Choice in Budgeting

By Llewellyn H. Rockwell, Jr.

Despite what we might charitably describe as an uncertain record over the last three and a half years, the Bush administration is now supporting an idea that could reduce federal spending, the budget deficit, and the national debt, and maybe even encourage a taxpayer revolt.

This idea, announced by President Bush at the Republican National Convention, is the "debt check-off." We could check a box on our tax form to allocate 10% of our tax payment to lowering the national debt, without increasing our taxes.

By reducing the debt 1.2 % a year, the checkoff would not exactly slay the $4 trillion monster, but it's a start.

Unfortunately, Bush wants to exempt some budget categories from cuts. Social Security, interest on the national debt, and deposit insurance. Social Security, our biggest welfare program, must be off limits, we're told, even though the elderly are, as a group, the richest Americans.

Interest on the debt cannot be cut because that would mean a partial default on U.S. government bonds. Yet, holders of private, state, and municipal issues faces this threat. Why should federal creditors be exempt? It would make them less likely to lend, you say? The feds would have trouble going into debt? Don't throw us into that briar patch, Brer Bush. And exempting deposit insurance means we should brace ourselves for an S&L-scale bailout for criminally imprudent banks.

Even with these exemptions, however, the debt check-off is a great idea, so naturally the treasury opposed it, for it would raise taxpayer consciousness.

That's why left-liberal Princeton economist Alan Blinder criticized Bush for proposing "a public referendum by voting with your tax dollars." And what's wrong with that? It's unequal: "poor people" would have "no vote. I would have many votes. And some of those people down in Houston would have even more votes."

Yes, and I'd have fewer votes than the affluent Blinder. So what? Those who pay more should have more say. Blinder calls this "profoundly undemocratic" because it "invites the haves to take away from the have-nots." In fact, it allows the looted (the have-nots) to reclaim a little control from the looters (the haves).

One of the ironies of modern democracy is , how undemocratic it becomes when combined with government intervention. When private property is insecure, democracies become redistribution rackets. That's why so many special interests get rich today while passing the costs on to the rest of society.

Only the milk industry, for example, favors milk subsidies. Only Chrysler and its unions and its bankers favored a bailout of that company. Such programs could not stand up to the bracing test of budget democracy. Under such a plan, a tax form might include the following items:

1. The government should send my money to:
   a) Egypt;
   b) Russia;
   c) China;
   d) The Inter-American Tropical Tuna Commission;
   e) My bank account.
2. My money should fund:
   a) Social workers;
   b) Spies;
   c) Bureaucrats;
   d) My children's education.
3. The government should subsidize:
   a) Export industries;
   b) Porno artists;
   c) Bums;
   d) Banks;
   e) Space stations;
   f) None of the above.
4. The government should:
   a) Own and manage 32% of the land area of the U.S.;
   b) Favor big business over small through OSHA and other anti-market regulatory agencies;
   c) Maintain financial dossiers on every American;
   d) Discriminate against the majority;
   e) Tell us to use more condoms and less tobacco;
   f) Provide for the national defense.

If given a chance, there can be little doubt that Americans would restore something like limited, constitutional government. In fact, every year, taxpayers should be sent plain-English copies of the budget. We should be able to check off the items we want to buy with our tax dollars.

Under the new system, voter-taxpayers would be able to answer an economically important question: on the margin, what's the best use for our money? People in Georgia may like paying for welfare in California, but do they like it more than keeping their own money?

Plebiscitary budgeting isn't the ideal, of course. But since the Founding Fathers have long since been discarded, it's a good second-best solution. My pencil's sharpened. How about yours?