Government Spending

Saving Our Way into the Poorhouse

Government claims its spending programs save money, but it keeps spending more money

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So when do the refund checks arrive?

Surely the checks are in the mail. Surely every American taxpaying citizen is due a big, fat financial windfall any second. Matter of fact, you might want to stop reading and check your mailbox right now.

Not there? Shucks. Well, give it a few minutes. After all, they promised.

"For every dollar we invest in pre-K," the president insisted a couple of weeks ago, "we save at least twice that down the road in reduced crime." Sounds like a bargain, doesn't it? Head Start's 2014budget was about $8.5 billion. You do the math.

That's not all we'll save, though. Obama also likes to say that for every dollar we invest in quality pre-K, we get seven dollars back. Fact-checkers contend he's stretching the truth, but let's not quibble over details like the truth when money is at stake.

The savings from pre-K might sound impressive, but don't be fooled. They're nothing compared to the savings from Meals on Wheels. According toWashington Sen. Patty Murray, "for every dollar we invest in Meals on Wheels, we can save up to $50 in Medicaid spending." Chew on that, why don't you.

What other investments pay off? Health care, among other things. According to apiece in Harvard Business Review, "For every dollar we invest in our workers' health, we see a return of more than $4 in reduced health care costs, lower absenteeism, and improved productivity." The same goes for the National Institutes of Health. "For every dollar we invest in the NIH," says Maryland Sen. Ben Cardin, "we know that $2.21 goes back into the economy."

Public transportation, too, provides a whopping big payoff. "Every $1 invested in public transportation generates approximately $4 in economic returns." Who says so? Why, the American Public Transportation Association, which certainly has no stake in the issue.

But it's not just public transit! "Every dollar invested in transportation infrastructure," says the Alliance for American Manufacturing, "returns $3.54 in economic impact." Oh, and "every $1 of federal transportation investment returns between $1.80-$2.00 of additional real goods and services produced in the economy," according to a studyprepared for (you guessed it) the American Road and Transportation Builders Association.

This must be why the federal government, and America more generally, are rolling in dough. The federal Department of Transportation budget alone is $84 billion. Total U.S. spending on health care is in the $3 trillion range — and while not all of that is spent on "workers," surely that investment "pays for itself," as politicians like to say.

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Health care is an even better deal these days thanks to Obamacare. We have it on the good authority of The Washington Post that "Obamacare pays for itself," partly "by taxing the rich."

What other programs pay for themselves? San Diego Mayor Jerry Sanders' investment in the arts scene, among other things. "A new city report claims the city's ($6.4 million) investment of hotel-room taxes in arts groups more than pays for itself," according to news reports.

Movies pay for themselves, too. Every dollar Virginia invests in movie productions brings almost $12 to the state economy, claims the Virginia Film Office.

Coastal restoration is a real money-maker, too. Every dollar invested in coastal restoration "returns more than $15 in net economic benefits," according to the Center for American Progress.

"Savings from health benefits dwarf the estimated $14 billion cost of (carbon) cap-and-trade program," according to research funded by the EPA.

Family planning for poor women? Yup. It "saves an estimated $7 in Medicaid and other public expenditures" per dollar spent, writes Washington Post columnistCatherine Rampell.

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Apparently, every government program either pays for itself or brings a fantastically high return on the investment: The national helium reserve. Federal crop insuranceAmeriCorps.

If our political and business leaders are to be believed — and why would anyone doubt their word? — any time the government spends a dollar, society gets far more than a dollar back. Very often it gets several dollars back by eliminating the need to spend more dollars on government programs elsewhere.

This is a neat trick and no mistake. But it does raise an obvious question: If seemingly every government program saves more than it costs, then why does government spending keep going up?

This column originally appeared at the Richmond Times-Dispatch.

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  1. you know what else pays for itself? A wood chipper.

    1. Not your solar panels? What do I win?

      1. my solar panels in fact do provide me a very nice return. Should see around 12% over their lifetime. Thanks for voting for people who increased my return.

        1. My solar panels are awesome! They shake the little plastic flower back and forth and back and forth and…..

          You can get em at Dollar Tree. For a dollar. Whoda thunk it?

          1. i got my wife a couple of those flowers as i thought she could not kill them like every other plant i gave her. They still ended up dead…the cat killed them.

    2. I hope it’s solar.

  2. Every dollar invested in NotAnotherSkippy saves the government $800 in future Skippy payments. My study confirms it using the Linear No Skippy (LNS) threshold.

  3. Why does the phrase, “lying liars who lie” come to mind?

  4. Taken to it’s logical conclusion, then if we gave government all our money, we’d have more than that to spend, right? It’s like a real life perpetual motion machine. Whodathunkit? I’m writing my check right now. I’ll just have to wait for that unicorn to come pick it up.

    1. Ah HA, I see the trick there. All that returned money has to go back to the government, otherwise we aren’t giving government ALL our money.

      So simple. They assure it’s multiplying behind the curtain, but we aren’t allowed to peek lest we disrupt the magic.

  5. Why does government spending keep going up? Doesn’t this article answer the question it asks? TO SAVE MOER MONEYZ!

    1. well, you do have to spend money to make money

  6. But these programs would work if only there weren’t all those special interests and lobbyists! /prog

    1. Just need the right people in charge.

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  9. What a colossal joke!! EVERY dollar spent by government is a dollar straight down the toilet. Government solves no problems. Every issue it addresses it only makes worse.

  10. any time the government spends a dollar, society gets far more than a dollar back.

    MULTIPLYER EFFECT FTW BITCHES!!!1!!!!!!!1!111!! /krugnuts

    1. I once read that every dollar spent on the War on Drugs takes seven dollars out of the economy. We have to spend a lot to make up for that.

  11. Ever hear lefties mock the “tax cuts pay for themselves” argument?*

    *in that on the left side of the Laffer curve they indeed do not.

    This article seems to show how they use the same argument themselves to justify spending.

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  14. Maybe because the population keeps going up? Or because life expectancy has gone up by a whopping 20 years since 1960 while we’ve kept the retirement age almost unchanged? Or because defense spending has risen at an annualized rate of 10% for the past 20 years, and doesn’t have ancillary societal benefits. Or because government pensions and benefits are overly generous with respect to the private sector.

    See, there are lots of reasons spending can rise even while preventative programs really do save money. Of course, we could end all preventative programs and when people get sick or commit a crime just shoot them – that would in fact be cheaper if that’s what you’re advocating.

    1. Which programs might those be? Which ones are actually preventative programs and how have you determined their impact?

      1. He lists many programs that studies show save money in the long term. One such is Head Start, which even many conservative groups like the Heritage Foundation agree help – participants have reduced incarceration rates (save lives, plus criminal justice costs), high graduation rates (earn more, pay more taxes), fewer mental health problems. Again he’s right that if the government didn’t pay for incarceration, mental health, or want tax revenue then you could argue it’s better not to have funded Head Start. But you know what, government does like tax revenue and does pay for prisons and police and even mental health care for the poor.

        1. Can you go into detail on lower incarceration rates, fewer mental health problems and higher graduation rates, more pay is due to head start? How have you controlled for this with all the other variables at play in the large time spans given?

          Not sure my pre-school days are really relevant now.

          1. I think it may be good for kids at the time. But trying to say it is responsible for better and incarceration rates is a stretch.

            1. Pay, mental health, grad rates and incarceration rates*

    2. Your last point is a strawman. Burn it.

  15. Every dollar spent on X leads to more people working and paying income taxes down the road. Can’t have everyone sitting at home earning millions by spamming discussion forums now, can we?

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