By George Donohue, printed 9-23-17
Hurricanes in Texas and Florida and wildfires in the West, being referred to as perhaps the worst natural disasters in U.S. history, are providing us with a teachable moment on the role of government in our daily lives.
Every thinking capitalist knows there are many instances of "market failure" in our lives. The lack of private flood or fire insurance in these natural disaster-prone regions is a case in point. Disasters of such historic dimensions illustrate how federal and state governments have consistently underestimated the actuarial risk and consistently undercapitalized Federal Emergency Management Agency insurance funds. Private insurance companies do not provide flood and fire insurance in these areas because they understand these risks. All the climate models predict that such events will occur with increasing frequency and intensity.
The Affordable Care Act is actually similar to FEMA in that it is primarily a health insurance regulation with a public subsidy to make up for a market failure. Insurance companies simply do not want to take the risk and insure people known to be sick.
In the movie "Wall Street," the character Gordon Gekko claims that greed is good. Since most major religions of the world condemn greed as a sin, President Ronald Reagan made it sound better by stating that "it is your money" and "government is the problem." The Republican-run states of Texas, Florida, Oklahoma, Kansas and Illinois have found that consistently electing politicians on a platform of reducing taxes does not prepare them to keep the schools in session, pay their bills or providing adequate funds for disaster relief.
Maryland is no exception to the growing concern about taxes that are "too high." Both Republican Gov. Larry Hogan and Anne Arundel County Executive Steve Schuh have run on this platform and will use it again to run for re-election. Maryland voters must not be easily swayed by this siren song of greed.
Gov. Hogan reduced the toll on the consistently congested Bay Bridge, which is in need of maintenance, only to approve a new study on adding another bridge. How does he expect to build such a bridge with a reduced capital fund?
The governor ran on a platform of reducing the "rain tax" but does not say how we are to pay for cleaning up the Chesapeake Bay.
County Executive Schuh says that reducing taxes is his No. 1 achievement. But he does not say how we compare in county government services with neighboring jurisdictions.
Personally, I find county facilities in Prince Georges County better than those here in Anne Arundel. Most school systems in neighboring counties provide higher salaries for their teachers.
Schuh likes to spend our funds on building new facilities, sending money to developers and contracting companies that fund his campaigns. New schools with too few or poorly paid teachers are no benefit to Anne Arundel taxpayers at all.
There is a popular perception that U.S. citizens are overtaxed compared to those in other countries. This is just not true. Both T.R. Reid, in his recent book "A Fine Mess," and L.E. Burman and J. Slemrod, in their book "Taxes in America," have pointed out that among the 35 Organization for Economic Cooperation and Development countries, we rank close to the bottom in tax burden, with taxes equal to 26 percent of gross domestic product. The OECD average is 34 percent.
If the federal tax rates all go down, state rates must go up. Otherwise, who will pay for schools, roads, water treatment, storm-surge control and public safety? Public debt is the other option, but our national debt burden is already too high. The Republican philosophy of favoring long-term public debt over raising current taxes amounts to a preference for passing our funding burdens on to our children.
George Donohue is a professor emeritus of Systems Engineering at George Mason University and the president of the South County Democratic Club. Contact him at email@example.com.
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