SiliconBeat

I’m not a fan of the lottery, and for many of the reasons you’d expect. But the latest word out of Sacramento is particularly distressing. It’s not bad enough that California has one, but now apparently the governor is going to milk it to paper over structural problems with the state’s budget.

The details emerged earlier this week when Gov. Schwarzenegger revealed his new budget plan. Part of the plan called for essentially selling future revenues from the lottery to create a rainy day fund. The administration went to great pains to insist that this wasn’t a loan, but rather that it was trying to optimize an “under-performing asset.” To hear the full depth of this double talk, listen to this episode of Michael Krazny’s Forum on KQED as Krazny talks to Mike Genest, director of the California Department of Finance.

Part of this scheme is predicated on the ability to dramatically increase revenues from the lottery. That’s probably a pipedream. And as a whole, the proposed budget faces an unlikely future as the state legislature puts it through the meat grinder.

But what really concerns me is the larger issue that lurks underneath the existence of the lottery.

There has been a strong cultural shift over the past couple of decades to embrace the notion of smaller government. It seems everyone thinks this is what we all want. But when you dig into the details, it turns out not to be true. Whenever someone wants to cut a program, reduce funding for some project, there’s a backlash.

So it’s not that people really want smaller government, they just don’t want to pay for the government they really want. Every politician (or most) live in fear of discussing any kind of tax increase.

And so the lottery has become the work-around solution. The lottery is the way we trick ourselves into paying for the government programs we want. It’s not something we can really blame on the politicians. It’s our own fault. We’re sending them mixed signals (don’t cut government, don’t raise our taxes) and they’re responded with the lottery.

Now Schwargenegger, who once promised to fix the structural problems in the state budget, wants to take this charade one step further. He wants to sell shares in this delusion on Wall Street, in a scheme that also sounds eerily like the terms used to sell bundles of mortgages to Wall Street banks. (They’re using the term “securitization” which should send chills down anyone’s spine).

Hopefully the lottery scheme will be stopped in its tracks. But even that won’t solve the bigger problem that we need to face: How to pay fairly for the government we want and need.