Nothing So Permanent...

Back in World War II, the government needed cash - quickly - to fund the war effort. A thirty year old economist had the idea that, as a wartime expedience, income tax withholding would get the government its needed cash while streamlining tax collection.

That economist would regret his idea for the rest of his life.

It never occurred to me at the time that I was helping to develop machinery that would make possible a government that I would come to criticize severely as too large, too intrusive, too destructive of freedom. Yet, that was precisely what I was doing.

That economist was Milton Friedman. Showing us that even the best minds aren't perfect and may not see all the consequences of an idea in the moment of ideation.

By grabbing a chunk of every paycheck, the government turns taxation into an abstract. It lulls you into complacency, it removes its share of your income from your "this is what I earn" baseline, and suckers you into being happy when you get a tax refund. A tax refund is really a zero-interest loan from you to the government, not some sort of gift from Uncle Sam. Imagine that, every April 15th, you had to write a check to the government for the entirety of your income tax liability, rather than having it drained every pay cycle from your employer's bank account before you even took possession. How much more accountability for how the government spends your money would you demand if you had to manually give it to them once a year?

Politicians know this, which is why withholding became a permanent part of the landscape. One senator, who had either read Colbert or paralleled his thinking, "cheered the provision as a way to 'get the greatest amount of money with the least amount of squawks.'"

Friedman, perhaps informed by his ill-fated withholding idea, or perhaps having observed the phenomenon countless other times, observed that,

nothing was so permanent as a temporary government program.

This comes to mind as I continue to hear squawks in opposition to cutting this program or that bit of spending, often with "Chesterton's Fence" rationalizations or Hands Off narcissism.

Government programs necessarily spend Other People's Money. The spenders, who also make their livings off the people's taxes (that's two Steve Miller references this month, for those keeping score), have no incentive to wind down their temporary programs and every incentive to keep them going. We've all heard the phrase "mission creep." Conversely, too few of us understand the concept of sunk costs well enough, though the phrase "throwing good money after bad" is probably more widely familiar. Those with incentive to keep a program going have much stronger motivation than those who say "it has served its purpose" or "we don't need this any more." Lobbying, re-framing their jobs, deceiving the voters, mongering fear, and lying are not beneath such public servants. The people harmed - the taxpayers - suffer that harm in a very diffuse manner, especially for programs that cost "just a few tens of millions." You care far less about that extra dime or two of tax a particular program costs you than they do about their jobs.

Nothing new here. It's territory I and countless others have covered many times. The lesson - and the caution - is to resist those temporary measures before they begin. It's far easier to say "don't" before something begins than to say "stop" after it has begun.

This same caution applies to infringements on your rights. Temporary, "times of crisis" infringements have a habit of never fully going away. We see residues of the rights violations imposed during the COVID pandemic today, and we see remnants of Prohibition nearly a century after it was repealed.

The bigger picture offers a parallel warning. John Maynard Keynes, favorite economist of big government types, advocated for "timely, targeted, and temporary" borrow-spending spending during economic downturns, followed by more fiscal prudence during boom times. Yeah, prudence, my ass. Spending just keeps going up, and when someone says "let's cut some of it," everyone says "cut someone else's budget, but not mine." Selfish behaviors ensue, public servants forget that they are meant to be prudent stewards of the citizens' dollars. "Timely" becomes endless. "Targeted" blobs into "whatever I can come up with to protect my job and fiefdom." "Temporary" becomes forever.