The next stage of big government expansion, however, is likely to be difficult to unwind. Whatever form the stimulus package takes, the fact is that millions of individuals and businesses will become largely dependent on government funds and programs for their well-being virtually overnight. That dependency will be much harder to upend, for obvious reasons. Withdraw the support too soon, and people’s lives are undone. Keep it too long, and they get used to the protections and support and are less likely to want to go back to the risks that markets and self-reliance bring.
It is imperative, then, that Congress and the administration get the balance right as they craft the bailouts that are soon to come. That means making it clear that this aid is temporary and will expire when the public health threat evaporates. Putting clear, objective measures into any bailouts or subsidies will send the right message that we will return to a market-based economy once the danger passes.
It is also crucial to make clear that this unprecedented aid is tied to the public nature of the problem. The economy will be pushed into recession because of our collective decision to place the public’s health over its wealth. As noted earlier, protecting public health is one of the most basic functions any legitimate government has; it is as central as protecting public security from threats foreign and domestic. The right to life comes before the right to liberty, which is why people are always willing to forgo the latter to secure the former.
There will surely be some who, after the crisis passes, will use a successful government intervention to argue for a broader expansion of government power per se. They will say the success of a response to this crisis shows how benign government power is and how much better off we would be if only we would use it more broadly. Expect this argument to be especially strong with climate-change activists who would dearly love an expert-driven push to revamp the U.S. economy in ways they desire.
Fighting this tendency after the crisis will be much harder if the message isn’t clear now. The government’s soon-to-be massive intervention in our economy is not a case of government knows best. It’s a case of “we broke it, we’ll fix it.” It is a government-led cure to a government-caused harm. This aid would not be needed if it were not the price of the public decision to save lives first.
Free-market advocates will have other challenges after this intervention. Globalization exposes the entire world to diseases that come from regions with less developed health systems or less competent public health regimes. It’s an unavoidable fact that the coronavirus arose in China, where the Communist government suppressed information about the disease at home and abroad. Nationalists will rightly ask whether the risks to global public health are worth the economic benefits that come from free trade with such nations.
The ballooning of the federal debt also puts tax increases squarely on the table. The United States was already facing difficult economic questions about its chronic, huge budget deficits. The response to this crisis will surely add $1 trillion to $2 trillion in added debt, and that’s assuming the economy recovers speedily. Expect budget solvency to become more politically popular after recovery, and there’s no politically possible path to solvency that does not involve significant tax hikes.
People always want more of the same after a successful government action. That was true after Franklin D. Roosevelt’s fight against the Great Depression, and it was true after Ronald Reagan’s fight against stagflation. Successfully fighting the pandemic will legitimize further public interventions in the global market economy for years to come.
President Bill Clinton famously said “the era of big government is over.” But as baseball great Yogi Berra reminds us, “it ain’t over until it’s over.” The era of big government isn’t over; the threat is that it may have barely even begun.