To Cut the Deficit, End the Drug War

Republicans in Congress are taking heat for passing a $400 billion budget deal, which critics on the left point out will balloon the nation’s deficits. Luckily, there’s an easy way for the GOP to reclaim its mantle of fiscal responsibility. Ending the war on drugs would raise revenue without raising taxes, cut a bloated government program, and cut the deficit by over $80 billion per year.

Abolishing the war on drugs could raise revenue by empowering Americans to work, broadening the tax base. In 2015, 469,545 people were imprisoned in the United States for drug offenses. That’s almost half a million Americans who are rotting in prison instead of being allowed to work and pay taxes. If a mechanic is caught with marijuana in his pocket and goes to prison, he could spend years languishing in a cell instead of working. His community loses out on his labor. Taxpayers lose too, because prison transforms a hardworking man into a net drain on government budgets.

Even once convicts do their time and are released, their earnings suffer. According to Pew, a nonprofit think tank, people who have been incarcerated earn 40 percent less than they would if they had never gone to prison, even controlling for other factors.

Inmates lose skills in prison; that mechanic is languishing behind bars, not fixing cars. And employers are often wary of hiring criminals, even non-violent ones. Many employers ask prospective employees if they’ve ever been incarcerated, and those who answer yes rarely get called back. If the mechanic has to work at Walmart when he gets out because his former employer won’t hire convicts, he’ll plummet from middle-class to destitute. A drug conviction can haunt citizens for the rest of their lives, permanently capping their income and ruining their ability to provide for their families.

Ending the drug war could ignite a boom in the middle class.

Ending the drug war could ignite a boom in the middle class, because hundreds of thousands of Americans would no longer be trapped in low-income jobs by their criminal history.

Some of those locked up by the war on drugs are entrepreneurs. Dealing drugs isn’t too unlike running a small company, with overhead and clients and the need to differentiate yourself in a crowded market. If we stop locking up these men and women, the nonviolent ones will be free to start new companies and develop new products. Rapper and business mogul Jay Z got his start dealing. How many would-be moguls like Jay Z, who were unlucky enough to be caught by police, are behind bars instead of starting new record labels and creating wealth?

By freeing people to work and start businesses, legalization could broaden the tax base and cut the deficit, while improving the fortunes of destitute Americans who would no longer rot in a cell.

The drug war could also broaden our tax base another way. Legalized drugs would bring in plenty of tax revenue, because drug dealing is big business. Americans spend $100 billion per year on illegal drugs, according to the White House Office of Drug Control Policy. Right now, most of that money funds gangs and organized crime.

But legalizing drugs could help the United States pay down our enormous debt instead of padding gangers’ pockets. Economists Katherine Waldock and Jeffrey Miron examine the idea of legalizing drugs nationwide and taxing them like alcohol and tobacco, with a 50 percent sin tax. Even accounting for the fact that such a high tax would reduce demand, the authors estimate it could bring in $46.7 billion in tax revenue per year.

The war on drugs is one of the country’s most expensive programs.

Legalization will also show that the GOP is serious about cutting government spending. The war on drugs is one of the country’s most expensive programs. It employs bureaucrats, police, judges, lawyers and prison guards. It requires building expensive new prisons. Prison alone costs an average of $30,000 per inmate, between medical care, feeding, housing and guarding the inmates.

According to research by Waldock and Miron, our current drug policy costs federal, state, and local governments a combined $41.3 billion per year.

Even that understates the true cost, because the drug war pushes thousands of Americans onto the welfare rolls by imprisoning parents. According to a study by the National Institute of Health, families with an incarcerated parent are twice as likely to use food stamps and 1.5 times as likely to use Medicaid or SCHIP (State Children’s Health Insurance Program), versus families with free parents. If a mother is thrown in prison for a few grams of crack, her husband and kids will need some way to fill the gaping hole in their finances to keep eating. Nobody wants to be trapped on welfare, but when a breadwinner’s income suddenly vanishes, her family may not feel like they have a choice.

The drug war also creates intergenerational poverty, which means slower economic growth and bigger deficits down the line. In Daedalus, a leading social sciences journal published by MIT, criminologists noted children with incarcerated parents are more likely than their peers to end up in poverty and on welfare. Conservatives have long recognized that a strong family is important to help children grow up right --- what should we expect when we lock up hundreds of thousands of parents?

The drug war, like most government programs, is unlikely to end on its own --- no matter how much it costs. If Drug Enforcement Administration bureaucrats ever actually won the war, they would lose funding and their jobs. By contrast, the worse the problem gets, the more money they can demand, because epidemics require enormous resources to fight. That's one reason the drug war's been completely ineffective, with 66 percent more Americans using drugs in 2010 than in 1970. If conservatives want to restore fiscal discipline to Washington, they need to stop giving this expensive program a pass.

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Julian Adorney is a Young Voices Advocate. His work has been featured in National Review, Playboy, The Federalist, The Hill, and Lawrence Reed’s bestselling economic anthology Excuse Me, Professor.

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