Scott Sumner  

Will the GOP once again opt for big government?

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The Republicans in Congress are facing an interesting decision on the budget. Here is the New York Times:

WASHINGTON -- The congressional push this week to secure the first Republican budget plan in nearly a decade is revealing a chasm between fiscal hawks determined to maintain strict spending caps and defense hawks who are threatening to derail any budget that does not ensure an increase for the military.

"This is a war within the Republican Party," said Senator Lindsey Graham, Republican of South Carolina, who has vowed to oppose a final budget that does not ensure more military spending. "You can shade it any way you want, but this is war."

The divisions will be laid bare Tuesday when congressional leaders unveil blueprints that hew to spending limits imposed by the budget battles of 2011.

Unlike legislation, the spending plan Republicans will be creating this week requires only a majority vote in both the House and Senate, cannot be blocked by a filibuster and is not subject to presidential approval or veto.

. . .

The budget plans that will be drafted Wednesday by the House and Senate Budget Committees are more symbol than substance. They do set overall spending levels for domestic and defense programs.

What they cannot do is overturn a law signed by the president, the Budget Control Act of 2011, which imposed a decade's worth of spending caps and across-the-board spending cuts known as sequestration. That will take yet another act by Congress, which defense hawks are trying to craft now, with the help of Democrats.

For Republican leaders, orderly passage of a budget is imperative. Republicans harangued Senate Democrats for their repeated failure to pass budgets when they controlled the chamber.

And they have promised conservative voters they will make good on their promises to fundamentally remake the federal government into a smaller, more limited force -- with a budget that balances in 10 years.

"This is not only possible. It's doable," Senator Mike Enzi of Wyoming, the Budget Committee chairman, said last week.

It will not be easy. President Obama has already proposed raising spending caps in the fiscal year that begins this October by nearly $80 billion, half for defense, half for domestic programs. Democrats in the House and Senate will offer no help to Republican leaders as they try to assemble a majority to approve plans that will be far more austere.

Senator John McCain, Republican of Arizona and chairman of the Senate Armed Services Committee, and Representative Mac Thornberry, Republican of Texas and chairman of the House Armed Services Committee, have promised a fight.


People often tell me that I should be a Republican. After all, I believe in small government. I point out that the GOP is pro-war on drugs, pro-NSA spying, pro-massive spending on border control, and pro-military adventurism. The response is that the Dems also favor some of that, and in any case the GOP actually wants less spending. I point out that when the GOP finally grabbed all three branches of government for the first time in my life, they immediately proceeded to increase Federal spending as a share of GDP, with a massive new entitlement program and greatly increased Federal involvement in education. They respond, "that was the old GOP, the new party has repudiated big government."

I doubt it, but we shall see . . .

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COMMENTS (16 to date)
Brian Donohue writes:

"I point out that when the GOP finally grabbed all three branches of government for the first time in my life, they immediately proceeded to increase Federal spending as a share of GDP, with a massive new entitlement program and greatly increased Federal involvement in education."

Best argument I've seen for Hillary. Gridlock today, gridlock tomorrow, gridlock forever.

TravisV writes:

Prof. Sumner wrote this brilliant comment years ago:

"There are actually two Republican parties in America. One wants to do real deregulation, to actually reduce the role of the government in the economy. The other Republican party (which I fear is the more powerful one) wants to do “deregulation,” to remove all constraints on business, banking, the medical industrial complex, energy, for-profit colleges, etc, so that they can systematically loot the taxpayers by taking advantage of the enormous moral hazard that has seeped into almost all aspects of our modern regulated economy.

The Dems are more likely to want to try to tame the beast, but then keep passing laws that make the economy even more riddled with moral hazard. Not much of a choice these days."

http://www.themoneyillusion.com/?p=8041

mico writes:

Is it worth considering that the US is actually a left-wing country, and that promising bigger government was the only way the Republicans were able to take the legislature at all?

I know it might sound silly, especially to (and from) a European, but consider:

1. Although the Presidency has passed to and fro between Democrats and Republicans, to much fanfare and acrimony, the Congress has been a Democratic lock pretty much ever since the Great Depression. Just look at the data. It became competitive again only with the rise of big government Neo-Conservativism.

2. Although people like Goldwater, Ron Paul, the Tea Party, etc. do, err, exist, which is more than can be said for most countries, these are marginal figures and movements with pretty much zero elite support and far from a majority of popular support. However loud it may be, this is a disgruntled minority, not the true representatives of the American national character.

3. Although the US seems to have smaller social programmes that many other Western countries, this is mostly due to incompetence rather than intent. In the one place US coverage is categorically inferior to that of other Western countries - healthcare - the US government still has per capita spending comparable to European countries and higher than Japan or Singapore. The federal system and separation of powers just means it is spent so poorly that there are large numbers of uninsured anyway. Federalism also means that concentrated areas of rich people can to a limited extent protect themselves from transfers that are much easier to effect in unitary countries like the UK or Sweden.

Eighty-five years later, US conservatives are still waiting to reverse the New Deal any day now. Why not just accept that the New Deal never stopped being the governing consensus of the US and isn't going to stop any time soon? Republicans might well be better than Democrats, even if only to the extent that those sitting at the back of the train arrive at the station last.

Brian Donohue writes:

@mico,

a couple comments.

1. Democrats had a lock on Congress between 1948 and 1982. Since then, it's been pretty even.

2. Scott's second chart is the key. Gov't spending increased inexorably from the 1950s to 1982, exceeding 35%. Since then, America has been more or less successful in containing Leviathan (now below 34%). It's a helluva fight, especially when Republicans squander opportunities like 2000.

People like Milton Friedman and Ronald Reagan (Goldwater's echo) have been key to achieving this stalemate.

Some European countries have been successful at reducing the size of government, but generally from a larger starting point.

mico writes:

1. True, and I point that out in my own post, but this coincides with what Sumner described as big government Republicanism. If the Republicans go libertarian, will they just lose the Congress and slide back into irrelevance? Is the real problem the Republicans or the electorate?

2. Yet not as successful as countries like Sweden which significantly reduced state spending as a percentage of GDP in this time. As Tino Sanandaji points out, it's more accurate to say that since the Thatcher-Reagan era Western countries have converged on a consensus position of about 40% of GDP state spending, rather than that most Western countries reduced their spending.

(In the interests of honesty, I will point that US state spending as a percentage of GDP actually did drop under the Gingrich Republican Congress, and if Sumner had posted this at that time I would not have been able to make point 2 (although he also would not have been able to have accused the Republicans of being pro-big government). But if either the current level of spending or the 1995 level was a blip, which was it?)

AS writes:

@mico: you raise a great point. In equilibrium, elected politicians will just be representative of the median voter. Both parties will rush to the median. The median voter in the US tends to favor redistribution (and hence big government) because he will be a net recipient. Just look at this chart posted by Mankiw: http://gregmankiw.blogspot.com/2014/12/who-pays-for-government.html The middle quintile gets a 113% return on their tax dollars.

Couple that with the anti-market biases discovered by Bryan Caplan, and it's pretty obvious that the root problem is the preferences of the electorate, not any particular party. As long as big government is popular, any electable politician will grow government.

Floccina writes:

Where is a classical liberal to turn?

IMHO the problem is either corruption or ignorance, more likely corruption. It looks to me like republican politicians take advantage of and scam republican voters and Democrat politicians take advantage of and scam Democrat voters.

Dan W. writes:

All good points and I hope to add another. In the past decade or so the Republican and Democratic leadership have agreed on an approach to governance that has neutered the role of representative government. The administrative state now performs much of the policy making in the country, absent any real oversight or accountability. Furthermore, the legislative process has all but been corrupted so bills are no longer debated but simply manufactured in back rooms and then voted on in assembly, where the vote is almost entirely a partisan affair. The more the politicians talk about transparency the less of it there is. I think we know why.

Floccina writes:

Addendum to my above comment IMHO it is the hidden taxes that make spending hard to reduce. To many it looks like something for nothing.
For example many USA voters think they pay 7.5 of there income for SS and medicare but this is not so if you consider matching FICA! Many people think you can tax the Warren Buffets to provide for the rest of us but if you consider consumption as Scott has pointed out it ain't so.

vikingvista writes:
Not much of a choice these days.


Or any days. A good reason to not advocate government policy. If you are in a position of influence, probably the most you can do to improve the social order is to expose to folly of existing policies why advocating good individual behaviors. Hopefully something good will emerge from the cumulative effect of such efforts.

Richard A. writes:

Republicans are also bad when it comes to agriculture subsidies. Too many Republicans in power are pro business--not pro market.

Andrew_FL writes:

Man, the one time I actually wish I could disagree with you, I'm afraid you're right. How depressing.

perfectlyGoodInk writes:

I think one problem is that, in a two-party system, the party that wins power controls the government and thus faces a strong incentive to increase its power.

I think if you had a multi-party system in a presidential system (i.e., no parliamentary governing coalition), the fiscal conservative social liberals could and would vote with fiscally conservative social conservatives against increasing government. In other words, you could have a majority of the legislature in favor of decreasing government who do not have control of that government.

Of course, then you'd face the other big problem that most of this country isn't very libertarian.

E. Harding writes:

Those graphs (especially the latter) look suspiciously like a graph of the unemployment rate. I doubt the GOP can change government spending as a percentage of GDP much if the denominator keeps growing weakly. Also, government civilian employment as a percentage of total employment peaked in 1975 and seems to be on a secular decline, after very steep growth from 1948 to 1971. This has further kept U.S. government spending from ascending into Sweden territory. So endless government is by no means an inevitability, especially under continued gridlock. Also, the GOP really has been the party of more-balanced budgets in recent decades, but only when it is not in the White House.

Scott Sumner writes:

Mico, I'm very dubious of the concept of "public opinion," as it is so strongly affected by framing affects.

I'm interested in what GOP politicians favor.

Everyone, Lots of good comments, thanks.

Alex writes:

The key is growth. Growing at 4% or at 2% makes all the difference (Compounding interest)

In order to have growth you need tax reform and regulatory reform. (Slash the tax code and the regulations in half)

Spending is important of course, but the key is growth.

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