It was always a bit of a canard. There is no public appetite for a government of pre-New Deal dimensions, nor to ravage the safety net. As a practical matter, a country of more than 300 million people with a globalized economy and multifaceted international threats needs a government of substantially different size and reach than what it required in 1920 or 1960.
The “balanced budget” amendment crowd loved the idea of operating deficit-free but never had the nerve to raise taxes or cut government sufficiently to achieve its desired outcome. It was a convenient talking point, something to get an easy applause line from the base (which, of course, included members of the armed services, Social Security recipients, Veterans Affairs patients, national park visitors, home-buyers with Fannie Mae and Freddie Mac mortgages, depositors in federally insured banks, etc.). Heritage Action, Club for Growth and Cato would cheer them on and give them gold stars on their rating charts (which had to skip over key votes since too many Republicans insisted on voting for fiscally generous legislation)
Ironically, it took a GOP-led Congress and a Republican president following the anti-tax (never raise no matter how much we spend, cut no matter how much revenue we need) to put a stake in the small-government mythology. As soon as the $1.5 trillion tax cut was passed, the arguments for fiscal restraint and specifically for the Budget Control Act of 2011 went out the window. Once the fiscal hawks threw in the towel, arguments that we “could not afford” domestic programs no longer passed the laugh test. Meanwhile, a large contingent of military hawks — faced with growing international threats — said quite plainly that defense was the government’s highest priority, and if cuts elsewhere or even (gasp!) forgoing tax cuts were required, so be it.
That brings us to the budget votes early Friday morning. When the military hawks, the Democrats and the middle-of-the-road conservatives teamed up, with lopsided votes in the Senate (71-28) and House (240-186, with only 67 GOP no votes), the obliteration of small-government dogma was complete. Sorry, but 28 Senate votes and 67 House votes do not make the GOP the party of “small government.”
To recap then, with no public appetite for small government, the domination of the donor and business class (who were the impetus behind tax cuts) and the passage of tax-and-spending measures that unleash a torrent of red ink, the GOP is now firmly committed to very big government. The Democrats are, too, so the debate then boils down to where and how we’re going to spend the money. That’s actually a positive political development, for it enables deal-making (as we saw from the Senate majority and minority) leaders and defangs the extreme-right wing, which can no longer hold the country and Congress hostage.
Democrats, who have been the party of robust, active government are surely the winners here. Having tossed aside fiscal virtue, the GOP is now left only to haggle over the price and the distribution of taxpayers’ money. Democrats, already increasingly internationalist in the face of an “America First” president and hawkish in the face of a pro-Putin one, are more than happy to gain national security credentials by offering up more for defense spending. So everyone is happy, right?
Ah, but the cost. How much debt can we sustain, and how much can we foist off on our children? At some point, the Republicans’ fiscal sloth comes back to haunt them: They have to pay for what they’ve spent. A few months back, Larry Summers and other center-left economists made the case that we need more revenue for the foreseeable future. Paul N. Van de Water wrote:
Spending and revenues will have to grow significantly as a share of the economy in coming years just to enable the federal government to continue carrying out existing functions that the public widely supports. . . . A few basic realities drive this result: the aging of America’s population, health care costs that rise faster than the economy grows (especially as medical advances continue), potential national security threats, current and emerging domestic challenges such as large infrastructure needs that the nation can’t defer indefinitely, and rising debt-service costs. Those factors will boost federal spending by about 2-1/2 percent of gross domestic product (GDP) between now and 2035, we estimate.
And so they argue, not unreasonably, that if we need and want bigger government, we must pay for it — at least part of it. “Given the long-run budgetary pressures due to the aging of the population, rising health care costs, and other factors, tax reform ought to raise revenues to help reduce projected federal deficits and debt. At an absolute minimum, policymakers should draw a bright line and insist that tax reform not lose revenues, either in its first decade or beyond.” Bizarre as it may seem, a fiscally irresponsible tax cut begat a huge spending bill, which eventually will require tax hikes. Democrats calling for taxes to pay for the spending Republicans demand now can rightly claim to be more fiscally serious than Republicans. Combined with the gargantuan gap between rich and poor and the wealth accumulation by the rich, the politically popular solution that Democrats might offer (albeit with some questionable math) is their own balanced budget (or more-balanced budget) with increased taxes on the rich. That is where we may be heading. At least it has the virtue of intellectual honesty: If we want big government, we have to pay for it.