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?
