Doom for Whom?

Sources:
*Keeping Michigan on Track: A Blueprint for a Freer, More Prosperous State.
**Matthew Mitchell, The Pros of Privately-Housed Cons: New Evidence on the Cost Savings of Private Prisons.
***Michigan School Employees Health Benefits Study.

A common defense mechanism of big-spending politicians is to claim that even modest budget cuts will result in unsafe streets, crumbling roads, uneducated children and untreated sick people. The implication is that government now operates with such perfect efficiency, and all its activities are so vital, that any reduction in revenue (or decrease in the rate of revenue increase) means the loss of "vital government services."

The big spenders hope that taxpayers will temporarily forget tax-funded services like government golf courses, fairs, arts grants, subsidized agribusiness, marketing campaigns and many other reasonable opportunities for belt tightening. Further, the public is expected to assume that it is impossible to operate core government functions any more efficiently or that they can’t be competitively contracted out for less.

The latest twist is for politicians to claim that without status-quo spending levels and patterns, Michigan would be unable to compete economically with other states, as seen in this recent statement by Gov. Jennifer Granholm: "It would not be a wise course, I think, to cut the things that I think make us competitive as a state."

Certainly, good schools, decent roads, safe streets and a properly functioning judicial system are critical prerequisites for a modern economy. It is not the case, however, that prospective employers would be put off were state government to provide these things in a less costly manner.

For example, no business will leave the state — or choose not to locate here — for any of these reasons:

• Because school employees are shifted to a preferred provider network health plan with modest co-pays, rather than less efficient plans that currently consume an unnecessary $400 million annually;

• Because highways are patrolled by sheriff’s deputies rather than the same number of state police — who currently cost an extra $65 million each year;

• Because some prisons are managed privately, with the systemwide spur of competition yielding as much as $200 million a year in savings from current levels;

• Because the state repeals its "prevailing wage" law, which currently increases the cost of government construction projects by around $200 million a year; or

• Because the state finally implements a federally mandated Medicaid estate recovery program — like those adopted by the other 49 states — potentially generating an additional $85 million a year.

In other words, the stark "either/or" proposition put forth by defenders of the status quo — either raise taxes or cut services — is a scam. It deliberately ignores a third way, which is to do more with less. In the private sector, this is always the first choice. In government, if considered at all, it is always the last choice.

The Mackinac Center has identified almost $2 billion in efficiencies like those listed above, and millions more in non-core government spending that could be eliminated altogether.

For example, would Michigan really have lost competitiveness if state government didn’t help fund research on how to grow the perfect poinsettia plant? Would residents flee if government stopped hosting the annual "Swine Quiz Bowl" tournament for high school students? Would businesses refuse to locate here if we didn’t subsidize film festivals showcasing productions few taxpayers would pay for voluntarily? The fact that taxpayer subsidies for such programs still exist suggests that Lansing politicians aren’t really serious about trimming the fat.

When politicians and their lieutenants prophesy doom if spending is cut, it pays to question what they define as "doom," and for whom. Would it really be the end of the world if public employees received fringe benefits comparable to generous private sector offerings, rather than grossly inflated ones? Who would suffer if additional competitive contracting sent a signal to public sector workers that they are no longer "entitled" to immunity from the cost-saving incentives of competition?

Given all of the above, politicians who threaten that any government spending reductions mean a loss of "vital government services" or "competitiveness" give the appearance of identifying more with the consumers of tax dollars than with the families and job providers who pay those taxes. Public officials need to remember that government exists to serve the people — not the other way around.

Jack McHugh is a legislative analyst for the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.