Big Government Is In the Details

For some time now, this blog has been warning about the bad consequences of austerity. One reason why austerity does not work is that the policies do not structurally reform away government programs – they just shrink their size without giving the private sector a chance to replace what government is no longer providing. In other words, the commitment from government is still there – government just chooses not to honor its obligation toward the citizens.

The reason why government makes this choice is, of course, that it does not have the money. Austerity does not create more money for government; if anything, it makes it even harder for government to fund its operations. But that does not excuse the fact that government maintains its spending programs- and thereby maintains its promises to the citizens. If government cannot deliver what it says it is going to deliver, then why not retreat from the promise and give room, financially and regulatorily, to the private sector?

The consequences of over-promising government are visible everywhere. Nausha, NH-based The Telegraph reports on a small but very illustrative example:

An interesting story about cost downshifting to local communities as a result of the New Hampshire Legislature’s recent knife-happy approach to budgeting came to our attention this week from The Telegraph. The paper reported that in the 8,271-population community of Litchfield – which lies smack-dab between Manchester and Nashua – town officials learned weeks after the New Hampshire Department of Transportation repaved a stretch of road that repainting the reflective stripes marking the edges and center of the road was not part of the package. In the face of budget cuts, the state highway agency has cut back to a three-year cycle for restriping and – despite its newly naked surface – the curvy, well-traveled Litchfield road that is maintained by the state in the summer and plowed by the town in the winter isn’t due for that yet, state officials said.

So who is going to take care of the road?

Town officials told The Telegraph the road, which has no street lighting, will either be a driving hazard during dark or foggy conditions, or the town will have to foot the bill for the painting. This is just the latest example of ways that – rather than disappearing with the wave of a magic legislative wand – governmental costs in the Granite State are simply being pushed down the ladder to counties, towns and cities.

And it is not just roads that fall between the budget cracks:

This week, the Cheshire County delegation met to review the budget it set in March and, unsurprisingly, officials said the cost of running Westmoreland’s Maplewood nursing home continues to outpace reimbursement from the state for Medicaid patients who live there. For years, county officials have been singing warnings about the possible effects of the funding gap. It’s reached the tune of a $4.5 million deficit.

In Europe they know this as “health care rationing”. They know it as health care rationing because they have single-payer health care systems. Thankfully, we have not yet gone that mad here in the United States, but if Obamacare stands we are headed there, faster than you can drive on Litchfield Road in New Hampshire.

Attend any legislative budget session or county delegation, select board or school board meeting and you’ll hear an identical refrain – voters are hurting and they want to see smaller budgets. In Concord last year, many lawmakers thought the best solution was taking a knife to the state budget, while blithely warning that tough decisions had to be made and priorities reexamined. Apparently, some still think there’s room for even more cutting, as House Speaker Bill O’Brien, R-Mont Vernon, recently told The Telegraph when he said he could see slicing another $400 million out of the state budget next year.

Local governments in New Hampshire get about 28 percent of their revenue from the state. So the question…

Does that just mean more shifting of costs to municipalities?

…is the one that will decide how we are going to deal with our government in general here in America. Are we going to let government maintain all its spending obligations and just try to squeeze them into a smaller box of tax revenues? Or are we going to structurally reform away government spending promises and let the private sector take over?

The answer is obvious.