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Government spending not an economic cure-all

by The Oklahoman Editorial Board Published: December 24, 2012

Gov. Mary Fallin's office estimates the state's Medicaid bill would be $103 million per year higher by 2020 if we expand the program. That figure is worth noting, because it's roughly the same amount provided to energy producers through horizontal drilling tax breaks. Yet those who see Medicaid expansion as economically beneficial consider the drilling tax breaks “unnecessary and unaffordable,” as the Oklahoma Policy Institute recently put it.

That's despite the fact the oil industry has actually created good-paying jobs in Oklahoma and elsewhere. Margo Thorning, senior vice president for The American Council for Capital Formation, has noted the energy industry added 100,000 jobs since the start of the recession, and another 2 million could be created over the next two decades.

It defies logic to argue that spending $100 million on government growth is a job creator, but leaving $100 million with actual employers is not. Furthermore, if the goal is job creation, lawmakers should favor policies leaving money in the private sector over policies redirecting it to the government. As columnist Robert J. Samuelson noted this year, public-sector employment “grows only when government claims some private-sector income to pay its workers. Government is not creating jobs. It's substituting public-sector workers for private-sector workers.”

The debate is not whether government spending truly creates jobs — it doesn't — but whether the benefit of a specific government program justifies the tax-induced loss of private-sector productivity and job creation. On the job-creation front, Oklahoma's oil-and-gas tax breaks are succeeding. Medicaid expansion is a non sequitur.

by The Oklahoman Editorial Board
The Oklahoman Editorial Board consists of Gary Pierson, President and CEO of The Oklahoma Publishing Company; Christopher P. Reen, president and publisher of The Oklahoman; Kelly Dyer Fry, editor and vice president of news; Christy Gaylord...
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