Prosperity doesn’t suffer in a compassionate society

An editorial currently circulating among state newspapers criticizes in unusually vitriolic terms Sean O’Leary of the West Virginia Center on Budget and Policy for a report in which he argues that proposed budget cuts to the federal food stamp program will, in addition to inflicting misery on the already needy, damage West Virginia’s economy.

Describing O’Leary and liberals generally as ignorant, closed-minded, and lacking in faith in the American people, the editorial’s stridency is striking because the debate over food stamp funding doesn’t usually trigger such vitriol.

So, why the sudden fury? It’s because O’Leary subtly but powerfully changed the traditional terms of the debate.

Fiscal conservatives have long argued that, while no one wants people to go hungry, government can’t afford to do everything, especially in times of high deficits and debt. They say that funds for safety net programs come either from increased taxes or higher deficits, which reduce growth by taking money from investors and consumers. Then they pair that argument with increasingly lame moralizing about the nonexistent debt crisis that has notably failed to produce the skyrocketing inflation and interest rates they have long predicted. In summary, they say there’s a trade-off in which compassion for the poor comes only at the price of diminished prosperity for all.

The concept of unavoidable trade-off between compassion and prosperity is central to conservative thinking on many issues. Sure, we can have adequate nutrition, health care, clean air, good education and other desirable things but we must pay with higher taxes, increased debt, diminished economic growth and fewer jobs. And as long as those who defend humane policies are willing to debate on these terms – what’s more important, jobs for Americans or the survival of the snail darter? – conservatives are confident they will win in the court of public opinion and usually they’re right.

That’s why O’Leary’s argument is threatening. Instead of accepting the premise of a trade-off between compassion and economic well-being, he flatly states that food stamps are actually beneficial to West Virginia’s economy. And, when you look at the numbers, something the editorial pointedly failed to do, it’s hard to disagree. In fact, if putting more money in peoples’ pockets and into West Virginia’s economy triggers growth and jobs, there’s no question O’Leary is right.

Two years ago when the federal government faced the prospect of the sequester, Republicans proposed cutting food stamps by 17 percent so defense spending could be preserved. West Virginia’s share of that cut would have been about $83 million annually, which would have come out of the pockets of food stamp recipients and, importantly, West Virginia grocery stores where recipients spend their food stamps. Meanwhile, almost none of the money going to the defense department would have returned to West Virginia.

That $83 million dollar cut would have reduced sales among food retailers by 3 percent, which is the entire profit margin for many. Another way of looking at the cut is that its effect would be the same as an $83 million tax increase on West Virginia food retailers. Imagine for a moment the howls of protest and the predictions of economic devastation that would ensue if such a tax were proposed.

This is the point O’Leary was making and the point which the editorial writers could not tolerate because it utterly destroys the argument that humane policy must come at the price of less prosperity. O’Leary was also implicitly pointing out that, if one consistently applies the conservative principle that policies that inject more money into the private economy and put more in peoples’ pockets stimulate growth, then many tax and spending policies that are currently in place in West Virginia begin to look pretty bad.

For instance, because a majority of large private employers in West Virginia — the largest being Wal-Mart — are based out of state, most of the savings from cuts to the state’s corporate income tax are exported out of state as well. And every dollar that leaves West Virginia weakens our economy, reduces demand and undercuts the incentive for businesses to locate and expand here.

West Virginia would benefit mightily if — when considering tax, spending, and social policies — political leaders asked the question, “Does this measure have the effect of enriching the state by increasing the amount of money in the economy or does it impoverish the state by draining money from the economy?” If policy were to follow the answers to that question, West Virginia could be put on the path to economic prosperity rather than continuing our present race to the bottom of wages and incomes.

At the very least, progressives must begin to make the argument that, apart from the humanitarian benefits, there is a powerful economic case for progressive policies.

Finally, because we share the same name, I should note that I know the West Virginia Center on Budget and Policy’s Sean O’Leary only through his research and a few email exchanges. I haven’t met him and, until coming across his work, was unaware of his existence. Now I have to cope with the realization that there’s a younger, smarter, better-educated version of me who even has hair. But, before I slouch off in a fit of jealousy and self-loathing, allow me to recommend not just O’Leary’s work, but that of the West Virginia Center on Budget and Policy whose quantitative rigor makes it the state’s most valuable resource for evidence-based policymaking.

— Sean O’Leary can be contacted

at seanholeary@gmail.com. This column

and others may be found at www.the-state-of-my-state.com.

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