - and an assortment of higher taxes.

Austerity only hurts the vulnerable among us whose lives critically depend on the government feeding tube. To give an example of how an austerity-minded government can destroy people's lives, let me share a story from Europe.

Meet Zandra, a Swedish woman with a serious disability. To live a reasonably normal life, given her circumstances, Zandra has had five personal assistants on a 24-hour rolling schedule. As part of its massive welfare state, government promised her and other people with serious disabilities, to pay for their assistants and for her own basic living expenses. Zandra adjusted her life, believing that the cash entitlements from the national Income Security Agency would keep coming. That money paid the wages for her assistants, de facto making Zandra's life critically dependent on government for her survival.

Because of the government promise of cash assistance, there are no other systems in place in Sweden. This is true not just for income security, but for practically everything else that private charities can be part of here in the United States. Therefore, the day when the Income Security Agency decided to cancel her cash assistance, Zandra was obviously devastated. Her assistants literally quit from one day to the next.

Over night, Zandra went from living an active life to being left helpless in her bed. Four of her assistants went looking for other jobs - understandably so - while one of them stayed and decided not to leave Zandra to die. 

This fifth assistant, Veronica, has been trying to help Zandra get back on the cash entitlement program, to no avail. Since the cash assistance paid both Veronica's wage and Zandra's daily expenses, both of them were now unable to pay rent, utilities and other basic expenses. As a result, the government's debt collection agency started sending letters, threatening to take Zandra's remaining property.

Since that property is Zandra's medical equipment - she owns practically nothing else - Veronica and Zandra decided to leave Sweden. Spending their last money on plane tickets to Cyprus, they relocated in the nick of time.

While cost of living is cheaper in Cyprus than in Sweden, you still need money to live. Since the Swedish Income Security Agency kept denying Zandra's applications to get back on assistance (in the EU, you can get assistance from your home country even if you live somewhere else in the union), she and Veronica were left starving, without anything but whatever scrapes Veronica could make doing whatever occasional work she could find. 

Zandra was de facto exiled from her country by a government that decided it could no longer pay for the promises it had made to her. Being the largest, most costly welfare state in the world, Sweden has vastly over-extended its entitlement promises in practically every direction, putting hundreds of thousands of people in situations not unlike Zandra's. 

The Swedish welfare state is not alone. In Germany, government health agencies have been experimenting with placing elderly people, who are in need of daily care, on facilities in Thailand. German government agencies have literally flown patients, German citizens, from elderly care homes in Germany to Thailand in order to save money on providing for them. 

This is just a glimpse of what happens when government makes more promises than it can keep. Do we really want Wyoming to continue down the path toward the point where our government starts treating us as cost items (not just tax ATMs)?

In the coming days I will publish a couple of articles on what an austerity crisis would look like here in Wyoming. That kind of crisis, when it happens, is always the result of a government that has run out of taxpayers' money. Knowing the dark side of the welfare state can hopefully help us convince enough statists to defect and join us in the fight for a prosperous future for Wyoming.

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