My dear friend Katie who is in grad school, asked one of her professors why governments do not in fact save up money for a rainy day. His answer, to summarize, is that taxpayers would get angry if they saw the government wasn’t using their money; they’d feel “over” taxed. Thank you Katie for your research. That actually leads me to a further thought: why doesn’t government just not OVER spend. Why don’t they live within their budgets?
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Hey Bethany. This blog is really nice. Light years better than mine.
I see overspending as being an effect of a desire to remain in power by regimes and/or politicians. This appears to be a larger problem among democratic states, but other countries also grapple with it.
In the case of the US, and other democracies, overspending seems to be a side-effect of elections. Any cuts you make might cost you votes. It is very easy to use funding cuts in political campaigns.
If a congressperson votes to cut Medicaid funding the commercial would go like this:
“Congressman X doesn’t care about seniors. Does he really care about you?”
If a congressperson doesn’t feel we need another aircraft carrier then the commercial will go like this:
“Congressperson X is dangerous on defense.”
Writing the budget in the US seems to me like trying to fill up the life boats of the sinking Titanic. Everyone REALLY wants to get a seat. And if there’s no seats, then they will do ANYTHING to get on board. Even if it means swamping the boat for everyone else.
Democratic states are at a disadvantage when it comes to combating budget deficits. Who is going to vote for the guy promising fewer guns and less butter, when the other guy is saying you can more of both?
Europe is going to have to find a way to dismantle their welfare states in the not-too-distant future. It might get ugly.
IN less democratic states with deficits, such as China, the government seems to be trying to stem reform by supplying better infrastructure, without having to risk the power of the ruling elite through elections.
Or they may try to counter external threats through defense and research spending, like in Iran.
Feel free to blow my theories out of the water. I didn’t spend a lot of time researching this issue, to be honest.
Actually the state of Utah does have a “rainy day fund” that they are debating whether or not to dip into. The debate is cut jobs and save the “rainy day fund” or keep jobs (for only a year) and hope that there is money next year to pay for the positions.
That is interesting Cindy! How do you know so much about it?