The Bailouts are Like Paying Off Molested Children

Since I found it all interesting, I thought I'd just reproduce all of Will Ambrosini's post about my last post here:

I’m actually with Will Wilkinson when he talks up “liberaltarianism” and I support a reasonable social safety net. I’m one of those people that thinks rising GDP indicates increasing interdependence, that that is a good thing and that self-sufficiency is the road to poverty. Today Wilkinson suggests a reason why liberaltarianism might be a non-starter:

[I]t’s easiest to get people to face up to tax increases if they don’t have the sense that they’re paying more just so the special interests of the winning coalition can get more.

Isn’t the conditional phrase an empirical fact about governments?

This reminds me of my dad and the Church. Even after all us kids grew up and he stopped going to church, he gave money to them every week. The Church does a lot of good things for people — disaster relief, poor assistance, etc — but a couple years ago my dad stopped giving. His primary reason: he thought his money was primary going to paying off molested children; it wasn’t going to help poor people. He didn’t want to subsidize corruption.

I don’t want to subsidize corruption either.

I think Will is just agreeing with me. I take it that the empirical fact about governments is this: when taxes go up, transfers to the special interests of the winning coalition go up. I think that's probably a decent empirical generalization. But I don't think most voters do. Now, if the increase in transfers is generally equal to the increase in revenues, then budgets balance only when revenues are underestimated. I'm not so sure that's true. And pretty sure most voters assume it isn't.

What I was trying to say is precisely what Will is getting at: that willingness to contribute reflects a sense that the contribution is going to something worthwhile. Tax increases coupled with large spending cuts creates the sense that there is a good faith effort to balance the budget, which the tax increase is one part of.

As a matter of fact, I think the various bailouts have created a large problem for Democrats in generating public support for tax increases. Ideologues on the left enjoyed depicting the various Tea Parties as a ridiculous efflorescence of dimwitted rightwing ideology, and it was partly that. But it was also partly a real reaction to transparent distributive injustice. You can say that some of the bailouts were necessary to keep the whole system going. That may be true, but that doesn't make it fair. (Maybe it was the best thing for the church to pay off molested children, but that doesn't mean Will's dad wants to pay for it.) That sense of unfairness, which is by no means limited to Limbaugh-loving Tea Partiers, together with the sting of the recession (even after it's over), together with the typical American aversion to taxes increases that Obama has constantly catered to, is going to make tax increases on the middle class an incredibly hard sell even if there are also large cuts in spending, which there won't be.