Gerald Prante of the Tax Foundation raises a philosophical question about state spending limits. Namely he wonders, if we don’t trust how legislators spend money now – a sentiment I think many people share – why would we trust them with spending limits. That is, lawmakers will make just as bad spending decisions, “cutting” spending in the wrong places.
I had a few thoughts I shared with Gerald
1) TABOR/spending limits would not require any spending cuts, but would limit the growth of state spending. Legislators would have the same priorities regardless of TABOR. If they would misspend money under TABOR, they are likely to misspend more money without TABOR.
2) It matters both what government spends on, and how much. While spending should be limited to the core functions of government (which is subject to debate – but not a debate we are having in Pennsylvania or elsewhere) – too much spending on even the functions, will take too much out of the private economy, harming economic growth. While it is true that some government spending does foster economic growth – such as defense of property rights – the consensus is that government spending in excess of 25% of GDP hampers economic growth. Between federal, state, and local spending, we are now around 40%. Even if lawmakers made poor choices, reducing total spending as a percentage of GDP would be a good thing.
3) Prante almost ignores the fact that spending limits might force greater efficiency in spending. For instance, lawmakers might repeal prevailing wage laws which drive up the cost of highway and school construction, they might promote greater school choice (since private and charter schools cost taxpayers much less), they might seek to privatize state-run businesses, look to reform Medicaid, pensions for state employees, criminal justice, or countless other ideas for efficient delivery.
4) Most importantly: under spending caps, lawmakers can exceed the cap…with voter approval. That is, if they can successfully make the case that the spending increase justifies higher taxes, they will be able do so. You’re right, we don’t trust politicians to make the right choices on spending and taxes…we trust the people. While I’m not advocating for direct democracy/majority rule in the budget process, voter referendum on tax hikes or spending increases over TABOR limits are another check on government power, and
one which is desperately needed.