Government Will Continue To Grow

Prediction: There is a 100% chance that government will continue to grow

It’s the season of predictions. Here are mine:

1. Government will consume an increasing share of the economy.
2. Most Americans won’t care.
3. Because most Americans won’t care, most politicians won’t do anything about it.
4. Because most politicians won’t do anything about it, future generations face lives of serfdom, which is defined as working more hours for the government than for themselves.

Before backing up the predictions with facts, let me pause here and insult myself to save those on the political right and left from having to do so.

Cantoni, you’re nothing but a cynic and defeatist.

That’s what conservatives typically say when I say that government growth is unstoppable. Because I deal in facts, they mistakenly think that I want to throw in the towel and let left-liberals win without a fight.

Cantoni, you’re a selfish, mean-spirited jerk.

That’s what left-liberals typically say when I say that government growth should be stopped. They mistakenly think that I don’t care about the poor. They also are delusional and think that most government spending has something to do with the poor.

Okay, insults or not, the facts are still the facts. And the facts are as follows:

A. Total government spending (federal, state, local) has increased from 6.9% of Gross Domestic Product in 1902 to an estimated 34.6% in 2008.

This fact alone does not prove that government spending will increase from one year to the next, because spending as a percent of GDP has fluctuated widely from one year to the next, especially in years in which the nation went from peace to war and from war to peace. For example, the figure increased from 9.8% in 1915 to 22.1% in 1918. Conversely, it decreased from 35.9% in 1946 to 23.9% in 1950

However, if the year-to-year fluctuations are smoothed by drawing a regression line through the data for the last 100 years, the slope of the line is positive. There is no reason to expect that the slope will change, especially considering other facts that we will turn to momentarily.

Notes:
(1) For annual GDP and spending numbers from 1902 to today, go to http://www.usgovernmentspending.com/index.php.
(2) Some economists believe that national income is a better denominator than GDP in determining government’s share of the economy. If national income is used instead of GDP, the government’s share of the economy climbs to 44%, as shown at http://mwhodges.home.att.net/piechart.htm.

B. The unfunded liabilities for Social Security and Medicare are over $60 trillion, according to reliable estimates.

To put the $60 trillion in perspective, this staggering number is over four times the estimated economic output of the country for 2008. And the number does not include the unfunded liabilities for state and local pensions, most of which are significantly under funded, due to dishonest government bookkeeping that makes Enron’s bookkeeping look saintly by comparison. These liabilities are not reflected in current deficit numbers.

C. The cost of complying with government regulations is estimated to be 14% of national income and growing.

My 1992 book on bureaucracy detailed the natural tendency of all bureaucrats and bureaucracies. The tendency, of course, is to increase their power. And an increase in power means an increase in the compliance costs inflicted on others.

As an example, the US General Accounting Office estimated in 1994 that state education agencies had to hire 13,400 employees to administer federal education diktats. Another example: According to the US Office of Management and Budget, the No Child Left Behind Act of 2001 burdened state and local education agencies/districts with 6.6 million hours of paperwork.

(see http://www.heritage.org/Research/Education/wm1406.cfm)

I posit that if the federal bureaucracy were reduced to one bureaucrat, that one bureaucrat could destroy the economy single-handedly if he were given unrestrained authority to issue diktats to other government agencies and to industry. For this reason, the size of the government workforce is less important than the authority given to it. There are approximately 23 million federal, state and local employees. It would be less costly if the 23 million had no authority than if the government workforce were shrunk to one bureaucrat with total authority.

An anecdote: When Bill Bradley was a U.S. Senator and testified with me before a congressional committee, he said that if he were to decide to leave government, a primary reason would be that even a Senator was powerless to control the federal bureaucracy.

A rant: The ignoramuses in the mainstream media blabber about the loss of manufacturing employment but say nothing about the growth in government employment.

D. Over half of Americans are dependent on the government.

Over half of Americans are either dependent on entitlements, on welfare, or on subsidies; or they work for the government or make a living administering government regulations. Many of them are self-described conservatives who rail against big government, but they are not about to vote in the privacy of a voting booth to do away with their government rice bowl. The cold reality is that we’ve passed the tipping point. It’s now politically impossible to right the teeter-totter.

E. Since 1990, the number of federal subsidy programs has grown 44%.

The US Department of Agriculture had the largest increase in subsidy programs: 78. (See the Cato Institute’s “Tax & Budget Bulletin No. 41)

Have the presidential candidates been asked if they would end farm subsidies? Have they been asked if it is morally right for a fat-cat on Park Ave. to invest in a farm in order to receive a subsidy that comes at the expense of poor people who have to pay more for groceries? Well, no. Tellingly, they really aren’t asked any tough questions about our culture of kleptocracy. Why? Because such questions aren’t asked in a culture of kleptocracy.

The truth is that whoever ends up in the Oval Office, the new president will be powerless to end farm subsidies. Yet many Americans believe that their favorite presidential candidate will be able to fix more complicated problems and save the nation from decline. Ha!

Subsidies prove the political science theory of concentrated benefits and dispersed costs. That is, those who receive a subsidy will be better organized and more politically influential than those who foot the bill, although those who foot the bill vastly outnumber those who receive the benefit. This is the fatal flaw of those democracies that allow some people to receive government loot at the expense of everyone else. The United States has the fatal flaw.

F. Ninety percent of Americans are educated in government schools, and teacher unions and the rest of the public education establishment comprise the most powerful lobby in state legislatures.

Next to their families, impressionable children spend most of their time in their formative years in government schools. We can debate the value of that education, but one thing is not debatable: It is not in the self-interest of government schools and their minions to teach that big government is bad. In my experience, Americans who have come to that conclusion have had an epiphany outside of the classroom.

In closing, you can ignore these facts and call me a selfish, mean-spirited jerk, cynic and defeatist. But your insults won’t change either the facts or my prediction. Happy New Year!

By Craig J. Cantoni
Jan. 2, 2008

Mr. Cantoni is an author, columnist and founder of Honest Americans Against Legal Theft (HAALT.org). He can be reached at ccan2@aol.com.

Comments are welcome at redstatepatriot@hughes.net. Please include the title of the article as your subject line. Selected responses, in whole or part, may be published (appended to the article).
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Addendum from the author: I found a supporting study in the current issue of Reason Magazine, which is retyped below. It supports my contention that government will grow, regardless of tax cuts and changes in tax methods, as long as the root problem isn't solved--namely, Americans thinking it's okay to use government coercion to take money from their neighbors for themselves.
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The beast still eats
Cut Taxes and Spend
Brian Doherty

Reason Magazine
February 2008

From Milton Friedman to Ronald Reagan, fiscal conservatives have hoped tax cuts could keep government from overspending by denying it revenues--a theory dubbed "starving the beast." A new study by University of California at Berkeley economists Christina D. Romer and David H. Romber, published by the national Bureau of Economic Research, indicates that the beast is thriving despite the tax cuts of the last three decades. Government spending seems to march on regardless of revenue or tax rates.

The economists studied the effects of four major legislated changes in U.S. tax rates and policy since World War II, choosing episodes where the "starve the beast" motivation was most conspicuous. After looking at the data every which way, with multiple regressions and time lags, and accounting for wars and military spending, they found that the one thing most clearly connected to tax cuts was not spending cuts but future tax increases.

"Although a tax cut leads to a sharp fall in revenues in the short run, it does not have any clear impact on revenues at horizons beyond about two years," the economists write. "Between one-half and four-fifths of the tax cut is offset by legislated tax increases over the next several years."

And spending cuts? "In no episode [of postwar American tax cuts] was there a discernible slowdown in spending following the tax cut," the economists conclude. "Indeed, in all of the episodes, there was an acceleration of spending." The beast finds its food, no matter what.

Posted January 13, 2008 04:48 AM
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