President Trump’s budget director Mick Mulvaney was unusually blunt during an interview on CNBC. As Jonathan Chait notes, Republicans usually make some effort to justify tax cuts for the wealthy, for example by denying that they will cause the deficit to grow. But Mulvaney is candid about not caring whether the deficit grows.
“Bad spending, to me, in terms of its economic benefit, would be wealth-transfer payments. It’s a misallocation of resources. Infrastructure is sort of that good spending in the middle, where even if you do misallocate resources a little bit, you still have something to show for it. It’s tangible, it may help economic growth, and so forth. At the other end of the spectrum, at the very other end, is letting people keep more of their money, which — while it can contribute to the deficit in a large fashion — is the most efficient way to actually allocate resources. It’s a little less important to me if infrastructure adds to the deficit. And I’m really not interested in how tax reform handles the deficit.”
What I’d like to focus on is one turn of phrase: “wealth-transfer payments [are] a misallocation of resources.” Mulvaney essentially says that if you build a road or a bridge or a tunnel or an airport that you’ll have something tangible in the end even if there are cost overruns or the contracts are needlessly expensive. I think the idea is that maybe the government isn’t the most efficient source of funding for building stuff, but it can get the job done.
On the other hand, wealth-transfer payments get you absolutely nothing. So, by his reckoning, a subsidy to provide health coverage or financial assistance in getting a college degree or money set aside to assure kids aren’t malnourished, none of these things ever result in anything worthwhile.
I suppose there’s a broader ideology about efficiency here, in the sense that he’s framing this as a matter of using money in the most sensible way. But there’s also a value system on display. It’s not just that there is suddenly good deficit spending (tax cuts for the rich) but there’s also a belief that it’s a misallocation of money to invest in people. Maybe investment in people is a little harder to judge in “tangible” results than investment in physical infrastructure, but it’s not impossible. Because they were no longer hungry, someone could concentrate in class so their grades went up. A person became the first person in their family to get a college education. A doctor’s visit detected high blood pressure, which allowed the patient to take life-extending measures and medications.
We can debate the precise meaning of the word “tangible,” but it’s pretty clear that Mulvaney doesn’t value these kinds of positive results of wealth-transfer payments.
In any case, he provided proof that he doesn’t care about deficits. When it comes to deficits caused by failing to tax the rich, he says he really doesn’t care.
What he doesn’t want is for anyone to get something they haven’t earned, and the only way you can earn something is by making money.