Big Government Conservatism
If you hop over to the Cato blog, you can find a bunch of posts stating that the reason Republicans have lost ground in 2006 and 2008 is that they’ve permitted too much spending. What you don’t see is much evidence to support this argument, or any serious consideration of the possibility that the GOP became more spending-tolerant (approving, e.g., the 2003 Medicare bill) and the Democratic Party won elections for the same underlying cause — public opinion that demands more government services.
I see exit poll data showing that 60 percent of the public was worried about rising health care costs and that 66 percent of those people backed Barack Obama. Presumably not because they thought the Republicans had been insufficiently vigilant about blocking pork barrel spending (it was John McCain after all) but because they thought Obama’s big government health plan spoke to their concerns while McCain’s small government alternative didn’t. I see that 50 percent of voters said they’re “very worried” about economic conditions and 59 percent of them voted for Obama. I don’t see in there any data whatsoever to back up the idea that there was an anti-spending backlash against Republicans that provoked people to vote Democratic, nor do I see evidence of a Libertarian Party surge or any such thing. I see people worried about economic conditions and rising health care costs who felt that McCain’s campaign — which made a spending freeze and a porkbusting crusade the center of its efforts — wasn’t speaking to those problems.
45 Responses to “Big Government Conservatism”
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November 5th, 2008 at 12:22 pm
Agreed. Libertarians need to realize that smaller government spending just isn’t going to happen. They should be going after their piece of the ever growing government pie like everyone else is. Instead of trying to defeat government expansions in health care, stimulus, etc. — which will be futile — they should work to direct government monies to themselves the same way other citizens do.
November 5th, 2008 at 12:26 pm
“they should work to direct government monies to themselves the same way other citizens do.”
oh, they do. and always have.
cato has never minded rich people *getting more* from the government.
they’ve just fought to make sure that rich people *pay less* to the government.
roughly 10.5 trillion less, at last count.
November 5th, 2008 at 12:26 pm
O/T: Everyone do yourselves a favor and pull up Condoleeza Rice’s statement at the State Dept. briefing just minutes ago. They’ll probably replay it on CNN too. Just sit back and get a load of it. She’s absolutely beaming, and almost despite herself though I don’t want to say she shouldn’t be proud regardless of party. It’s something to behold. Makes you really wonder who she voted for.
November 5th, 2008 at 12:27 pm
Just a retort from Blue Dog/libertarian Democrat land, since I’m feeling quite pleased today:
Robert Peston lists some of President Obama’s more liberal proposals on BBC, but wonders whether they will be put into practice given the current fiscal situation:
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/11/obama_shackled_by_debt.html
“The point is that he is inheriting an economic estate that has been pillaged by his predecessor.
US public sector debt is well over $10,000bn, equivalent to around 80% of US economic output (roughly double the share of GDP taken by our government’s debt – though most economists would say that the Treasury significantly understates the British national debt).
And the rising burden of bailing out America’s battered banks and financial institutions means that US government debt is on a strong rising trend.
That worries foreign investors who are supposed to buy all this debt in the form of US Treasuries.
If these investors see no realistic prospect of Obama cutting public borrowing on any meaningful time horizon, that would put further downward pressure on the dollar against the currencies of China, Japan and the eurozone (though probably not against sterling, since the UK is perceived to have too many structural weaknesses in common with the US).
Which perhaps would be no bad thing for US exporters. But it would be a problem if it led to a painful rise in the cost for Obama’s administration of servicing all that debt.
The US government, US banks, US consumers and US business all remains precariously dependent on borrowing from Asia and the Middle East.
The urgent need for the US to become more financially self-sufficient, for its economy and the global economy to be better balanced, may conflict with Obama’s determination to spend in order to make his country (in his view) a fairer society.”
I agree with his basic point, but not about making our country a fairer society. There are many things we can still do in this tough environment to help out on that score. However, I too doubt that many of these proposals will be enacted.
Anyway, I predict that President Obama will, once again, please me more than many liberals on economics. On other issues, we’re in general agreement, and might take the same hits.
November 5th, 2008 at 12:28 pm
I think your analysis is correct. It is wishful thinking to believe libertarian influence will significantly increase in the Republican Party. Voters want politicians to do things; they want them to fix problems. Fixing problems is exactly what libertarians think government should generally be doing less of. Libertarians aren’t interested in transferring wealth from party A to party B, which is a large part of what politics is about.
Arguments about efficiency just don’t excite people all that much. Unless libertarians can build a popular positive social message around freedom and personal responsibility (which are ideas that can resonate in America), Libertarians will remain a relatively unimportant (and frustrated) group.
November 5th, 2008 at 12:30 pm
I think it is a more complicated situation than either Cato or Matt is allowing. To oversimplify a bit myself, the Bush budgets were based on the premise that you could cut taxes and increase spending more less arbitrarily, and somehow things would work out fine. So of course the people enjoyed the increased spending, but they were also conditioned to see the increased spending as painless in terms of taxation.
So that did indeed set up McCain for a fall, since arguing against perceived-as-painless spending was a losing proposition and there was no way he could actually argue for increasing taxes and keep his base. Meanwhile, Obama did more realistically argue for some tax increases, but wisely (or cynically, if you prefer) focused those tax increases on just a small segment of the wealthiest people and entities, and actually offered further tax cuts to most people. So, basically, for 95% of Americans Obama was still promoting the idea of painless spending increases.
Now the thing is that in detail Obama’s budget plan is still unrealistic, even though it was much more realistic than McCain’s. However, in broad strokes it is viable: there is likely lots of room to increase taxes on the wealthiest and increase spending a bit and still bring the long term budget picture into some sort of sanity, all while having a net stimulus effect on the economy. But nonetheless at least in the short term either the tax increases will have to be higher than Obama suggested, or the spending increases will have to be lower, or both–assuming Obama is, in fact, concerned with having a sane budget.
November 5th, 2008 at 12:33 pm
I’m elated that Sen. Obama is our next president and while his election’s significance to race relations in America should not be underestimated or unacknowledged he was not elected because he is African-American (or for any other social indicators ie: young, poorer, looks like most of us) but because his progressive economic views spoke to the concerns of Americans. Let us not be diverted from this election’s core meaning: America leans left.
November 5th, 2008 at 12:37 pm
Matt, remember all those times you castigated the Democrats for being Republican-lite?
Well, I think that Cato, knowingly or not, has a point. If the choice is between two parties that both support massive government, then you might as well go vote for the people who are honest about it and want to make it run well. Why vote Democrat-lite if you can have the real thing?
November 5th, 2008 at 12:38 pm
“the Bush budgets were based on the premise that you could cut taxes and increase spending more less arbitrarily, and somehow things would work out fine”
um, no.
the bush regime was based on the premise that you only have 10 minutes in the bank vault, and you have to loot as much stuff as you possibly can.
if you’ve got some accomplices waiting outside you can hand stuff to—enron, exxon, blackwater, etc.—, then this makes it a bit easier.
and they did pretty well: in eight years, they managed to loot over 5 trillion dollars from ordinary taxpayers. dollars that went out of the pockets of us and our kids, and into the pockets of the wealthy republican base.
and that doesn’t even count the parts of the government that they left in tatters, like fema and justice.
it was never an administration; it was an asset-stripping operation. a very successful one.
and one that was aided and abetted by cato and norquist.
November 5th, 2008 at 12:45 pm
Cato is full of idiots like Will Wilkinson who believes that the prospects for infinite future economic growth are 50-50 or better because of the positive environmental externalities of modern industrial capitalism. Taking what they say over there seriously is an exercise in getting dumber.
November 5th, 2008 at 12:46 pm
Matt has it right. Big government is popular. At least, it’s popular today. When people find out that Obama’s idea of health care reform is to make private health care insurance more expensive, not less, because only when it becomes more expensive will folks choose to move to the subsidized government plan, I think there will be a reaction. Taxes will need to be drastically increased, or health care spending drastically reduced, and since people want health care spending, well, neither one is going to be a popular option.
DTM, you may have noticed a financial crisis, and a Wall Street disaster. Those things will affect tax revenues, both this year, and, if I’m right, going forward. Lots of people were making lots of money systematically underpricing risk, and now they won’t be making that money. The idea that there is still going to be a pot of money for the federal government to take is silly.
November 5th, 2008 at 12:47 pm
Re:kid blitzer
You’re right, that’s how I should have put it: one side says big government in order to loot the public fisc, the other says big government to provide you with actual benefits and services. Which big government are you, assuming you’re at all rational, going to choose?
November 5th, 2008 at 12:52 pm
The polls are meaningless unless they ask people what they are willing to give up to get cheaper health care. AS long as it is perceived as free, of course people are going to support it. But ask if people would support paying higher taxes to have cheper healthcare and the numbers will fall.
November 5th, 2008 at 1:14 pm
“But ask if people would support paying higher taxes to have cheper healthcare and the numbers will fall.”
“People” aren’t paying higher taxes. Ask them if they support increased taxes on people making over $250k a year to get cheaper health care, and I think you’ll find an overwhelming mandate.
Oh, and that group of people who are actually getting their taxes raised? They went 52-46 for Obama. The only people opposed to the idea are Hannity bots like Joe the Plumber who think they’re going to be rich some day.
November 5th, 2008 at 1:18 pm
kid blitzer,
Fair enough, so let me clarify that by “premise” I was more thinking about the public justifications for the budgets than whatever they may have been thinking in private.
Thomas,
Exactly how much economic contraction are you forecasting? And in fact if we are heading for a serious deflationary scenario, then that is all the more reason to tax the wealthy.
November 5th, 2008 at 1:32 pm
“and they did pretty well: in eight years, they managed to loot over 5 trillion dollars from ordinary taxpayers. dollars that went out of the pockets of us and our kids, and into the pockets of the wealthy republican base.”
Must have been a neat trick. How high did they raise the tax rates on ordinary taxpayers in order to transfer money to the “republican base” (which is who exactly? Evangelicals and small businesspeople?)
November 5th, 2008 at 1:38 pm
I don’t see in there any data whatsoever to back up the idea that there was an anti-spending backlash against Republicans that provoked people to vote Democratic, nor do I see evidence of a Libertarian Party surge or any such thing.
Yeah I agree with Matt, libertarian and conservative intellectuals are using this as an excuse to console themselves.
Greg:
Matt, remember all those times you castigated the Democrats for being Republican-lite?
Well, I think that Cato, knowingly or not, has a point. If the choice is between two parties that both support massive government, then you might as well go vote for the people who are honest about it and want to make it run well. Why vote Democrat-lite if you can have the real thing?
No, the election was about competing ideologies or philosophies. The last 8 years of Bush (and before that Clinton aka Republican-lite) have shown that the Republican governing ideas are bankrupt (see Wall Street). Obama made a point of this in his speech last night.
This is just mad spin. Republicans are always about red herrings and distractions, Obama is saying, lets do something that works, let’s get serious.
This talk about “massive” government is just scare tactics. There have never been true free markets, usually the wealth is being redistributed upwards.
McCain seemed gracious in defeat, unlike all of these conservative pundits.
November 5th, 2008 at 1:54 pm
I think that a lot of the Republican leadership’s ability to keep its members in line derived from their willingness to dole out pork.
November 5th, 2008 at 2:34 pm
DTM, I expect that the financial services sector–the source of much of our economic “growth” over the last 20 years and a significant source of both tax revenue and income inequality–will shrink significantly over the next 4 years. A couple percentage points of GDP. That’s not to say that I think that the overall economy will shrink. Of course it won’t–Obama was elected, and only good things will happen. But there won’t be as many huge Wall Street paydays to pay for grand plans.
November 5th, 2008 at 2:54 pm
If the Republican-lite brand is bankrupt, why are Larry Summers and Tim Geithner running neck and neck to be Obama’s Treasury Sec?
Or did you forget that Summers was Clinton’s last one, or that Geithner was Rubin’s golden boy, and has been running the New York Fed – and backing Greenspan and Bernanke and Paulson all the while – since 2003?
Look, I voted for Obama because I hope, fervently, he won’t lead us into some nuclear catastrophe or allow millions to go uninsured and jobless.
But do not feed me this absolute bullshit that Obama’s economic team is going to be anything other than representative of Wall Street. Goldman didn’t give more to Obama than any other entity just for shits and giggles.
November 5th, 2008 at 2:56 pm
Emerson:
I think that a lot of the Republican leadership’s ability to keep its members in line derived from their willingness to dole out pork.
You mean like on the bailout (invervention) vote?
November 5th, 2008 at 2:56 pm
The flat-earthers naturally think that the reason the Republicans lost is insufficent devotion to flat earth policies.
November 5th, 2008 at 2:59 pm
Greg:
But do not feed me this absolute bullshit that Obama’s economic team is going to be anything other than representative of Wall Street. Goldman didn’t give more to Obama than any other entity just for shits and giggles.
I have one word for all of the naysayers this past year, right and left:
FAIL
November 5th, 2008 at 3:00 pm
Thomas,
I believe financial services in general make up around 20% of U.S. GDP. Of course not all aspects of financial services have been directly affected, and I also have the impression this sector tends to generate disproportionately low tax revenues.
In any event, that leaves the rest of the economy–at least 80% of it, and maybe a lot more if you are talking about tax revenues. And in my view, we are likely pretty far away from the bad side of the Laffer curve, so I think we could more than make up for any direct loss of revenues from just the affected parts of the financial services sector by increasing the general rate of taxation.
November 5th, 2008 at 3:14 pm
I will believe ’small government’ rhetoric when it involved cutting the pentagon budget in half. Until then, fuck off.
November 5th, 2008 at 4:34 pm
Peter K-
I’ve been for Obama all year. He got my vote. I’m at the University of Chicago for christsakes and I live a couple blocks away from him.
Responding with an idiotic “FAIL” in no way invalidates my point that Obama’s cabinet will be filled with people like Summers and Geithner and maybe even Corzine or Rubin.
These men were and are in the thick of the Wall Street class, and make no mistake, they will be exercising a great deal of power in this administration. It was their money and the money of their associates that funded this billion dollar campaign. What pisses me off, and the Cunning Realist said it best here:
I think years from now Bernanke will be seen as a temporary cut-out, an Arthur Burns mini-me, a front man for expediency, someone to damn the monetary torpedoes and then get the hell out before some Very Serious People (who no doubt quietly shifted their own savings into euros and gold long ago) announce that no, that didn’t go well, but we’ve found a Volcker-type to come in and clean things up.
The result is that the guys who utterly fucked up our economy are not only going to escape punishment, they are going to be placed by virtual acclamation into power. Obama will, thank god, not replay October 1962, something McCain clearly would like to do. But frankly, he’s going to be in a position not much different than if Hoover had taken office 6 or 7 months later.
November 5th, 2008 at 5:26 pm
Responding with an idiotic “FAIL” in no way invalidates my point that Obama’s cabinet will be filled with people like Summers and Geithner and maybe even Corzine or Rubin.
DOUBLE FAILURE
We’ll see, won’t we?
What do you think of this?
No More Economic False Choices
By ROBERT E. RUBIN and JARED BERNSTEIN
Published: November 3, 2008
http://www.nytimes.com/2008/11/03/opinion/03rubin.html?scp=2&sq=Rubin%20Bernstein&st=cse
“Capital versus labor: Here again, for all their alleged friction, our dynamic and flexible capital and labor markets have combined to generate impressive productivity gains in recent years. The problem is that the benefits of this productivity growth have largely eluded working families. Though productivity grew by around 20 percent from 2000 to 2007, the real income of middle-class, working-age households has actually fallen $2,000, down 3 percent.”
Obama said the same sort of thing in an interview to the Wall Street Journal.
November 5th, 2008 at 8:25 pm
I think that the point that a lot of people are making here is correct.’
The problem with the Republicans is that they preached small government and lower federal spending, but then in practice simply shifted the spending to their cronies.
The problem is not, as Limbaugh suggests, as much that the GOP promised reduced spending and then increased social spending per se. It is that they wound up increasing spending in areas that were unpopular and seen as favoring Republican constituencies.
The GOP promised reduced spending and then blew hundreds of billions or trillions in what became an unpopular war. They supported a No child Left Behind Act that essentially encouages schools to cheat. They wrote a prescription drug benefit that many feel was designed to pay off the prescription drug companies rather than to help people get their medication.
In short, instead of being the party of less spending, the GOP seemed to be the party of stupider spending. That was the problem.
As for people preferring Obama’s health care plan to McCain’s – I think that a lot of people would be willing to have the government spend less on health care – if they thought that they would actually get the money back in tax breaks rather than having it go to fight a stupid war in the Middle East or to enrich the GOP leadership’s cronies on Wall Street with a bank bailout.
November 5th, 2008 at 10:02 pm
Peter K-
Rubin is now saying that the last ten years really fucked up the basis for economic prosperity of most Americans.
He does not say who was responsible. As the other man behind destroying Glass-Steagall and creating the CFMA, along with Phil “Nation of Whiners” Gramm, he was as deep in the shit as anyone, excepting the scumbag Greenspan.
I’ll ask you this, after acting as the Goldman Treasury Sec. and then assisting in the cratering of Citibank, do you think he’ll be giving back any of the wealth he’s been able to amass? If you believe he will, then there’s a wonderful bridge near 85 Broad that I’d absolutely love to sell you.
Sorry, but Obama’s administration will be as infected with Wall Street as the last three.
However, if he gets us out of Iraq, decreases our commitment to Afghanistan, and creates a national health plan, then maybe things will come out ok.
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