Friday, June 8, 2012

Rick Perry's Fed Up 3

I have two items for my write-up today on Rick Perry's Fed Up! Our Fight to Save America from Washington.

1. Rick Perry does not like for the federal government to bribe states to do its will, as when it threatens to withhold federal highway funds if the states do not pass laws making 21 the minimum drinking age.  But, as critics of Perry have noted, Texas under Governor Rick Perry still receives federal funds.  Is Rick Perry a hypocrite?  After all, Rick Perry probably could choose not to receive federal money and thereby to allow his state to be independent, but he does not always go that route.  What impressed me, however, was Perry's humble acknowledgement of this dilemma on page 54:

"Are we, as states, complicit in this?  I suppose so, in that from time to time we have valued the money more than our sovereignty.  But it is a no-win situation: ignore the tremendous transportation needs of a growing state like Texas and you get painted as an impractical ideologue; take the money and you no longer care about principle.  Politically, it is hard for state politicians to refuse such funds----particularly when it came right out of the pockets of their constituents in the first place.  You can see the box Washington puts us in.  This is something I know a little about."

I respect Perry's dilemma, but my question is this: If Perry acknowledges that Texas needs federal money, then why is he so insistent on the federal government having a very limited role while the states pick up most of the slack?  Hasn't he essentially conceded that the states are inadequate for the task?  I do not want to put words into Perry's mouth, but I think I know how he would respond: He would say that Texas is dependent on the federal government under the current system, in which the federal government takes the hard-earned tax dollars of Texans.  But suppose that the federal government got out of the way and did not tax Texans so much?  Then Texans would have the money to pay for their own highway construction, and they would not have to run to the federal government for help.  That is my hunch about how he'd respond.

The thing is, though, if the states are left with the vast bulk of the tasks that the federal government currently performs, wouldn't that require the states to raise taxes or to impose new taxes?  My impression is that Rick Perry would not care for that, for Newt Gingrich in his introduction to Perry's book argues that Texas' economy is good in part because of its low taxes.  And if there is a threat that businesses could leave a state due to higher taxes, wouldn't that discourage the state governments from raising the taxes that are so necessary for programs?  Wouldn't the result be the erosion of the social safety net, among other things?  For reasons such as these, I prefer to leave certain powers in the hands of the federal government.

On a related note, check out the Bartlet-Richie interaction on this issue.

2. A friend of mine once sought to dispel economic doom-and-gloom by pointing out that, during World War II, the national debt was a huge part of America's GDP, but that the economy of the 1950's wiped that debt out.  I think that my friend's point was that we should not be paranoid about how high our current national debt is, for the economy can get better and that would take care of the debt.

Perry essentially acknowledges this point of history on pages 57-58, only he says that during World War II "the national debt surpassed 100 percent of our economy, or GDP", and that the "strong economic growth [during the 1950's] allowed us to move beyond our debt (that is, we grew our economy faster than debt to get to a point where it was manageable)."  But Perry believes that times are different now than they were then.  In the 1950's, the welfare state was "in its infancy", whereas today the government spends a lot domestically, which results in more debt and higher taxes (which will increase in the future to keep up with entitlement spending, unless something is done).

Perry may have a point.  Borrowing a lot of money, printing a lot of money, and raising taxes for more government spending can be deleterious to the economy.  At the same time, liberals such as Michael Moore and Robert Reich appeal to the 1950's as a time when liberal policies worked----when higher tax rates on the rich, government development of highways, and strong unions coincided with higher productivity and a strong middle class, which was good for the economy.  Moreover, is there a way for the federal government to have an active role while being fiscally responsible?  I agree with Perry that earmarks are bad, for example.  And when one observes that the cost of health care is lower in Canada than it is in the United States, could that mean that there is a way to have a national health insurance program without as much of a cost?

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