Economics 101, Part 3: Who Should Pay for What?

Over the last two posts, I’ve shared my thoughts on how the economy looks to an average person trying to apply common sense to something that doesn’t often have common sense applied to it. I’ve ruminated in broad terms about businesses, taxes, budgets, and jobs. Since I'm probably running the risk of losing everyone's interest by dragging this out, let's finish this set of economy-focused posts with a discussion of one of the most difficult questions of all - the one that drives any discussion of how high taxes should be: what should government pay for?

Economics 101, Part 3:

Who Should Pay for What?

One of the fundamental differences of philosophy between Republicans and Democrats, and now between Republicans and even more hard-core, small-government conservatives, is the economic Siamese twin of taxes and spending. To conservative Republicans, both taxes and spending should be kept low in order to keep government as small and non-intrusive as possible; to liberal Democrats, taxes should be high enough to pay for a government that can provide a wide range of services for all citizens. Thus the difficult question: what should the government pay for?

In earlier posts, I've noted that while the Constitution specifies the general structure of the federal government and gives that government the power to collect taxes and pay the bills, it's not very specific about how big the government should be and exactly what it should be responsible for providing. Article 1, Section 8 says that

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

and it goes on to enumerate some of the things the federal government should do and pay for. Don't look for a lot of specifics, because they're not there. Basically, the Founders simply told future generations of government representatives to provide for the common Defence and general Welfare of the United States ... whatever that turned out to include.

So, what ought government to pay for?

I think we need to answer that question by deciding logically what ought to be funded and best provided at each of the three levels of government: Federal, State, and Local.

Here are a few of what I think are reasonable responsibilities of the Federal government:

- National Governance - paying the operating expenses of Congress* and the Federal bureaucracy**.

- Conduct of Foreign Policy - because a nation needs to speak to other nations with one voice, not 50.

- National Defense - an Army, a Navy, and an Air Force*** and their supporting administrative structures ("provide for the common defense," in Constitutional terms)

- Coining and Regulating a National Currency and Uniform Banking Structure - it wouldn't do to have to deal with 50 different currencies as one travelled across a theoretically-united country, would it?

- Regulating Interstate and International Commerce - in order to present uniform trade policies to external customers and keep things peaceful between the states.

- Providing a Social "Safety Net" in the form of National Pension Insurance - I think this falls under the “promote the general welfare” vagueness of the Constitution. I'm talking about Social Security.

- Establish Common Legal Standards and a System of Courts - “establish justice” and “ensure domestic tranquility,” in Constitutional terms.

Here are some of the things that it probably makes sense for State governments to do and pay for:

- Public Safety - providing a Militia/National Guard, Disaster Preparedness and Relief, and similar functions and services.

- State Courts - because not every case needs to go to the Supreme Court, even if the parties think so.

- Public Higher Education - a well-educated population is critical to a functioning democracy. States have a responsibility to foster this via state colleges and universities, and support to local schools as needed.

- Public Services and Infrastructure - someone has to build those state highways, bridges, parks, and other public infrastructure.

And here are some of the things that should be Local Government (County or City) responsibilities:

- Local Administration - government functions best when it's closest to the people it serves. The state governor and the President of the United States don't need to worry about your zoning issues.

- Public Safety - provision of essential police, fire, and related emergency services.

- Basic Public Services - providing water, trash collection, public transportation, local streets and roads, and parks and recreation services. Many of these can be outsourced and provided by commercial sources, with government oversight.

- Public Education - those local schools and libraries that prepare citizens for their place in society.

- Local Courts - because the state governor and the President of the United States don't need to worry about your fight with your neighbor over his barking dog.

Those are some of my thoughts ... what do you think, Dear Readers? What are the things that ought to be done at each level of government? But before you answer, just remember this: no matter what level of government they're being done at, they need to be paid for ... and that still means taxes, and a decision about how heavy they ought to be at each level****. You get what you pay for.

Have a good day. More thoughts tomorrow.

Bilbo

* And wouldn't merit-based pay for Congress be a wonderful thing?

** I recognize that "bureaucracy" is a negatively-charged term, but I'm using it because it fits.

*** I'm leaving out the Marine Corps (because it's actually part of the Navy and, in any case, I don't think we have a legitimate need any more for a separate naval infantry force). I'm sure I'll hear from my Marine friends on this one. I also didn't mention the Coast Guard, which is technically part of the Department of Homeland Security. I think it ought to be folded into the Navy, although this leads to some issues with the use of the armed forces for law enforcement.

**** Don't look for the total amount to go down ... just to be more realistically distributed.