Why Big Government Is Back in Fashion

How times change. Today, Barack Obama is attempting to bring about the biggest surge in government activism since the Great Society of Lyndon Johnson and the New Deal of Franklin Roosevelt, and most Americans are welcoming the shift.

The financial crisis has convinced the new president—along with many economists and most Americans—that only government has the wherewithal to lift the economy out of the ditch. Even former President George W. Bush, a self-styled free marketer, opted for a $700 billion bailout when the financial collapse first hit last fall. Now, Obama is pushing for a bigger package costing at least $819 billion.

All of this demonstrates the pendulum effect in American politics: the fact that public opinion swings back and forth between less government and more government and that the pendulum now is swinging Washington's way. About 58 percent of Americans favor increased government spending to stimulate the economy, according to the latest CNN/Opinion Research Corp. poll released January 18. A new Diageo/Hotline poll shows that 66 percent of Americans support the Obama plan, and 65 percent are confident that it "will be effective in turning around the economy." The Gallup Poll finds a lower level of support but still a majority of 52 percent favoring Congress passing the Obama plan, while only 37 percent oppose it.

"Reagan conservatism is at an end," says presidential historian Robert Dallek, referring to Reagan's philosophy of slowing the growth of government spending and reducing the role of Washington in American life. Dallek predicts "a new era of progressive federal activism." This would mean more regulation of the economy, especially the financial sectors that helped cause the current meltdown. The approach of the Federal Reserve already is to "flood the country with money to combat deflation," says Dallek. This risks reigniting inflation in the future, but for now, the urgent priority is on using government to revive the economy and preserve jobs.

Obama is capitalizing on those sentiments in arguing for his big-government plan. "In short," Obama said in a radio and video address on January 24, "if we do not act boldly and swiftly, a bad situation could become dramatically worse."

To be fair, it's also important to understand that Obama and his advisers are promising to carefully keep track of federal spending and to eliminate programs that don't work or that waste money. But the administration's proposals to expand the role of the federal government are gargantuan. First and foremost, Obama's more than $800 billion American Reinvestment and Recovery Plan could quite possibly rise to $1 trillion when Congress gets finished adding to it. The measure is aimed at creating or saving 4 million jobs and, in a bid to jump-start the economy, calls for spending at least 75 percent of the funds approved within 18 months.

Among the programs included in the package are renovating 10,000 public schools and creating a $2,500 tax credit to make college more affordable. It would start 1,300 wastewater projects and repair and modernize thousands of miles of roads. It would cut taxes by $1,000 for 95 percent of workers and their families and increase food stamp benefits for more than 30 million Americans. It would guarantee healthcare coverage for 8.5 million jobless people who risk losing their health insurance and increase federal aid to protect 20 million people at risk of losing their Medicaid eligibility. On the environmental front, it would double renewable-energy generating capacity over three years by an amount equal to that needed to power 6 million homes and would weatherize at least 2 million homes and 75 percent of federal buildings.

Many Republicans in Congress remain skeptical, arguing that the plan contains too much wasteful spending and won't provide immediate relief to the economy. The GOP generally prefers tax cuts rather than more spending. And even some Obama backers are concerned about the new direction. "Government is getting bigger at a rate somewhere between astonishing and alarming, with no end in sight," says political scientist Bill Galston, a former White House adviser to former President Bill Clinton.

But that's the world today—a return to big government, with a popular new president leading the charge.

• Read more about economic stimulus
• Read more about the Obama administration
• Read Kenneth T. Walsh's Presidency column