Belmont Club

No way out

The Claremont Institute has a long and informative history of the central issue of in American politics: the size and scope of government. The dry recitation of facts is inexorable. Although it is fashionable to depict politics as a war between welfare state liberals and small government conservatives “the welfare state battle between liberals and conservatives has been as evenly matched as the one at Little Big Horn between Sitting Bull and Custer. Real, per capita federal spending on Human Resources was 15 times greater in 2007 than in 1940.” Human Resources spending is an OMB term for

  • Education, Training, Employment, and Social Services
  • Health (excluding Medicare)
  • Medicare
  • Income Security (excluding Social Security)
  • Social Security
  • Veterans’ Benefits and Services

Author William Voegeli’s tables should hammer the final nails into the coffin of the charge that ‘the War in Iraq bankrupted America’.  Human Resources, not National Defense, has been top dog by a long chalk for decades. And it will get bigger still. Consider this chart.

The size of federal spending has been growing inexorably, under both Republican and Democratic administrations. Often Human Resources spending has grown faster under Republicans than it has with Democrats.  The difference is in the atmospherics. The Republicans have increased the size of government while moaning with regret in the manner of the walruses eating the oysters in Alice in Wonderland. Liberals on the other hand, have rubbed their hands with glee at each expansion. But attitudes aside, both have increased it just the same.

The long political advance of liberalism has coincided with the refusal of any prominent liberal politician or writer to specify or even suggest the welfare state’s ultimate and sufficient size. Instead, liberals have denounced our shockingly insufficient welfare state every year since the beginning of the Progressive era. When Max Sawicky did so in 2004, real, per capita expenditures on Human Resources were more than twice as large as they had been in 1975.

To all intents and purposes, the Big Government faction has won. The only problem is that neither faction — including the liberals — can afford their victory.  “The baby boomers’ retirement will be the best documented, least surprising policy challenge in American history—and still we are not prepared for it. Herb Stein’s Law remains operative, however: if something can’t go on forever, it won’t. Entitlements can’t go on, indefinitely, laying claim to a bigger portion of the federal budget and the GDP. Once the furniture is engulfed in flames we will finally start shopping for fire extinguishers.”

William Voegeli doesn’t believe that any combination of tax cuts or alterations in government spending patterns will change things any time soon.  America is imprisoned by self-created events. About the only thing it can do is make the prison cell a little more comfortable and efficient by curbing the fantasies on each side of the aisle and to concentrate on rejecting obvious imbecilities.

There is a framework, then, for liberals and conservatives to argue about Good Government rather than Big Government. Start by rejecting all magic beans theories of public finance, acknowledging that the welfare state’s expenditures and revenues cannot be massively, permanently out of balance. Both sides could accept the corresponding idea that the welfare state, like any utility-maximizing enterprise, has finite resources at its disposal. A well-designed and well-run welfare state will direct them to where they can do the most good and assist those people who need help most urgently. The corollary principle is that the welfare state should stop using its resources in ways that are not the best and highest, and reduce, reshape, or eliminate programs to help people who don’t need it.

Voegeli’s presentation is brilliant and suffers only from the defect of refusing to follow its own logic. “If something can’t go on forever, it won’t.” Nothing in the prescription to focus on Good Government now that Big Government is a fait accompli addresses the issue of how to sustain it. If nothing works to slow it down it will simply expand like a bubble until reality knocks the pins out from under it. Spending on Human Resources must ultimately reach some limit imposed by demographics and the growth of the productive part of the economy. Once it passes that point, gravity takes over. As Freddie Mac and Fannie Mae have just shown, there is no such thing as “too big to fail”.

It’s tempting to confuse the futility of political debate with the notion that nothing can be changed. Big government is only 60 years old. It had a beginning and it’s hard to hard to argue, even from its size, that it has no natural end. Within a given election cycle the debate about the size of government will revolve around the existence and coverage of particular programs. But over the longer period the shape of the outcome will be determined largely by technology, economics and demographics. My guess is that if it is useless to discuss how to reduce the size of government, it may be useful to speculate on what to do if it crashes.

Impossible? No. Unforseeable, maybe.

And if nothing works then there’s this special offer featured at Tigerhawk’s. But what happens if America collapses and Canada has to defend the Western Hemisphere?