*Keeping Michigan on Track: A Blueprint for a Freer, More Prosperous State.
**Matthew Mitchell, The Pros of Privately-Housed Cons: New Evidence on the Cost Savings of Private Prisons.
***Michigan School Employees Health Benefits Study.
A common defense mechanism of big-spending politicians is to
claim that even modest budget cuts will result in unsafe streets, crumbling
roads, uneducated children and untreated sick people. The implication is that
government now operates with such perfect efficiency, and all its activities are
so vital, that any reduction in revenue (or decrease in the rate of revenue
increase) means the loss of "vital government services."
The big spenders hope that taxpayers will temporarily forget
tax-funded services like government golf courses, fairs, arts grants, subsidized
agribusiness, marketing campaigns and many other reasonable opportunities for
belt tightening. Further, the public is expected to assume that it is impossible
to operate core government functions any more efficiently or that they can’t be
competitively contracted out for less.
When politicians and their lieutenants prophesy doom if spending is cut, it pays to question what they define as “doom,” and for whom.
The latest twist is for politicians to claim that without
status-quo spending levels and patterns, Michigan would be unable to compete
economically with other states, as seen in this recent statement by Gov.
Jennifer Granholm: "It would not be a wise course, I think, to cut the things
that I think make us competitive as a state."
Certainly, good schools, decent roads, safe streets and a
properly functioning judicial system are critical prerequisites for a modern
economy. It is not the case, however, that prospective employers would be put
off were state government to provide these things in a less costly manner.
For example, no business will leave the state — or choose not to
locate here — for any of these reasons:
Because school employees are shifted to a preferred provider network health plan with modest co-pays, rather than less efficient plans that currently consume an unnecessary $400 million annually;
Because highways are patrolled by sheriff’s deputies rather than the same number of state police — who currently cost an extra $65 million each year;
Because some prisons are managed privately, with the systemwide spur of competition yielding as much as $200 million a year in savings from current levels;
Because the state repeals its "prevailing wage" law, which currently increases the cost of government construction projects by around $200 million a year; or
Because the state finally implements a federally mandated Medicaid estate recovery program — like those adopted by the other 49 states — potentially generating an additional $85 million a year.
In other words, the stark "either/or" proposition put forth by
defenders of the status quo — either raise taxes or cut services — is a scam. It deliberately ignores a third way, which is to do more with less. In the private sector, this is always the first choice. In government, if considered at all, it is always the last choice.
The Mackinac Center has identified almost $2 billion in
efficiencies like those listed above, and millions more in non-core government
spending that could be eliminated altogether.
For example, would Michigan really have lost competitiveness if
state government didn’t help fund research on how to grow the perfect poinsettia plant? Would residents flee if government stopped hosting the annual "Swine Quiz Bowl" tournament for high school students? Would businesses refuse to locate
here if we didn’t subsidize film festivals showcasing productions few taxpayers
would pay for voluntarily? The fact that taxpayer subsidies for such programs
still exist suggests that Lansing politicians aren’t really serious about
trimming the fat.
When politicians and their lieutenants prophesy doom if spending
is cut, it pays to question what they define as "doom," and for whom. Would it
really be the end of the world if public employees received fringe benefits
comparable to generous private sector offerings, rather than grossly inflated
ones? Who would suffer if additional competitive contracting sent a signal to
public sector workers that they are no longer "entitled" to immunity from the
cost-saving incentives of competition?
Given all of the above, politicians who threaten that any
government spending reductions mean a loss of "vital government services" or
"competitiveness" give the appearance of identifying more with the consumers of
tax dollars than with the families and job providers who pay those taxes. Public officials need to remember that government exists to serve the people — not the
other way around.
Jack McHugh is a legislative analyst for the Mackinac Center for
Public Policy, a research and educational institute headquartered in Midland,
Mich. Permission to reprint in whole
or in part is hereby granted, provided that the author and the Center are