Clemson University economist Bruce Yandle has published a new paper that compares the federal government’s spending habits with that of the average family. Yandle effectively bridges the gap between private common sense and public finance.
As he relates, overspending and government bailouts have created a federal deficit of $1.4 trillion. Already at 10 percent of GDP, this is only predicted to rise. A series of graphs clearly show the alarming rate at which government outspends itself.
Professor Yandle also highlights how government programs “lack a coordinated way to assess their effectiveness.” As a result, their budgets expand without any true gauge of their success or failings, or “how government-provided services can be improved.”
The paper goes on to explain how government- supported programs crowd out similar private sector efforts. Yandle shows a more uniform government approach does not, and cannot, provide individual cases with individual commitment as effectively as private enterprises such as charities can.
Private sector donations and causes are further squeezed out as businesses and individuals realize that it is often more profitable for them to lobby for more government support than turn to the free market economy.
Yandle then addresses President Barack Obama’s fiscal proposals. In his 2010 State of the Union address, Obama compared the government’s fiscal troubles to those faced by the average family. Yandle writes that “[t]he call to freeze discretionary spending brought a few chuckles, since that part of the budget accounts for just 17 percent of the total. But 17 percent matters in a 2010 budget that totals more than $3 trillion. We have to start somewhere.”
He goes on to cite a Gallup poll that showed the American public becoming increasingly concerned with its government’s fiscal situation. “Part of the explanation for this surge in interest in the federal budget deficit may reflect the surge in the deficit itself.” Never before has America faced such a deficit, with the prospect of such drastic consequences for the Everyman family.
Professor Yandle concludes that in the coming years, the federal government’s “Golden Handcuffs” will no doubt be strained, to not much avail, while the average family tightens its purse strings, nervously awaiting government cuts or increased taxes.
“Everyman’s Deficit” is a crash course in why we need to reduce the size of government. The paper clearly emphasizes and explains the benefits of private sector enterprise over government mismanagement. It should be a required read for all congressmen–and voters!