The American Enterprise
by Christopher DeMuth
Government bloat 1980-2005
Well, what difference does all of this make? Why in the age of the Internet, globalization, and al-Qaeda should we attend fastidiously to a document written more than two centuries ago, in radically different circumstances, that itself contains many artful fudges and reflects many political compromises on issues that long ago lost their salience? Here are three reasons why we should be much more fastidious than we are.
First, the American political order is very old and very successful, and tolerable Constitutional adherence has already seen us through many epochs and crises. Have you heard the joke about the student who went to the reference librarian and asked for a copy of the French Constitution? “I’m sorry,” the librarian replied, “we don’t keep periodicals here.” Ours is the oldest written Constitution, and our nation, for all of its problems and shortcomings, has been an unprecedented success. For most of our 216 years, other countries have been places of continuous political upheaval and oppression, punctuated by periods of mass violence. Progress and stability are cardinal virtues where political systems are concerned; when you find yourself in possession of them, hold fast to your institutional inheritance.
Second, the principle of limited government is not a bit less urgent today than it was two centuries ago. It has now been 25 years since Ronald Reagan arrived in Washington announcing his intention to “check and reverse the growth of government.” That quarter century has been governed mainly by Republican Presidents, and increasingly by Republican legislatures, and even the one Democratic President declared that “the era of big government is over.” Yet the federal government’s annual domestic spending doubled during the period, from about $900 billion to about $1.8 trillion (in 2000 dollars). Today the federal government’s fiscal imbalance—the excess of projected future expenditures over projected future revenues—is close to $70 trillion. About $20 trillion of this enormous sum was tacked on just in 2003, with the addition of a massive, unfunded Medicare entitlement to prescription drug benefits. Increasing taxes to pay for our standing policy commitments would move U.S. rates to the levels prevailing in today’s socialist European nations.
In recent years, with the Republicans in charge of both houses of Congress, domestic expenditures (even excluding post–9/11 “homeland security” spending) have been growing faster than during the previous two decades of divided government, and the incidence of pork-barrel projects has reached an all-time high. The 2001-2005 period marks the transformation of the Republican Party from its traditional role as a win-or-lose guardian of limited government to that of a majority governing party just as comfortable with big government as the Democrats, only with different spending priorities.
Perhaps the best illustration of this transformation is the Department of Education. Following the Department’s creation under President Jimmy Carter in 1980, Republican leaders routinely called for its abolition, and the 1996 GOP platform did so explicitly on Constitutional grounds. Then, in 2000, the party dropped its platform pledge. And by 2004 the Bush administration was campaigning for re-election boasting of a “huge, historic, gargantuan increase in federal education spending.” The claim was correct: the Department’s annual budget grew 83 percent after inflation during President Bush’s first term, by far the greatest rate of increase since its creation.
And the expenditure and debt figures offered here seriously understate the extent of recent government growth. That is because they ignore the burst of regulations whose costs are borne largely by the private sector. As with domestic spending, off-budget regulatory growth has been particularly pronounced in the recent years of unified Republican government. Examples include the institution of national “corporate governance” and accounting regulation under the Sarbanes-Oxley Act, national school testing requirements under the No Child Left Behind Act, the Securities and Exchange Commission’s issuance of a profusion of new rules throughout the financial services sector, the Department of Justice’s use of aggressive new legal theories to prosecute “economic crimes” and establish new forms of federal crime, and the national regulatory regimes established by state attorney general litigation described earlier. In 2005, political leaders of both parties proposed national price controls for gasoline, heating oil and gas, and pharmaceuticals. The bipartisan deregulation movement of the late 1970s and ’80s has been supplanted by new, equally bipartisan enthusiasm for regulation.
These developments have not come without resistance, but the nature and futility of that resistance is highly instructive. With the decline in Constitutional adherence, political leaders (mainly Republican) have been searching for several decades now for substitute, sub-Constitutional devices for curbing government growth. During President Reagan’s first term, I participated in lively White House debates where some promoted a “starve the beast” strategy of continuous tax reductions (reasoning that swelling government deficits would produce pressure for spending restraint), while others favored a “serve the check” strategy of matching taxes to current spending (on the theory that charging voters the full costs of government, rather than bucking some of them to our grandchildren through borrowing, would create a constituency for spending control). Reagan came down unhesitatingly for tax reductions, with auspicious political and economic results that made tax cutting the new mantra among all practicing Republicans.
In the Congress, Senator Phil Gramm devoted much of his public career to devising budget rules that would oblige his colleagues to make difficult spending choices they would rather avoid. More recently, House Speaker Newt Gingrich’s theme of an “opportunity society” and President George W. Bush’s theme of an “ownership society” have aimed to popularize the personal benefits of shifting insurance and subsidy programs from government administration to private institutions and markets. But these and other expedients have had little durable effect. It seems that, when accepted external constraints on government action are abandoned, there is no solution within the political system to the problem of government’s turning “every contingency into an excuse for enhancing power in itself.”