It’s accepted wisdom in San Francisco that the path to successfully purchasing an apartment is an opening bid of 50% over asking price. It’s worth remembering as the right-leaning California Post expresses optimism about the city achieving budgetary balance.
At first glance, it’s difficult to not find optimism in what so many correlate with fiscal prudence. This is San Francisco after all. But conservatives regularly make a correct case for addressing concepts beyond first glance.
Given a second glance, it can be said that budgetary balance in a city that can lay claim to some of the richest residents and some of the most valuable corporations in the world is the accomplishment equivalent of hitting a two-inch putt.
Seriously, what’s so difficult about balancing a budget in a city full of billionaires, centi-millionaires, and soon-to-be multimillionaires once Anthropic, OpenAI, and numerous other San Francisco hyper-Unicorns go public? To say there’s nothing to it insults understatement.
Which means conservative excitement about theoretical budgetary balance during a particularly booming period in one of the booming-est cities in the world doesn’t mean much. Sports are an apt metaphor again: a basketball player who can slam dunk without a running start is somewhat notable unless the player is Victor Wembanyama. Then it’s not so notable. Wembanyama is 7’5”, while San Francisco’s treasury is the recipient of staggering amounts of taxes.
What’s happening in San Francisco rates thought nationally. Responding to then President Joe Biden’s mindless quip that billionaires don’t pay much in taxes, then-Washington Post fact checker Glenn Kessler acknowledged the more realistic truth that the 400 richest U.S. taxpayers pay more federal income taxes than the bottom 70 percent of American taxpayers combined. Think about what you’ve just read with San Francisco top of mind.
While the team picture of the American rich changes all the time, it’s evident at least for now that wealth creation that’s always been California-centric will shift even more in the direction of California in the present (see Anthropic, OpenAI et al), but also the future as evidenced by how skewed global VC investment is toward the Golden State.
What this tells us is that even if Congress passes a balanced budget amendment as the libertarians at the Cato Institute desire, the passage would hardly shrink the federal government of the present. Quite the opposite. This can be explained in two ways.
For one, consider the national debt of $39 trillion. There’s a reason markets are revealing the opposite of alarm at the same time that budgetary experts of the various ideological religions are revealing enormous alarm: Treasury yields that resemble those when the national debt was a seemingly quaint $7 trillion signal a market understanding that tax revenue collections in the future will well exceed what Treasury takes in now. In other words, the surest sign all the debt will be easy to pay off is all the debt.
Consider a balanced budget with what you've just read well in mind. Such a budget would sadly well exceed the one of the present, thus revealing a substantial increase in the tax that is government. Which is the point of these weekly columns on the debt.
There’s nothing impressive about budgetary balance in a country with taxable access to the most productive people in the world. Instead, there’s horror that those who rhetorically favor small government would ever associate limited government with budgetary balance. Given the serious, but blithely ignored problem of an excess of tax revenues in the future (see the market for Treasuries), a balanced budget will signal nothing resembling accomplishment.
