Big Government: Pendulum or Runaway Train?

Ever since FDR saved the economy - either through his welfare and public works programs if you like his fiscal model or by entering World War II if you believe the country was going to turn around on the basis of a business cycle anyway - the size and role of the federal government in the business life of America has continued to grow. Truman was too busy fighting wars and dealing with new international realities with our Soviet allies to leave a huge mark on America Inc., but conservative president, DDE, built the interstate highway system with a heavy dose of liberal spending, a symbolic and tangible symbol of a more federally driven America economy. JFK we hardly knew you. We'll never know his spending agenda based on his short tenure though his activism in other areas might lead us to believe he would have been big government in all ways. Inspired by political activists like author John Steinbeck, LBJ attempted to build a 'Great Society' - a phrase he borrowed from Steinbeck - to further expand the government's role and responsibility as the provider and protector of the people's welfare.

Let's break from this historical free for all for just a second. Everyone, including politicians of all stripes, is concerned with the welfare of 'the people' and individual persons. Whether one cares is not what is being debated, though in the political world it is posited by big government proponents that if you don't want government to take responsibility for people's welfare you don't care about people's welfare. The fiscal conservative or political libertarian will argue that he or she cares just as much about the welfare of individuals, he or she just does not think government does a very good job of supplying it. They want an old school model that limits the role of government to good laws and national defense - and leaves individual welfare up to individual effort, which will be much more productive and efficacious in a free enterprise system the thinking goes. But what happens when that doesn't work, big government proponents ask? Some free enterprise advocates agree with having clearly defined and limited temporary aid measures in place - others argue for the 'family and friends' program. But based on what we've seen so far in our historical foray, there really haven't been too may free enterprisers in control, no matter what we might assume from party affiliation.

RMN actually toyed with price controls, which would made him a hero among Marxist ideologs and an enigma to his independent, puritanical forebears, but ultimately, he pored his attention on foreign policy and then shifted his focus to another set of problems that were a little more personal in nature. JC. We hardly knew you. Stagnation and malaise were the order of the day. The result of bad business or too much government intervention? Carter wasn't sure there was a possible solution from the government or private sector and suspected we might be headed for leaner days. That helped RWR, who was sure it was the latter, too much government intervention, get elected. He cut capital gains taxes, eliminated and simplified regulations to doing business, and cut income taxes for the middle and upper middle classes. (He would have done the same for the lower and wealthiest classes but it is impossible to cut anything from nothing.) It can be argued that he restored America's business star, setting the stage for the largest capital growth campaign in history and the rise of Bill Gates. What he didn't do, however, was cut government spending. And it wasn't just because he built up the military. Liberals and columnists - I would have said Liberal columnists but why be redundant? - bemoaned all the benefits he cut from the poor. Not true. He did occasionally cut government program increases but never spending. GHB (W's dad). We hardly knew you, either. I do recall H was kinder and gentler than Reagan and raised taxes to prove it despite the protests of lip readers to the contrary. WJC got his butt kicked on socialized medicine early in his first term. His solution? Keep Hillary away from Congressional hearings and enjoy Reagan's promised 'peace dividend.' Then he started experiencing the joy of balancing the budget and reducing the federal deficit so much he went out and tweaked some welfare policies so that they became workfare policies. For the first time in 60 years people were involuntarily cut from welfare rolls. Bill might be the last and the only fiscal conservative of the past 100 years. Deep down, I suspect that still bothers him. GWB. Or just W. A man of principle, faith, and profligate spending habits. He and the man who followed him, BHO, are architects and builders of an expanded role for government through TARP(s) that might have made FDR's head spin. Even the German socialists are confused. When they throw money at economic problems it is at least to save unnecessary jobs. In America's iteration of corporate welfare, it is to eliminate jobs and save companies. The latest Obama move has been to appoint a 'Special Master for Compensation' to oversee executive and employee pay at companies that accepted government bailout money. Any wonder so many are fighting like crazy to give this 'free' money back? Any wonder Hugo Chavez, left-wing socialist president of Venezuela, claims he is more right wing than Obama?

So is the size and scope of the federal government cyclical - a pendulum that is simply on a high note of growth? Or is it a runaway train navigating hair-pin turns as adroitly as possible?

If these economic days are tough on your personal welfare and you see a bright shining light ahead, it might mean there is hope at the end of the tunnel for you. Or it might mean you better jump off the track in a hurry if you don't want to get hit!