The Current Budget Crisis Illustrates James Buchanan’s Concerns About Politics

Nobel laureate James Buchanan has been in the news lately, especially because of a book that seeks to link his 7000 pages of economic writing to both Dixiecrat segregationists and Charles Koch’s secret plan “to radically alter our government in ways that will be devastating to millions of people.” The thesis of Democracy in Chains by Nancy MacLean is that public choice economics is a radical plan to “shackle the people’s power,” “to put democracy in chains.” Oddly, she claims (without evidence), he set out on this project because he resented the Supreme Court’s decision in Brown v. Board of Education – which of course used “undemocratic” means to overturn the democratic decisions of legislatures in various states.

Buchanan certainly was concerned with how to achieve justice, efficiency, and “prevention of discrimination against minorities” in the context of majority rule. Throughout his work he explored how to design constitutional rules to bring about optimal outcomes, including a balanced budget requirement, supermajorities, and constitutional protection of individual rights. He worried that both majorities and legislatures would be short-sighted, economically ignorant or inefficient, and indifferent to the imposition of burdens on others.

And today a Washington Post column by Dana Milbank illustrates one of the big problems that Buchanan sought to solve: the temptation of legislatures to spend money with little regard for what two of his students called “deficits, debt, and debasement.” Looking outward from Hurricane Harvey to the upcoming congressional session, Milbank wrings his hands:

Harvey makes landfall in Washington as soon as next week, when President Trump is expected to ask for what could be tens of billions of dollars in storm relief. And paying for storm recovery — probably with few offsetting spending cuts — will be but the first blow to fiscal discipline in what looks to be a particularly active, and calamitous, spending season.

It’s not just disaster relief. The Pentagon is hoping for tens of billions of additional dollars. And Republicans may pivot from “tax reform” to mere tax cuts. It’s easier just to spend money and cut taxes than to reform the flood insurance program, make the tax system more efficient, and focus military spending on actual defense needs, much less to think about the national debt and the next generation.

Trump, who came to power promising to eliminate the $20 trillion debt, or at least to cut it in half, is poised to oversee an exponential increase in that debt. Republicans, who came to power with demands that Washington tackle the debt problem, could wind up doing at least as much damage to the nation’s finances as the Democrats did….

If the red ink rises according to worst-case forecasts, “we’re talking additions to the debt in the trillions,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, tells me. All from actions to be taken in the next few months. “It turns out the Republican-run Congress is not willing to make the hard choices,” she says. “It is a fiscal free-lunch mentality on all sides.”

We’ve heard a lot over the past few years about a “dysfunctional” Congress. Many critics mean that Congress doesn’t pass enough laws. But this is the real dysfunction: a Congress that spends money with little thought to the future. The national debt doubled under President George W. Bush and doubled again under President Barack Obama. President Trump and the Republican Congress are just getting started, but the prospects don’t look good.

Milbank, MacGuineas, and others who worry about the “fiscal free-lunch mentality” should read some Buchanan. As one scholar put it in a reflection on Buchanan’s work, “Perhaps legislatures would do better if supermajorities were required whenever transfers to current recipients will burden future generations.” Perhaps so. And perhaps constitutional guarantees of individual rights, judicial protection of those rights, and limits on the legislature’s free-lunch mentality are all part of what Buchanan called the constitutional political economy of a free society.