The Return of Big Government
A bulked-up uncle Sam is coming back to deal with housing, healthcare, Social Security, and more
Here's a little straight talk: Whether you pull the lever (or fill in the oval or touch the screen) for Hillary Clinton or Barack Obama or even John McCain in November, you're probably still going to end up in 2009 with a push for Big Government of the sort not seen in a generation. More taxes. More regulation. More spending. "It's going to be like watching That '70s Show," says Daniel Clifton, political analyst at Strategas Research Partners, which provides research to institutional investors.
Certainly there are some gaping policy differences between the White House contenders that will determine just how big Big Government gets. Both Clinton and Obama want to make national health plans available to all—partially paid for by rolling back the 2001 and 2003 Bush tax cuts for wealthier Americans. McCain prefers a more market-driven approach and wants to keep all the tax cuts on income and investments.
But all three candidates are in favor of a "cap and trade" regulatory system to reduce carbon emissions suspected of causing global warming and to nudge the economy toward energy independence. It's an approach that could serve as a de facto $100 billion-a-year tax, since companies having trouble meeting government limits may be forced to bid for pricey carbon permits. And all three candidates will have to confront a Social Security system whose cash flow turns negative in 2017. Almost any politically feasible compromise would require higher payroll taxes—an option McCain says he's steadfastly against—as part of the mix. And it would be tough for any politician to ignore America's rickety infrastructure, which may require a nearly $2 trillion overhaul. "We're talking about government playing a different role than it has over the past decade or two," says analyst Sherle Schwenninger of the New America Foundation, a centrist think tank.
The return of Big Government? The smart-aleck response here would be something like "Really? I didn't know it ever left." And there's some truth to that view. Even though Americans have elected a generation of political leaders espousing the wonder-working power of free markets, the United States has never come close to resembling a libertarian fantasyland. Social Security and Medicare are still here gobbling up more and more of the budget. Two federal executive departments have been added—Homeland Security and Veterans Affairs—with current budgets of over $100 billion a year. The idea of a flat tax is coming close to joining the gold standard in public-policy purgatory. And despite dozens of cable channels devoted to kids and education, Uncle Sam still subsidizes Bert and Ernie.
Yet it's undeniable that America experienced an economic and political revolution that saw voters push back hard against the high spending, confiscatory tax rates, and heavy regulation that were the negative legacies of FDR's New Deal and LBJ's Great Society, programs that by the late 1970s had left the U.S. economy caught in a stagflationary trap. "Government is not the solution," President Reagan declared in 1981, and most Americans seemed to agree. Top income tax rates fell from 70 percent to 28 percent, and spending not tied to either mandatory entitlements or smashing the "evil empire" fell by 1.3 percent a year under Reagan.
By 1996, even Democrats were preaching the small-is-beautiful gospel. That's when President Clinton declared in his State of the Union address that "the era of big government is over." By 2000, government spending had fallen to 18.4 percent of gross domestic product, down from 23.5 percent in 1983. That was its lowest level since 1966, a year when America chose both guns and butter in the simultaneous ramping up of the Great Society and the Vietnam War.
But more and more, it seems as if the end days of the 20th century were the high-water mark for America's movement toward freer markets and smaller government. After all, it is the current president, a self-described conservative Republican, who created—in the prescription drug benefit—the first new entitlement program since Medicare; signed the expansive Sarbanes-Oxley financial regulation act, much loathed by Wall Street; and has presided over the fastest growth rate of spending in a generation. President Bush also offered up the first $2 trillion and $3 trillion annual budgets during his two terms. "The Bush administration has been a disaster for limited government," says Nick Gillespie, the former editor-in-chief of Reason, a magazine of libertarian thought.
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Reader Comments
Mandy Cat
For the past two decades Americans have been lectured about the miraculous ability of the free market to solve all life's problems. We were going to trade health care, consumer rights and environmental protections (oh, only in the short run of course; it would all come out right in the end) so that the U.S. economy could flourish unhampered by any pesky oversight.
Well, here we are in 2008. Where do we begin: health insurance more difficult to get than ever, polluted water supplies, dirtier air, a compromised food chain, lead tainted toys, financial institutions run like casinos with rigged roulette tables, credit card operations run like Mafia extortion schemes, highways and bridges crumbling, unsafe airplanes whose maintenance has been outsourced to third world countries flying overhead ... Oh, and the economy itself is headed for the dumpster.
One of the key tenets of the free market system is supposed to be the connection between risk and reward. What we have here is a system where 90% of the rewards go to 2% of the populace and 100% of the risk is being assumed by everyone else.
The Return of Big Government
So the editors at US News got together with their buddies in the rest of the media and declared Big Government is back. Not yet! Maybe they need to talk to us bitter Middle Americans who have turned to religion and guns. Big Government will come back only if the Democrats get control the House, Senate, and the Presidency. God knows, Pelosi and Reid are peddling hard as they can. Raising taxes and spending, as both Hillary and Barak want to do, is no way to grow the economy.
Jobs are created in the private sector; growing Government is not the answer. Pass the Fair Tax to grow the economy (with jobs returning to America) and Government revenues will take care of themselves. Cut spending, not my paycheck.
Big Gov. Solves Problems?
If big government solves problems, why has every experiment in big government always met failure? (Soviet Union, Nazi Germany, Roman Empire), now the United States is doomed to failure as well if you look at the statistics every program run by the government is currently failing----Social Security is broke, Medicare is broke, the military is being broken with it being spread out so thinly, our currency is worthless compared with the currency when it was backed by gold, gasoline is up to over 3.50 per gallon and going ever higher due to inflation which is caused by the Federal Reserve printing more money and expecting the same value with the old currency. What we need is for government to get out of the way and get back to following the constitution like they swear to do when they take office and then let private industry come in and solve the problems that big government has created. If we do this now maybe we can salvage what little value that is left of the American ideal that our fore fathers gave us. Of course if everyone still expects government to solve the problems, then everyone will still be trying to live off everyone else with taxes being taken from all and given to a very few.
I was hoping in the 90's for the United States to wake up as I did and hopefully start cutting government, but so far it hasn't happened, if government keeps growing like it is now, it will consume everything the private sector has to offer by 2020, and after taxes are 100% then where do we go for more revenue? I know create more worthless money with the printing presses so everyone will be poor.
This is what we have to look forward to with either Hillary, Obama, or McCain in, too bad Paul isn't the nominee, at least he had a plan to get rid of the IRS, the Federal Reserve, and get government back on a balanced budget with much less taxes, I guess we Americans will remain stupid and keep voting for ever bigger government. What is the definition of ignorance? (Doing the same thing over and over again and expecting a different result because we just didn't do it big enough yet!!!!)
The Return of Big Government
As David Walker states, we're in a fiscal hole and it is now essential that we stop digging, which I suggest should include the following:
1. Cap spending by the federal government at its present level. Come hell or high water, the federal budget should remain level for the next five years
2. Stop spending money that we do not have, starting with the annual borrowing to pay for the war in Iraq. That virtually the entire cost of the war is being financed by borrowing that will have to be repaid by our children and grandchidren is unconscionable. So give the Iraquis a date certain when they must start picking up the tab for our presence there. According to recent reports of their annual oil revenues, they can well afford to do so.
3. Put in place the universal health care program that is most affordable. According to Jane Bryant Quinn, it is the single payer plan, which she stated in a recent article would cost no more than is now spent on health care in this country. If the new administration or the Congress can come up with a more economical and equally comprehensive plan, fine.
4.Instead of continuing to kick the can down the road, the next President, in concert with the Congress, should create a bipartisan commission to provide us the best possible approach to addressing the future costs of Social Security and Medicare. Unfortuantely, it will no doubt result in the commission prescribing some bitter pills. But better to take our medicine now than later (and even risk the possibility of a complete financial collapse along the way).
5. The next President should, by executive order, create a commission similar to the Hoover Commission of some 60 years ago to go through the federal bureaucracy with a fine tooth comb to identify waste and inefficiency, of which I am sure there is plenty. It should be bipatisan in makeup and be staffed by competent professional administrators from the public and private sectors. All of its staff reports should be immediately made public to assure their complete consideration.
In summary, let's start running the federal government in a bussinesslike way, from its broadest perspective right down to the most minute detail.
Rod Terry
Savannah, Georgia
Big Government
If the Democrats retake the White House, they should look into the practices of the Republicans during their 8-year reign. This administration's sole purpose was to line the pockets of its cronies and lobbyists in the oil and medical business.
There is so much "stealing" going on in the Iraq confrontation and the new Medicare program that, if it were stopped, I'm sure the U.S. would be able to balance its budget immediately.
How To Reduce The Size of Government/Big L.O.'s Like Ted Turner? Use The Land Value Tax/Land Value Capture System
If you DO REALLY WANT to reduce the size of government, FIRST, DEMAND that ALL governmd business data bases, and information be Eliminated!!! Second, DEMAND your federal, state, and local political, social, and business,leaders and religious leaders GET WITH THE PROGRAM and support YOU in introducing and proposing a federal, state, and local Land Value Tax/Land Value Capture Laws, and BEFORE that can happen citizen's MUST ALSO DEMAND, BOTH a Survey-Study of ALL in the U.S., ALL 50 state's and U.S. Territories, and an LVT/LVC Public Pilot Project, at both the state and local levels of government, and actually see land values rise as the tax is collected and the land value captured. A typical, average vacant lot is actually under taxed by $30 to $50,000 Dollars, thus theivery takes place by absentee land-owners,who monopolize/speculate, and land bank at great cost to both the public and government. People like Ted Turner, typically are over greedy and realize the Great harm they are causing by owning MORE land than they need!!! Also, the Mayor of Chocago has Tax Increment Finance District's, about 156, and maybe more TOTALLING $500 Million Dollars, according to Mr. Ben Joravskyof the local free paper, the Chicago Reader. The Mayor of Chicago MUST change that to an LVT/LVC ordinance and he too MUST order a Survey-Study of ALL land both vacant and occupied!!! ALL mayor's MUST DO this it's URGENT and VITAL!!!!!
All this talk of big government
And not ONE mention of Ron Paul? He's still running and anyone with a brain that is following the elections know that too. But still, no one is willing to mention that HE will not bring big government back. You complain of big government but won't give the candidate who wants to bring small government the time of day.
Three Stooges
It's too bad that the cover page does not accompany this article. The photo was worth 1000 words: head shots of Obama, Clinton and McCain over the words "BIG GOVERNMENT." When it arrived, I showed it to my husband who, seeing it from across the room, asked, "is that the three stooges?"
I'm tired of every election coming down to voting AGAINST the other candidate instead of being motivated to vote FOR a candidate. This year, an alternative to this madness remains in the race, and if conflict is good for ratings and sales, why not cover the one man who's comments and principles are 180 degrees from the three we hear about ad nauseam? It makes me wonder if the media are lazy, incompetent, or just incapable of understanding anything other than a sound bite.
Big Government
If Americans are ready to allow government a larger role in their lives, they should also be prepared for the consequences. Social security has a demographic time bomb ticking; government has refused to address the problem. Medicare continues to struggle with access to care and cost.
The government continues to tell us inflation is low (4-5% annually), while knowledgeable experts are estimating it closer to 7-11% annually. Why would the government understate inflation? Because it would require larger cost of living adjustments for social security, adding to the problem.
Energy costs continue to escalate, but the government has refused to allow access to our own energy deposits. The congress should be discussing nuclear energy and drilling in ANWR as part of national energy policy, but no. How high will energy costs go before the voter requires action?
It appears there are many problems already, none of which the government has come close to solving. How can any serious person expect the government to really address additional problems.
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Collapsed Social Security System.
Unfortunately two extremisied thought is going on. As health system ;It could be possible to ensure a free more qualified health service for everyone by the new type of private sector. As housing system; The real ownerships of the house could be possible under the new system and alsohas no individual risk.--Under the present conditions the global capital can not finance the terrible system- As pension system;The problem is not whether public nor private initiatives. The problem is that the technical continual funding which has to be tolerated in the general system,becouse the pension funding has spesific technics. We are ready for these solutions. It is easy.
Apr 14, 2008 15:46:06 PM [permalink] [report comment]