August 20, 2019

More, Less, or Both

Spectator
By Stephen Tuttle | May 4, 2019

We don't have enough money. Not nearly enough.  
 
Peter Gaynor, the Acting Administrator of the Federal Emergency Management Agency (FEMA) recently said they simply wouldn’t be able to help everybody stricken by natural disasters. With the growing number and severity of damaging storms, FEMA's budget and personnel issues will become untenable. Gaynor recommends more people buy flood insurance.
 
That's sage advice — except the taxpayer-subsidized National Flood Insurance Program (NFIP) is already $25 billion in the red and constantly teetering on complete insolvency. Old floodplain maps no longer accurately portray the expanding areas now prone to flooding.
 
Even when there’s disagreement on needs, the discussion involves piles of money that don't currently exist. 
 
The American Society of Civil Engineers (SCE), which has a vested interest in repairing and rebuilding our infrastructure, says we need $2 trillion to fix our roads. The Federal Highway Administration says it's closer to $900 billion. SCE says we need $1 trillion to repair and upgrade our drinking-water systems. The Environmental Protection Agency says it's more like $384 billion. SCE says we need $45 billion, immediately, to fix 15,000 bridges. The Association of Dam Officials says it's less than half that. 
 
Why there is such disparity mostly involves the degree to which the building and repairing are done, but it doesn't really matter, because all of it is being contemplated based on funds we don't have. The number of trillions seems irrelevant when we have no current way of getting our hands on even the first dollar. 
 
Social Security paid out more than it took in the last year, to the tune of about $9 billion. That's a trend likely to continue as the last of the Baby Boomers retire. There's enough money in trust to sustain full benefits for all recipients for another couple of decades. After that, not so much, absent Congressional action. 
 
Not that we've stopped spending. Lack of money is no hindrance. Defense spending, for example, rockets along, up nearly $300 billion in just the last decade. When you add in all the intelligence agencies and off-books items, that budget now exceeds $1 trillion by itself. 

With a strong economy, low inflation, and low unemployment, we're still managing to run up near-record deficits, blasting past $1 trillion this year. It's not clear if the recent tax cuts will improve federal revenues, but it is clear they won't pay for themselves, much less anything else. (Government revenues typically increase year-to-year except in times of recession or depression.)
 
So, who's paying attention? Almost nobody.
 
Conservative Republicans used to be budget hawks demanding cuts and balanced budgets. Most who still pine for an end to red ink are now an endangered species within their own ranks. The spending addiction is bipartisan.
 
Democrats, of course, would like to spend even more. Free daycare, free college, Medicare-for-all ... they actually have a pretty long list. They claim they've figured out how to pay for all of it by higher taxes on the rich.
 
None of which addresses our already existing needs.
 
If we're going to keep talking about spending more money we don't have and raising taxes for which there aren't enough votes, let's at least prioritize the we-can't-afford-to-do list. Since we use some part of our infrastructure virtually every second of every day, that might be the place to start. 
 
The president and Congress have proposed $2 trillion for infrastructure but without a funding source. That our nation’s infrastructure is still functioning is testament to those who built and installed it. But our pipes are old (Traverse City, for example, will have to replace lead couplings on water lines when its highly-trafficked Eighth Street is reconstructed this summer), our power grid is at perpetual risk, our roads have become rim-benders, way too many bridges are starting to crumble, and our rail system is archaic. Maybe we should actually do something. 
 
At least Michigan Governor Gretchen Whitmer has been honest about the need for new revenues, proposing a 45-cent-per-gallon gas-tax increase dedicated to state highways and roads. The votes are not likely there in the legislature or among voters for such an increase, but without more revenue, we don't have the money.
 
The country has real needs for which we'll need real money, and that has to come before we get to an expensive wish list.
 
So, we have three choices: increase revenues, reduce expenses, or both. The first means raising taxes or closing tax exemptions and deductions, an unlikely scenario in most states and even more unlikely in Washington. That leaves reducing expenses. Defense, homeland security, Social Security/Medicare and Medicaid consume nearly 70 % of the budget. There is waste aplenty to cut but no politicians willing to wield the knife. 
 
Pay more, receive less, or both. Otherwise, there just isn't enough money.

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