November 20, 2006
WRTA
 Brown
Shoes Diary
Dupe, Bait, and Switch
Let's say you are taxed $30 a month to
cover some government service like disposal of your sewage. Then the
government gets the idea to form a public-private partnership (sounds like
Mussolini to me), by which it means that it will lease the rights to the
sewage service to a private company. In other words, you will now pay the
private company directly to take care of your sewage. But instead of reducing
your taxes by $30 since it offloaded the service it was providing while
insisting you pay the private provider directly for it, the government keeps
taxing you $30 for other projects it deems fit. The government then claims
that they've expanded and improved your sewage service without raising your
taxes. How wonderful of them! But if you check your bank balance at the end of
each month you will find it just as depleted as if there had been a tax
increase.
That's the nonsense that's going on with the proposal from the PA
Transportation Funding Commission for public-private partnerships, often
referred to as P3. The Philadelphia Inquirer tells us that the commission was
created the same day Governor Ed Rendell stole $400 million dollars marked for
highway improvement and gave it to Philadelphia for its mass transit system
known as SEPTA. And even the usually sensible and skeptical Commonwealth
Foundation has fallen for the gimmick in its November 16th press release. [commonwealthfoundation.org]
A little Public Choice theory is appropriate here. If legislators and
governors confined their activities to those projects that benefit the
general welfare,
they would simply be stewards of the public trust with little to do in
managing a small and limited government. But since these people are desirous
of power and wealth, they don't confine their activities for the general
welfare, but systematically curry special interest. They try to buy the
farmers' votes with agricultural subsidies, the educators' votes with school
subsidies, the environmentalists' votes with regulations, the manufacturers'
votes with economic development grants, etc. But even legislators and
governors are not capable of creating a free lunch. When it comes to spending
tax revenues, they have to choose between using the tax revenues for buying
votes or for legitimate projects, like transportation infrastructure, that
benefit the entire Commonwealth. Obviously the former will get more of their
attention than the latter.
The Commonwealth Foundation seems to be supportive of this new way to drain
our pockets for infrastructure. Really, what difference does it make if we pay
the extra $1.7 billion a year for highway improvement as a tax or as a toll?
The whole problem is that the government is spending way too much. It can
pursue its illegitimate functions more easily by offloading its legitimate
functions to the private sector. The government has historically said that it
has to build and maintain highways and that's why it started taxing us in the
first place. Now it says it has other purposes for those taxes so we will have
to pay for the highways via tolls, while the government takes our hard-earned
money to fund its vote generating programs.
This is like the call for a national sales tax--do not accept the fair tax
until the income tax is Constitutionally forbidden. Do not accept the
offloading of government services to the private sector until there is a
commensurate decrease in our tax burden. We must insist that our state
government abide by the following three principles:
Principle One: Our state government is already too big and spends too much of
our money.
Corollary of Principle One: No increase in taxes is warranted. State
government needs to prioritize its activities, giving more focus to its
legitimate duties such as tending to transportation infrastructure and away
from redistribution. This may require a restructuring of its budget by moving
more appropriations from welfare (such as economic, education, agriculture,
and other subsidies) to those functions that promote the general welfare, such
as justice and infrastructure.
Principle Two: Our state government is already too big and spends too much of
our money.
Principle Three: Always remember Principles One and Two.
The opinions and ideas expressed in this essay are those of John D
McGinnis and should not be considered representative of WRTA.com, any
institution with which McGinnis is associated, or anyone else. He can be
contacted at john@wrta.com.
Contact John D McGinnis
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