“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.” – U. S. Constitution, Article I Section 8
With the release of President Trump’s first proposed budget, I thought it a good occasion to offer my longstanding view on budgets for government and not-for-profit entities. I’ll save the latter for a subsequent post, and deal with the former in this one. Most profit-making company budgets have an intentional teleological ethical bent, a word used to describe moral systems that are mostly focused on “the end goal,” which in this case is usually to maximize economic returns to stockholders.
But governments are different, especially the one aspired to by the United States Constitution. Inscribed in that document is an intended balance between “defence” (in its archaic original spelling) and the “general welfare.” The latter concept once commonly had the great name of the commonweal, which I would like to bring back, so here it is as my first of several principles on which to adjudge the moral condition of our national budget. (Spoiler: it’s not good.)
Principle #1 – The commonweal
While there is a persistent national tradition fed by numerous “bootstrap” legends, I did not get to my own fortunate place in this society entirely on my own, and I don’t think you did either. My father was lifted out of a poor immigrant mining community to the middle class by the “GI Bill” education program and Veterans Administration housing program following World War II,  and I was a direct beneficiary of that “common good.”
I personally benefited further from excellent public schools and cheap college education.  I also benefited from a secure financial system, which mostly kept my money safe from unscrupulous bankers and securities traders. I can walk my neighborhood streets because of a police force that can (most of the time) differentiate between a secure society and police state (and your mileage may vary).
All of this makes up the commonweal, and somehow we all need to contribute to its support. This support usually bears the unfortunate name of “taxes.” Taxes are not “takings,” rather, they are “US” acting as community.
We really need to work on this principle; we are not doing well here.
I will note that this idea of “I did not make it on my own” really seems to set some conservatives off. They are being intentionally blind here. If there is unfairness in the contribution or the allocation (hint: there is) then this needs to be a full-community discussion. But the ideology of just “lower taxes” is an often ill-informed strike against the common good for the benefit of the few.
Principle #2 – Money is choice, and money from the commons is moral choice
We get so hung up on the making and the spending and the economic details of this concept called money that we forget that money is, at its most basic reality, just a counting system for assigning a number to economic choices. And some of us have more choices than others.
In the U.S. and much of the world we call this number “dollars,” while British people call it “pounds sterling,” and the Japanese call it “yen.” Each country tries to stabilize its counting system because that stability is key to equitable commerce across the society. The U.S. has done a pretty good job in recent years of keeping that exchange number stable, and we all benefit from that.
Because of money, our economic choices are largely interchangeable, even internationally, and these choices are also increasingly fungible (i.e, exchangeable or substitutable).  This fungibility makes for a lot of flexibility when it comes to money going into, and coming out of, the “common pot.”
Since we do collectively pool our money into that common pot (reluctantly or not), we have a collective responsibility to “provide for the common Defence and general Welfare” as the Constitution says. The budget of the United States is our statement of how we hold those monetary choices in moral relationship to each other. If we are spending today more than we are collectively willing to contribute into the pot today, then we are also making a moral statement about our common interest versus the common interest of our children, who will pay for this piper.
And because money is fungible choice, a dollar is a dollar. A dollar uncollected for the commons that could have been equitably collected is a dollar not available for the common good. Likewise, a dollar spent unwisely or to favor a special interest robs from a dollar for the broader public good spent wisely. When we start throwing “billions of dollars” around like candy, we lose that basic truth.
Principle #3 – Income is income, and differential treatment is moral choice
The U.S. Tax Code is packed with exceptions and special favors, created for well-connected people, that treat different types of citizen and business income differently. Usually, this is to the detriment of wage income, favoring various types of capital income. And further, each new exception enacted usually favors less than one in 1000 individual or business taxpayers, which ought to be a big red flag, but is instead seen as somehow normal.  The total economic income of the country is what provides the base top line for paying for the common good. Every exception, every exclusion, and every special calculation, cuts into that top line exactly the same as if we threw the money out the window.
Of course, every one of these special favors has its advocates (cough, cough, paid lobbyists) claiming that the exception will “pay for itself” by money being re-invested in the economy, but the emerging evidence from actions of recent years ought to make us smart enough to not fall for that scam anymore. And yet we do.
Wage earners, given a few extra dollars in their pocket, will most likely spend that money in the local economy quite quickly. The “velocity of money” in local shops and employers would likely see that same dollar quickly spent multiple times, generating demand, and helping the suppliers of goods and services supplying that demand. On the other hand, the biggest response to massive corporate tax cuts passed in 2017 appears to be directed toward stock buybacks, further consolidating stock ownership, with much of that ownership held by foreign interests.
We have gone 180 degrees in the wrong direction here, and at reckless speed, careening toward massive structural budget deficits. How can this be conceived in any way as a good moral choice for the commonweal?
Principle #4 – Direct community spending is moral choice
So finally, when it comes down to disbursing common funds for the “general welfare,” the “one dollar equals one dollar” choice becomes even more stark. Here is where the political arm-wrestling gets serious, but let me suggest that you cannot “provide for the general welfare” by simply not spending on social programs, or by diverting the funds to “defense,” much of which is really direct, special-favor, targeted corporate welfare, providing little security in return.
Instead, the focus needs to be on how to best protect the environment, from which we all share the air and water, how to enable a good education system and economic opportunity for the upcoming generation, and how to ease the awful burden borne by the “casualties of culture.” When you look at our country as one big “normal probability distribution” in our ability to navigate this changing world and prosper in this always-changing river of an economy, then we will always have a significant percentage of people who are falling off the bad end of the curve. We can either spend our time casting blame on these folks and kicking them further for their “failure to prosper” or else we can focus on “things that work” and aggressively try to make people’s lives better.
There is lots of room to argue and arm-wrestle in how to implement this principle, but right now, we can’t even get the right people to accept the principle itself. Instead, we see far too many people and businesses treat the “common pot” as a way to get richer, and we see too many people who seem to delight in “kicking the poor” in order to brag about their relative economic prowess.
Good people disagree, but…
I have long had a dictum describing my view of various and conflicting ethical philosophies and theologies saying, “Good people disagree.” There is lots of room in the federal budget for honest and productive disagreement on how best to “provide for the general welfare” using “the people’s money.”
But I have to say, there are a lot of “not very nice” people right now who are deep into destroying the guiding Principle of the Commonweal. Which side are you on?
- Both of these programs, it must be said, had major social inequities in their administration, which is a point worth keeping in mind.
- And like the above, many readers likely did not experience good public schools and cheap college, again a point worth keeping in mind. See my recent post on this topic.
- See my earlier post on fungibility.
- See my earlier post on tax simplification.