Don’t Republicans Know That Government Spending Saps Economic Growth?

Economic discussions would be far more worthwhile if those in the conversation got the basics. One of them is that governments don’t take in money, nor do they spend it.

When governments charge us for our production (call it a tax), the money they take in is just a ticket for the actual resources that we’ve produced, and that politicians are going to redirect in politicized fashion. Translated for those who need it, governments don’t tax away our money to look at it lovingly; rather the money taken from us represents their ability to redirect actual goods, services and labor in politicized fashion.

Which means a more apt description of government spending would be central political control. Government spending is the political class arrogating to itself the right to allocate precious resources. It’s politicians substituting themselves for market forces.

It all explains why government spending is such a hideous, economy-sapping tax. What we call an “economy” can never have too many resources. Instead, businesses and entrepreneurs of all sizes are in a constant hunt for the money that represents resource access. Paraphrasing Nike Co-Founder Phil Knight, business owners are endlessly praying to the proverbial gods for liquidity, for capital, for anything to keep their business open. Too bad they have to compete with a federal government that literally consumes trillions on an annual basis.

It’s worth keeping in mind with a recent front-page news item by the Washington Post’s Tony Romm top of mind. In it he quotes an Alabama politician cheering federal monies that found their way to his state. It reads like this: “Great to see Alabama receive crucial funds to boost ongoing broadband efforts.” Ok, government spending is oxygen to politicians, isn’t it? The answer is yes, but then the person uttering the words in quotes was Alabama Senator Tommy Tuberville. He’s a Republican, and Republicans are supposed to be for limited government…Please read on.

Indeed, it’s not just Tuberville cheering federal outlays in his state. Arkansas received $50 million to rehab roads and bridges in the state, only for Sen. Tom Cotton to issue a press release in which he wrote “I’m pleased Sen. Boozman and I were able to secure the grants for these projects.”

Rep. Sam Graves (R-Mo.) indicated that he was “proud” about winning $1.3 million in federal funds for local highway repair in Maryville, a town in his district. In his case, he wanted to share the credit: “Congratulations to all who helped secure this funding.”

Where it perhaps gets interesting is that the  funding which has Tuberville et al so pleased comes care of an infrastructure bill quarterbacked by President Biden, a bill that Tuberville, Cotton and Graves all voted against. About a vote that contradicts present excitement about federal largesse, Tuberville staffer Steven Stafford responded with the following: “Does the White House believe that only states with Democrat representation in Congress should receive federal tax dollars?”

Clearly Stafford knew the answer to his own question. President Biden is the personification of swamp creature, which means he’s been gleefully doling out tax dollars alongside Republicans probably longer than Stafford has been alive. Again, spending is oxygen to politicians.

The only quibble here is that Republicans are supposed to be for limited government. Better yet, they’re supposed to know why they’re for limited government: when government spends the economy is slammed because politicians substitute their limited knowledge for that of market. For Republicans to cheer the arrival of federal dollars is for Republicans to cheer not just bigger government, but also slower growth. Something’s wrong with this picture.

This article was originally published by RealClearMarkets and made available via RealClearWire.