Taking stimulus dollars isn’t hypocritical

This past February, President Obama told the Las Vegas Chamber of Commerce that members of Congress who opposed his 2009 stimulus package were “trying to vote against their cake and eat it, too,” because these politicians voted against the stimulus but accepted the money for their states and/or districts.

Recently, in a visit to west Michigan for the opening of an LG Chem battery plant, the president said (in apparent reference to U.S. Rep. Pete Hoekstra, R-Holland), “(Stimulus opposition) hasn’t stopped many of these same people from turning up at ribbon-cuttings, but that’s OK.”

Even The Economist, a relatively free-market publication, uses this alleged “hypocrisy” to hit Gov. Mitch Daniels of Indiana when writing about his possible presidential ambitions: “He has derided the federal stimulus but taken its cash — a sign of pragmatism or hypocrisy, depending on the audience.”

Many news articles have echoed this same theme. Playing politics, this most certainly is. But hypocrisy? No way.

Governors (and individuals) may believe the stimulus to be a waste, but still take the funding. After all, where does that money come from? Taxpayers. And if the money is not taken for their state, it will only go to another; and the state that turned down the funds will not see any drop in their federal tax rates. Taking funding for themselves that would only go elsewhere is not a sign of hypocrisy.

Indeed, neither is politicians taking farm subsidies, elders taking Social Security or Michigan businesses taking Michigan Economic Development Corp. tax credits — even if these individuals are against these programs in principle.

There are many government programs that those who support the free market may find undesirable, but may benefit from without fear of being a hypocrite. One may believe public schools are in need of reform, yet still be a teacher. Or support a flat income tax rate with no deductions, and yet still take tho se deductions when able. still take these deductions when able. Not taking advantage of these programs does not make the programs better; it merely reallocates the funds somewhere else.

For example, a publicly traded company has a fiduciary responsibility to its shareholders to maximize share value, and that can mean accepting tax credits, abatements, and outright subsidies from the MEDC. These business leaders may very well realize that the state would be better served as a whole with across-the-board tax reform — and that the MEDC has had several instances of scandal — but not taking advantage of tax credits offered does not help their corporation or its employees, save perhaps for the unfair advantage it provides them over existing competitors.

One of the “Seven Principles of Sound Public Policy” (published by Lawrence Reed, president emeritus of the Mackinac Center for Public Policy) is that “Sound policy requires that we consider long-term effects and all people, not simply short-run effects and a few people.” Minimizing government involvement in the economy is a step towards this goal and one individuals should be constantly working towards. But in the meantime, it’s not hypocritical to take what the government is handing out. As the novelist Ayn Rand once wrote, “Minimizing the financial injury inflicted on (taxpayers) by the welfare-state laws does not constitute support of welfare statism…initiating, advocating, or expanding such laws does.”

(Jarrett Skorup is the research associate for online engagement at the Mackinac Center for Public Policy, a research and educational institute based in Midland.)