Mmmm, Free Federal Money
The Springfield News-Leader published a letter to the editor on the subject of federal expenditures in Missouri (link via John Combest, emphasis added):
I asked a state representative how the Missouri Department of Transportation arrived at the decision to place mile markers every two-tenths of a mile along Interstate 44. His reply was that this was federal money and not state money that was the funding source for this project. In other words, no cost to taxpayers.
The view that federal money doesn’t cost the taxpayer anything is completely false. As I have argued before, there is no such thing as a free lunch. Even if it’s dispensed by the federal government, all public expenditures come out of the pockets of taxpayers — not out of thin air. From an economic perspective, the only way that federal spending differs from state spending is the fact that the costs are further diffused, and the benefits are further concentrated. The money that is spent on mile markers in Missouri may be paid for by taxpayers in other states — but, simultaneously, taxpayers in Missouri are paying for similar projects in other states.
Later in the letter, the writer asks:
How many communities, counties and states in our United States are celebrating this “free” money?
This is a great question. When people perceive that they are spending “other people’s money,” they are less likely to spend it efficiently than they would if they perceived it to be their own. As Milton Friedman observed, individuals are better at spending their own money than somebody else’s money. If people in all 50 states view federal money as “free money,” they’ll spend, spend, spend, and their collective tax burden will skyrocket as a consequence.
So do residents of areas near interstate highways fund them primarily by their own taxes (as David Stokes citing Randall O’Toole said in the comments of another recent post) or does it often come from external sources? On this blog I see one concrete example of transportation funding as pork and only vague references to gasoline tax revenue allocations. I know each of your opinions and posts are your own, but . . .
Comment by Rob — September 3, 2010 @ 3:03 p.m.
Thanks for the comment. To the best of my understanding, you, Dave Stokes, and Randall O’Toole are correct that users bear most of the costs of interstate highway construction and maintenance through taxes.
However, I don’t consider this post to be in conflict with Dave Stokes’ posts because I’m not debating whether mile makers are a worthy expenditure or whether users or non-users should pay for roads. My sole point in this post was to argue that the “federal money = free money” belief that is unfortunately pervasive in public policy in the status quo.
Comment by Christine Harbin — September 3, 2010 @ 4:03 p.m.
Thanks for saying that I am correct, but you accidentally said that Dave and Randall O’Toole are as well.
I understand your argument and I like it. Funding sources even for things as prominent as interstate highways are hard to pinpoint and no one really understands them. This is why we shouldn’t be so sure that users of highways pay for the bulk of the costs.
Comment by Rob — September 3, 2010 @ 6:04 p.m.
Doesn’t matter who or how far away… it’s silly.
Comment by ray — September 3, 2010 @ 9:17 p.m.
What you won’t get most politicians to adequately explain is that federal mandates like this end up being paid by other states with higher populations and higher incomes, i.e. larger tax bases. You’re assuming that Missouri is putting in what it gets out of the federal tax system and that’s not accurate.
So why do local politicians not complain about them? Because it provides local jobs on the back of other, generally blue, states.
If you want to read some really pissed off views about this policy, go google interstate and hawaii and watch people go absolutely batshit about the fact that there is no such thing as an interstate in Hawaii yet the rest of the 49 states have to fund it so that it remains fair.
I’m not saying you’re wrong about anything in this blog post, but I am trying to tell you that it’s unlikely you’ll get any local traction on the issue. If you post this up in New York though you’ll find a few people who are aware their federal tax money goes to bullshit projects out in the backwoods and are very pissed off about it.
The general feel of the entire problem is probably most accurately summed up in http://www.fuckthesouth.com
Comment by KC Lowlife — September 12, 2010 @ 2:39 p.m.