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Shrinking government


John Hood


Tuesday, July 25, 2017

RALEIGH — For decades, the modern conservative movement, and Republicans as an increasingly conservative party, dedicated themselves to the proposition that government was too large, too costly, and too intrusive into matters best left to voluntary associations to address.

With this unifying principle, American conservatives were largely in consonance with American voters, who have usually told pollsters they’d prefer a government that cost less and did fewer things to a government that cost more and did more things.

But for both the general public and conservatives as a subset, advocating a smaller government is easier in general than in specific. They exhibit higher levels of support for particular functions of government, such as education or Social Security, even as they disdain government’s overall size and expense.

This isn’t inherently irrational. You can believe that, say, preschool or immigration enforcement ought to be a higher priority and get more funding, even as you believe that governmental budgets as a whole ought to be smaller. You can also favor a government function in general — such as assisting the disabled and destitute — while believing that programs ought to be run more efficiently, or target more narrowly the neediest populations.

Still, there are tensions to be reconciled. Those who step forward to run for public office are, whether they realize it or not, taking on the responsibility to resolve and reconcile those tensions as much as is possible. If the problem were easy to solve, it wouldn’t still be a problem. And if leadership consisted of nothing more than polling every issue and plugging the results into legislative voting machines, it would be more properly called followership.

When it comes to acting on fiscally conservative principles, there are important differences between Republican lawmakers in Raleigh and Republican politicians in Washington, D.C.

Since the GOP won majorities in the North Carolina General Assembly in 2010, they’ve enacted a series of budgets that, while expanding programs in high-priority areas, have consistently held spending growth below the growth rate of the overall economy. A new report from the progressive North Carolina Budget & Tax Center projects that by 2019, state General Fund spending will fall to 4.9 percent of total personal income, down substantially from the 45-year average of 6 percent.

Conservative analysts have observed the same trend. The difference, obviously, is that we think it’s good news while the left thinks it’s bad news.

As it happens, federal expenditures have also fallen since 2010, as the Great Recession-era bailouts and stimulus came and went. But according to official estimates, the federal budget will average about 22 percent of America’s gross domestic product through the end of the decade — still higher than the pre-Great Recession average of 20 percent.

It’s certainly true that America’s total government spending of about 38 percent is below the likes of Italy (50 percent), France (57 percent), and the Euro zone as a whole (44 percent). But all industrialized countries are headed for grave fiscal problems in the coming years as their populations age. Their politicians have all promised government benefits that simply can’t be financed at current tax rates.

In America, Social Security, Medicare, and Medicaid are unsustainable in their present form, and yet dominate federal budgeting. The federal government has become “an insurance company with an army,” as a former Bush administration official once memorably put it.

If Republicans can’t manage to repeal and replace the Affordable Care Act then it’s hard to see how they’ll ever be serious about the measures, such as means-testing pension and Medicare benefits, that will be needed to balance federal budgets in the long run.

John Hood is chairman of the John Locke Foundation.


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