Now that it appears that the financial system will not sink into a black hole, many of us are waking up and realizing that the government is in a lot debt.  In essence, we nationalized the bank’s sins and we are going to have to pay for it. With a much older population than the last government deficit problems of the late 1980’s, this one may take a lot longer to get out of.

There are two large methods to fight deficits: raise taxes or cut programs. The former is always easier than the latter. Why? Because we want it all. We want our programs and are not willing to give them up.

As illustration of this problem, the State of California is dead broke. But in a recent survey of Californians 67% supported spending cuts over tax increases to solve the state’s deficit. However, a majority of those surveyed also opposed program cuts to 10 of 12 program areas under the state’s jurisdiction. The only programs those surveyed had no issues cutting were parks and prisons (I suspect in the next breath those surveyed cited crime as a concern too and want government to adopt a more law and order agenda).

What does this tell us? When push comes to shove, the environmental agenda takes a back seat to money.  Equally as important, as tax-payers, we are an extremely passive-aggressive lot. Say cut a program and everyone says “yeah!”. The government tells you that they are cutting YOUR program and suddenly it is a sacred cow (call it the NIMP syndrome- not in my program).

Our city experienced this recently. The city cannot balance its budget- it requires the Province to give it a grant- and there was much grumbling about property tax increases. But when the city attempted to close public pools 1 more day of the week or institute higher user fees to save money, the back-lash was quick and severe and the city backed down quickly. Our city is fundamentally mismanaged but, in one of the few times I will defend the administration, how can it solve its fiscal issue if every program cannot be cut (let’s overlook the fact municipal election turnout is 40% maximum)?

This is why, sadly, tax increases are always easier. Programs have stake-holders who can form a lethal and concentrated voting blocks. For example, try cutting back welfare to seasonal fisherman and you’ll lose an entire region of votes.  The benefit is widely unreasonable and should be scaled back but that’s not the point. Fisherman vote en masse for anyone who will maintain this benefit. Politicians are, foremost, self-preservationist and will not dare mentioning cutting this program.

Raising taxes, on the other hand, hits everyone equally and there are always scapegoats (blame the previous government, the U.S., the Russians, the Chinese, the oil industry, welfare bums, the socialists, special interest groups etc.). Every once in a while, a poorly designed tax can topple a government but, as a whole, the entire electorate is a poor lobby group- too big, too divergent, too scattered and increasingly indifferent to really mobilize.

What can you do? The cynic in me says prepare for the inevitable tax increase. The democrat in me (small d democrat) believes its time to clearly articulate what we want as an electorate. Do we want good programs with accompanying high taxes or do we want to be self-sufficient individuals with low taxes? We can’t have good programs with low taxes.  It is all pixie dust politicians sell you to vote for them. In this era of frugality, it is something we should cut back on buying as well.