If you want to save taxpayer dollars, then give the money back 

A Culture of Excess

For almost all of the nation's politicians and far too many of its commentators, saying a bill or policy proposal will "save taxpayer dollars" has become a way of saying "I agree with it" or "I think it's a good idea." And that's why the phrase has become the single most used and abused one in all of American politics.

In former times, the phrase was limited to cost-cutting measures — consolidating government services, say, or privatizing government programs. Now, however, you can apply the phrase to almost anything government officials think is a good idea, even if it means spending more — a lot more — of those allegedly "saved" taxpayer dollars. Indeed, most Democrats and a large number of Republicans now routinely claim that spending increases will somehow "save" money over the long term. So, for example, by starting a new anti-obesity program, we will make Medicaid recipients slightly healthier and therefore less costly. Or by "investing" large amounts of public money in clean energy schemes this year, we'll make energy cheaper to produce at some point in the future.

In South Carolina, state lawmakers have just passed a bill to restructure the state's antiquated government structure. The bill does very little to alter the Legislature's dominance of state government — hence it misses the whole point of government restructuring — but it does rationalize or streamline a few government functions. And so the bill's supporters have claimed repeatedly that it will "save taxpayer dollars."

Here's the bad news: Nothing that anyone says will "save taxpayer dollars" actually saves taxpayer dollars. Using government resources more frugally doesn't "save" them in any real sense of that term, and spending more dollars for more theoretically cost-effective results 10 or 20 years from now certainly doesn't "save" them. In fact, there is only one way to accomplish that end, and it does not happen in South Carolina: return the unused funds to taxpayers.

Consider this: If you buy a pair of shoes at half the price you were expecting to pay, you can legitimately claim to have "saved" the money because the other half of the money stays in your pocket. But if a state agency decides it can provide a service at half its current cost and it makes changes to accomplish that result, the "saved" half of the money will just go to some other part of the agency budget or back to the state's General Fund. The agency may have "saved" money, but the taxpayer has not. He's already paid his taxes, and he's not getting anything back. Politicians may send out press releases claiming that taxpayer dollars have been "saved," but the state budget will keep going up and taxes will not go down.

Now, this isn't to say that government officials shouldn't try to do things in a more cost-effective way. If a public service can be provided at a lower price, officials have a duty to make that happen. But don't kid yourself. No taxpayer dollars are being "saved." The only way that will happen is if surplus funds — dollars collected by government but not spent — are returned to taxpayers.

Lawmakers frequently introduce and sometimes debate "spending limit" bills. These bills purport to limit the legislature's capacity to spend revenue. The trouble with the vast majority of them is that they allow state government to keep the money. A bill currently filed in the state Legislature (H.3533), for example, would create a "Spending Limit Reserve Fund." Excess revenue would be put into this fund, and the money would be appropriated to a variety of "priority" areas. In other words, the state would keep the money. As for the "priority" areas, elected officials could change those from year to year, making the "spending limit" no limit at all.

The principle here is this: If the government gets to keep the money, there isn't a limit on government spending. The money will still get spent, all right, but just not in the usual way and through the usual channels. If it's a spending limit you want, get rid of the silly reserve fund and insert a provision requiring all excess revenue to be returned to the people who created it in the first place. That, unfortunately, is the only possible way to "save taxpayer dollars."

Barton Swaim is the communications director for the S.C. Policy Council and a book reviewer for the Wall Street Journal.


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