Gay Marriage and the Budget: Does DOMA Preserve "Scarce Government Resources"? (No.)

As you've probably heard, Obama's Department of Justice issued a legal brief to a federal judge defending the Defense of Marriage Act, which Obama previously derided as "abhorrent." I finally got around to reading it (late as always). This paragraph jumped out at me.

DOMA maintains federal policies that have long sought to promote the traditional and uniformly-recognized form of marriage, recognizes the right of each State to expand the traditional definition if it so chooses, but declines to obligate federal taxpayers in other States to subsidize a form of marriage their own States do not recognize. This policy of neutrality maximizes state autonomy and democratic self-governance in an area of traditional state concern, and preserves scarce government resources. It is thus entirely rational.

Does DOMA really preserve "scarce government resources"? Would repealing it really "obligate federal taxpayers" to subsidize gay marriage? No. This is factually incorrect.

At least, it is factually incorrect according to the federal government itself. Five years ago the Congressional Budget Office did an analysis (pdf) of the potential budgetary effects of recognizing same-sex marriages. (The CBO is a truly wonderful place.) That analysis concluded:

The potential effects on the federal budget of recognizing same-sex marriages are numerous. [...] In some cases, recognizing same sex marriages would increase outlays and revenues; in other cases, it would have the opposite effect. The Congressional Budget Office (CBO) estimates that on net, those impacts would improve the budget's bottom line to a small extent: by less than $1 billion in each of the next 10 years (CBO's usual estimating period). That result assumes that same-sex marriages are legalized in all 50 states and recognized by the federal government.

I think the Defense of Marriage Act is a terrible law for many reasons -- equality before the law is where I'd start -- so I'm not desperately concerned about a 0.1% increase in federal revenue. Nonetheless, I think it is worth pointing out a pretty clear error in the DOJ's brief. Federal recognition of gay marriage will save the federal government hundreds of millions of dollars.

gay marriage flickr ProComKelly.jpg

UPDATE, 12.15pm: I was sleepy when I wrote this and didn't explain what is probably the most interesting thing about gay marriage and the budget: Why, exactly, would gay marriage increase federal revenue? The answer is not obvious. As gay-marriage advocates are fond of pointing out, there are 1,138 statutes in which marital status is important for doling out various benefits, rights and privileges. Wouldn't doling out all those rights and privileges be expensive?

In some cases, yes. Social Security spending (to which spouses are entitled) would increase, as would Federal Employee Health Benefits spending. But some means-tested spending (Medicaid, Supplemental Security Income, etc) would actually decrease. (The benefits of those programs are linked to income an assets, and household income and assets tend to increase with marriage.)

But the biggest change would probably be with income and estate tax revenue. More marriage would mean more marriage penalties -- the CBO estimates that it would have been an additional $400 million a year between 2005 and 2010. The effect on the estate tax revenue would be harder to predict. On the one hand,  the estate tax has an unlimited spousal exemption, which means married couples can exempt twice as much from the estate tax as unmarried ones. On the other hand, if an increase in married couples led to an increase in children (an thus an increase in targets for inheritance), estate tax revenues would probably rise.

Again, there are obviously more important issues at stake in the gay marriage debate. But I think this revenue stuff is pretty interesting.

Lousy marriage ban via Flickr user ProComKelly

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Conor Clarke is the editor, with Michael Kinsley, of Creative Capitalism. He was previously a fellow at The Atlantic and an editor at The Guardian. More

Conor Clarke is the editor, with Michael Kinsley, of Creative Capitalism, an economics blog that was recently published in book form by Simon and Schuster. He was previously a fellow at The Atlantic and an editor at The Guardian. He is also on Twitter.

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