Let's pay for the government we get: why, someday soon, middle-class taxes will have to go up.

• Author: White, Bill
• Position: We Are Better Than This: How Government Should Spend Our Money - Book review

We Are Better Than This: How Government Should Spend Our Money

by Edward D. Kleinbard

Oxford University Press, 544 pp.

The conservative icon Milton Friedman once commented that "to spend is to tax," since public debt and related interest must be repaid. Though conservatives today seem to have forgotten that fact, it provides an organizing theme for We Are Better Than This: How Government Should Spend Our Money, Edward D. Kleinbard's thoughtful new book on the federal budget.

No one likes to pay taxes, and most taxes discourage something. So it makes little sense to consider the appropriate level of taxation without referring to the benefits of government spending funded with tax revenues. Accordingly, Kleinbard--the former staff director of Congress's nonpartisan Joint Committee on Taxation--rests the case for higher federal tax revenues on a well-reasoned defense of federal spending.

He begins by debunking the idea that markets alone maximize public welfare. Even if one believes that market-related efficiencies tend to maximize national income (or gross domestic product), that measure of economic output does account for the value of programs--such as Social Security and food stamps--that reduce a citizen's fear and despair when confronting potential destitution. Kleinbard quotes extensively from Adam Smith, the eighteenth-century patriarch of market economists, when emphasizing each individual's connection to "the union of mankind."

Enlightened public policy can moderate income inequality produced by a market system. In the last four decades the median inflation-adjusted taxable income of middle-class male workers has declined, while the amount and share of national income received by the top 1 percent of earners has soared. After reviewing studies that adjust taxable income to account for government benefits and taxes, Kleinbard notes that in recent decades most of the growth of standard of living by middle-class households has resulted in public benefits (including the value of group health insurance), lower taxes, and greater female participation in the workforce. He views that fact as a vindication of the government's ability to ameliorate the trend of rising income inequality, while noting that the social safety net for more than a decade has relied on a "fiscal policy of borrowing against the future by delivering more transfer benefits than our current level of tax collections can support."

The author pokes holes in the belief in a...