The folly of revenue suggestions from fiscal conservatives

The tax-and-spend crowd lives on the premise that government needs more money, and takes pains to keep the huge waste and fraud in government spending out of the political conversation. One of the most politically damaging things fiscal conservatives can do is tacitly endorse either of these.

That’s just what happened last week when Americans for Tax Reform led off their series of policy suggestions for the state of Texas with an endorsement of expanded gambling as a new revenue source.

When did ATR get into the government revenue expansion game? And, why would ATR lead their policy suggestions with revenue expansions?  After all, Texas does not yet have spending limits. Texas does not yet have zero-based budgeting. Texas government is incredibly inefficient in a variety of ways. These are supposed to be the priorities of fiscal conservatives.

Yet ATR’s first policy action is about revenue expansions, tacitly endorsing the premise that Texas government can get no smaller, or at least that it isn’t politically reasonable to make that case.

ATR made its name by holding the line on taxes and advocating for a reduction in the size of government in Washington, DC. They’ve tried to expand their reach with a state government advocacy section, but moves like this suggest they are overextended.

For example, in Texas the pro-gambling crowd is the tax-and-spend crowd, especially on the Republican side. There are a few anti-gambling tax-and-spend advocates on the Democrat side, but the vast majority of “yes” votes for gambling are “no” votes on things like spending limits.

This means that ATR’s first Texas policy suggestion is one that gives ammunition to the crowd that is diametrically opposed to ATR’s lifelong quest of reducing or holding the line on taxes and size of government.

There is also the fact that gambling makes the government revenue situation worse, not better. Only old, incomplete studies, nearly always funded by the gambling industry, say that gambling improves the revenue situation.

We now have much more complete information that says otherwise. While expanding gambling creates revenue sources by enriching existing gambling establishments or creating new ones, advanced studies have shown that the sharp increase in social service and law enforcement costs coupled with a broad, slight, and consistent decrease in existing revenue sources (save establishments right around the casino), makes gambling expansion a drag on available government dollars.

Economics professor Dr. Earl Grinols at Baylor has spent huge amounts of personal time and energy, unfunded by special interests, making himself arguably our country’s foremost expert on the effects of gambling legislation. Next to his, the expert opinion of an interested party, or an activist, or an interested party posing as an activist on this issue (b/c they are paid by the gambling industry) is not impressive.

Precisely, gambling expansion costs governments three dollars for every one dollar of “new revenue” that comes to the government through the new (or newly enlarged) gambling establishment.

Further, Texas gambling is crony capitalism. It consists of a gambling oligarchy protected from competition by a constitutional fence.  Why anyone espousing libertarian economic principles, as ATR does, would be okay with this setup is hard to figure. Ostensibly one could defend support of crony gambling on the basis it is incrementalism towards free market gambling, but again, this conclusion gets an F on politics. What sense does it make to further empower the oligarchy as a strategy to destroy it?

This is because Texas gambling expansion has nothing to do with enlarging the oligarchy and everything to do with enriching it. This will also enrich the entire political platform of the pro-gambling crowd in Texas, which just happens to be tax, tax, tax, spend, spend, spend.

Support for gambling expansion in Texas is foolish for many reasons:

1. The gambling crowd is the tax and spend crowd. Supporting them is de facto political opposition to tax reform;
2. Texas gambling is crony capitalism at odds with free market principles;
3. Small government authorities tacitly endorsing the idea that we are at rock bottom on revenues by prioritizing revenue suggestions is seriously damaging to the conservative cause;
4. Gambling makes the government revenue situation worse, not better, which will eventually strengthen the case for raising taxes (especially if the liberals can find a fiscally conservative authority suggesting there are no realistic cuts left in government!)
5. The tax and size of government reformers in Texas are overwhelmingly anti-gambling, a position consistent with Texas values and the Texas GOP platform.

Americans for Tax Reform has done great work holding the line on tax increases in Washington, DC for years, but this clumsy foray into the business of Texans suggests they are overextended in their state level ambitions, at least in Texas.