“Let us never forget this fundamental truth: the State has no source of money other than money which people earn themselves. If the State wishes to spend more it can do so only by borrowing your savings or by taxing you more. It is no good thinking that someone else will pay – that ‘someone else’ is you. There is no such thing as public money; there is only taxpayers’ money.”
– Margaret Thatcher, Speech to Conservative Party Conference, 1983
I was six months old when Thatcher gave this speech. It was nonsense then and it is still nonsense now. That hasn’t stopped David Cameron from channeling the spirit of his hero in a speech given on the campaign trail today saying:
“We know that there is no such thing as public money – there is only taxpayers’ money. And we know how we’d rather see it spent: Not on bureaucracy or bloat or the latest crackpot Government scheme but on you, your family – your future.
“Quite simply, it’s your money – you earned it. And we believe it’s people – not politicians – who know best how to spend their own money. And that’s what today is all about.”
The wording is remarkably similar to Thatcher’s phrasing in ’83. I doubt it’s a coincidence. The truth though is 180 degrees from Thatcher and Cameron’s assertions. “taxpayer’s money” is an ideological term used to set the bias towards lower spending and lower taxation. That’s a perfectly defensible argument to make, but the likes of Cameron make it so dishonestly. How far does he want to take this “you know how to spend money best” line? Health care? Schooling? That’s the logical conclusion.
We could just as easily turn the phrase around though and say “there is no such thing as taxpayer’s money – there is only public money”. The UK government is the issuer of pounds. They don’t come from anywhere else, so in order for us to have money to pay our taxes, government must spend the money into the economy first, and it must generally spend more than it taxes back in order for the supply of money to increase sustainably.
Now I don’t think Cameron wants to shrink the size of government to nothing (I don’t think he really believes in anything really), but this section of his speech shows a willingness to gently lie to people in order to push policies which seem to benefit all, but are really squarely aimed at benefiting those at the top. Those at the top can afford the best of everything. They don’t need public services. Everyone else though doesn’t have that luxury though, which is why pooling our resources makes sense in so many areas. Cameron also talked about the “immorality” of government spending, but providing useful public services is not immoral, it’s just common sense!
alittleecon 
‘Taxpayer’s real goods and services’