State government consumption and spending of taxpayer money has grown rapidly over the years. Since 1970, Pennsylvania’s operating budget increased from $4.2 billion to $59 billion in FY 2007-2008, an inflation-adjusted increase of over 168%. As a share of personal income, the state’s operating budget rose from 8.8% in FY 1970-1971 to an estimated 12.2% in FY 2007-2008—an increase of more than 39%.
Despite these dramatic increases in government consumption and expenditure of taxpayer money, Pennsylvania’s fiscal and economic health remains in poor condition. From 1970 to 2007, Pennsylvania ranked 49th in job growth, 45th in state personal income growth, and 48th in population growth. Yet, the Governor and the General Assembly relentlessly pursue the political and economically dysfunctional strategy of trying to tax, borrow, and spend our state to prosperity.
As part of the Pennsylvania Diet Plan, the Commonwealth Foundation has developed some “spending tips” for our elected officials. Better fiscal health and greater prosperity will return to Pennsylvania only when lawmakers cut wasteful spending, reduce the size and scope of government, and allow citizens to keep more of the fruits of their labor.
Government on a Diet: Spending Tips 2008 identifies specific spending reductions to curb state government’s spending appetite and trim down its “wasteline” of expenses. It is designed to promote a discussion of the proper role of government in a free society.
Few people would argue that there should be no limits on what government spends. Yet many in our legislature act without considering the appropriateness of a new or expanded government program. They often fail to ask and answer important questions:
- Does this bill weaken communities by assuming responsibilities that are best left to families, charities, or private enterprise?
- Does it strengthen parents’ ability to rear, educate, and provide for their children?
- Does it encourage personal responsibility and independence? Or, does it institutionalize government entitlement over self-reliance?
- Does this bill reduce the tax burden on individuals, families, and job creators?
- Does it benefit all citizens and businesses? Or, does it just take wealth from one and redistribute it to another?
- Does this bill limit government’s scope and influence in our private lives?
- Does it expand opportunity for individuals and groups? And, can they engage in voluntary exchanges and associations without excessive government regulation and interference?
Spending Tips 2008 considered currently existing programs and identified those that would have failed to pass the Q&A test above by applying the following principles:
- Government spending should be limited to core functions of government (i.e. providing for the safety of citizens, protecting individual rights, and providing public goods—those which clearly benefit all citizens, such as law enforcement and general infrastructure).
- Government spending should not target or benefit a select few businesses or individuals at the expense of the many.
- Government spending should encourage voluntary activities, personal responsibility, and private entrepreneurship, and not “crowd out” such private, non-political efforts.
- Government spending and taxes should be as low as possible so as to least distort or undermine the decisions of individuals, families, and businesses, which are the real engines of social and economic prosperity.
- All government spending should be accountable to taxpayers and open for critical review by anyone.
Thomas Jefferson said in his First Inaugural Address in 1801 that “…a wise and frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.”
Spending Tips 2008 is part of the Commonwealth Foundation’s efforts to restore a wise, frugal, and good government in Pennsylvania. Spending Tips 2008 identified $6.7 billion in spending cuts—$1.2 billion from the state General Fund Budget, $1.2 billion from other operating funds, and $4.2 billion from the capital budget and off-budget programs. If eliminated and returned to the taxpayers, the average family of four in Pennsylvania would realize a $2,100 reduction in their share of the cost of state government. These spending reductions are organized into four spending categories:
- Corporate Welfare. These programs award tax dollars to individual companies at the expense of all taxpayers, empowering government officials to pick and choose winners and losers in the marketplace.
- Private Goods. These programs and services are activities that only benefit a handful of individuals or groups rather than the general public, compete with the private sector, and would be better left to the free market.
- Paternalism. These programs represent a paternalistic belief that state government must care for the public like children, depraving citizens of personal responsibility.
- Perverse Incentives. These programs are for the benefit of government officials, not the general public, and they encourage additional government waste and extravagance.
The programs identified in Spending Tips 2008 are beyond the core functions of government, and although some people may benefit from them, these programs are neither “wise” nor are they “frugal,” and they ultimately violate the “sum of good government” by failing to serve the broader public good.