Government Spending

The Golden Age of Groupon Government!

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Courtesy The Daily Beast

Revealed: Government keeps growing because we're purchasing it at an apparent discount. Between 2009 and 2013, for instance, the federal government borrowed 33 cents of every dollar it spent. That makes it seem as if we're only shelling out 67 cents for every dollar of government goods and services.

Since 1974, when new budget accounting rules went into effect, the government has paid out of pocket for just 84 cents per dollar of spending, giving us all a sweet 16 percent discount. Who wouldn't buy more at those low, low prices? In my latest Daily Beast column, I call this "The Golden Age of Groupon Government."

The idea behind Groupon is pretty simple: If you discount the price of something, then people are more likely to buy it. While we may not be willing to shell out $34 for artery-clogging amounts of Cherry Garcia, Coffee Heath Bar Crunch, and Chubby Hubby, we might sign on if the cost is just $17.

Andy Warhol

For decades now, we've been getting much more government than we're actually willing to pay for. Which leads to…more government. About a decade ago, two Cato Institute scholars—Peter Van Doren and the late William Niskanen—reported on "Some Intriguing Findings About Federal Spending." Basically, they found that when the government appears to charge citizens less money in the form of current taxes and fees, people are happy to purchase more government. "Controlling for the unemployment rate, federal spending [between 1981 and 2000] increased by about one-half percent of GDP for each one percentage point decline in the relative level of federal tax revenues." Does anyone else remember a simpler, more parsimonious America? "Gas, grass, or ass—nobody rides for free" is only a bumper sticker these days….

At least with a Groupon deal, you settle your bill up at the exact moment of the sale. Those heavily discounted gallons of Ben & Jerry's Ice Cream may give you a stroke, but it's not as if you—or your descendants—are still on the hook for the other 50 percent of the purchase 10, 20, or 30 years down the line. Yet that's exactly where we are with Groupon Government: We buy more than we can afford now, with no good idea of how we're ever going to pay up when the rest of the bill finally comes due. Because if we're lucky, we'll be long gone before that day arrives. As Keynes once quipped, "In the long run, we are all dead." You bet, but who's paying for our funeral? And will they be paying retail?

Read the whole thing here.

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  1. The Iron Bank will have its due.

  2. Alt-text win on the Obama photo.

  3. +1 J. Wellington for the alt-text.

    Speaking of, are there any other Chicagoans on here that know what the hell happened to J. Wellington’s in Bucktown? They had some damn good burgers and was BYOB to boot.

    1. Sorry. “Wicker Park” for all of you hipsters out there that might get offended.

  4. Citizens! In all times, two political systems have been in existence, and each may be maintained by good reasons. According to one of them, Government ought to do much, but then it ought to take much. According to the other, this two-fold activity ought to be little felt. We have to choose between these two systems. But as regards the third system, which partakes of both the others, and which consists in exacting everything from Government, without giving it anything, it is chimerical, absurd, childish, contradictory, and dangerous. Those who parade it, for the sake of the pleasure of accusing all governments of weakness, and thus exposing them to your attacks, are only flattering and deceiving you, while they are deceiving themselves.

    Bastiat

  5. Only little people pay their bills.

    1. That would explain why Tyrion Lannister always pays his debts.

  6. He may think there are 57 States but he does know how to make medical decisions for 300 million people.

  7. I have a friend who subscribes to MMT and so believes deficits never matter, but he is now having second thoughts because all the artificial growth is hurting the environment. What’s a prog to do?

  8. “”Gas, grass, or ass?nobody rides for free” is only a bumper sticker these days….”

    It must have been the hipster guys wearing leather jackets who used that expression heavily – i don’t remember it ever being exceptionally common

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