Scoppe: Government has to make choices families, businesses don’t

ONE OF the favorite devices for people trying to make a point about government spending is to compare government to families or businesses.

You’ve read them (I’ve written them, more times than I can count): Families don’t use Mom’s one-time bonus to determine how big a monthly mortgage they can afford. They don’t skip out on the mortgage payment or the light bill while continuing to buy fancy new gadgets. Businesses don’t cut all departments equally to make budget. (Yes, I know, the assumptions are all embarrassingly outdated, but bear with me: The point is about analogies.)

Oftentimes it’s a useful device, a way to translate complex decisions into language we can all understand, crying out for the basic common sense that we fancy ourselves to have, but that seems lacking in a bureaucracy — or a legislative body.

I’m not so sure this is one of those times.

Oh, plenty of people are still trying. Like the reader who responded to my assertion that there are no easy solutions to our state’s budget crisis with a lengthy explanation of how his own father had weathered difficult economic times. Let them eat cake.

But it’s just not that simple. As the frightening death spiral of our economy seems to have demonstrated to most of us, government has obligations that businesses and individuals do not.

As individuals, we are told that if we have the means, we should keep up our spending, lest our optional frugality contribute to the problem. But we quite understandably weigh that most logical advice against our fear of losing our jobs and opt for the frugality that will inevitably put those very jobs at greater risk.

Government does not have the right to ignore the consequences its actions have on the economy. Individuals might have a biblical imperative to love our neighbor as ourselves, but the very purpose of government is to look out for society, for the common good.

When the government finds itself short on money, its duty is to consider not only which services it most needs to provide but also which expenditures are most likely to improve the economy — not always compatible goals.

If South Carolina could run a deficit as the federal government does, we could have all sorts of fascinating debates about how to accomplish this: Do we plunge our children into debt in order to keep from laying off state employees, so they can keep purchasing (or paying for) products and services, so the state’s economy doesn’t tailspin even faster? Do we create similar deficits by cutting taxes, so everybody is better able to keep spending?

Our state can’t run a deficit, though, so we face different choices:

Raising taxes results in state spending, on salaries or local purchases, as opposed to spending by individuals, who as likely as not will buy Chinese-made products at Wal-Mart. Does the benefit to the economy of raising taxes outweigh the drawback of less money for businesses, which could be forced to shut down, or individuals, who might be unable to pay the mortgage or meet basic needs?

Or the more realistic flip side: Will the benefit of cutting taxes (putting more money into the hands of individuals, or businesses, or certain individuals, or certain businesses) outweigh the drawback of reducing government spending, and therefore putting more people out of work or cutting their pay or reducing government purchases of goods and services from the private sector?

Is it better for fewer people to have more money (give out pay raises, while laying off employees) or for more people to have less money (no layoffs, but wholesale furloughs)?

If we raid trust funds, do we stick to the smart fiscal policy of using the money only for one-time needs? Or does the short-term benefit of keeping more people on the payroll outweigh the long-term damage of using one-time money to do that?

And how do we best allocate money among programs? On the one hand, we shouldn’t start new programs when we’re having to cut others. But can we really afford to wait any longer to get poor kids enrolled in 4-year-old kindergarten, whose cost will be more than outweighed by the savings to our state for the rest of their lives?

It’s mighty tempting to say we should cut back on the size of college scholarships and divert the money to K-12. But is that wise? Those college kids are a lot closer to becoming productive, tax-paying citizens.

It is rarely imperative that a building be constructed immediately, so a moratorium on government construction seems like a good idea. But that reduces the number of people getting paid to do construction work and the products being purchased.

I feel pretty certain that we ought to cut out pay raises in order to reduce layoffs — as Education Superintendent Jim Rex proposed for teachers, and as the Legislature should have done in writing the current year’s budget. And I’m inclined to think furloughs are less bad for the economy than layoffs, although even such relatively small salary reductions will make it impossible for some people to pay the mortgage, and will reduce everybody’s spending.

The rest of the questions — I’m not so sure. At the risk of being bombarded with more family analogies, I repeat: There are no easy answers here.

Ms. Scoppe can be reached at cscoppe@thestate.com or at (803) 771-8571.