Let’s talk about three words beginning with the letter I:
Internet, interstates and Iowa.
They all have something useful to say about the current food fight over the federal budget.
Perhaps we can agree, at least, that it’s not good for our national government to live beyond its means, going deep into hock to China. The issue, as always, is what mix of the two available approaches – raising revenue or cutting spending – you should adopt to fix that.
The U.S. House is now run by a faction whose godfather, Grover Norquist, once said his goal was to shrink the federal government to a size where he could drown it in the bathtub.
As that charming image suggests, the only move these dudes favor is cutting spending. Unfortunately, their arithmetic simply doesn’t work. Nor, as they’ll find soon enough, does the politics of their position. You just can’t cut as much as they say they want without whacking programs that the bulk of the American public strongly supports.
Still, some spending needs to be cut. The trick is realizing which types of outlay should be axed, and which protected ‘til the last dog dies.
And, just for now, for the sake of muddying a simple point, let’s put questions of social justice aside, and look at just one measuring stick: Does this spending help the economy? The bathtub drowner’s automatic answer is: No, never.
I reply: Really?
Back to the three I’s.
The Internet. Would you say it has created, oh, just a smidgeon of economic value in the last 20 years? Who do you think invented it, really? (I trust you know not only that it wasn’t Al Gore, but that Al Gore never claimed that he had.)
No, the Internet was spawned by a federal agency known as DARPA. Sure, DARPA worked with brilliant private researchers, but it organized the project, which was also fueled by tax dollars from the National Science Foundation. (And, oh by the way, the World Wide Web was first spun at a think tank called CERN, which is funded by those same European governments that Fox talk show hosts are always mocking.)
The lesson: It’s wise to fund basic research into game-changing ideas that are too new for Wall Street. (You can’t always know which ones will be game-changers, so understand you’re going to fund some duds along the way.)
Now, Interstates. It was a Republican, Dwight Eisenhower, who made the national highway system happen, pushing for infrastructure investments unimaginable in our pound-foolish time. Whatever you feel about sprawl, it’s hard to dispute that interstates spawned enormous GDP.
So why do we applaud now when a New Jersey governor nixes a project that would better connect his state with the most important city in the world?
Finally, Iowa. The lesson first. Not all federal investments are created equal.
When you meddle in markets for mostly political reasons, good things rarely happen.
Here’s the deal with Iowa, Iowa grows corn. So Iowa loves ethanol, which can be made from corn.
And every member of Congress who looks in the mirror each morning and sees a potential president (which is to say, most of them) slavishly genuflects to Iowa’s whims.
So we spend enormous sums subsidizing this costly biofuel, which reduces your mileage while doing little to end our addiction to Saudi oil. You could pay for, oh, I don’t know, a lot of home heating aid for the working poor if you got rid of ethanol subsidies, and other, similar sweet deals for big agriculture.
Some times federal spending hits home runs; some times it whiffs. The trick is electing people who can tell the difference. Right now, Congress has a frightening shortage.