The Party of Big Government?
The Democratic Party is supposed to be the party of government. That idea was reinforced at the Democratic convention last week in a video that had this memorable line: “The government is the only thing we all belong to.” But there is another saying worth remembering: “Actions speak louder than words.”
With that in mind, here is something that may surprise you: Federal entitlement spending over the past 50 years has grown significantly more under Republican presidents than under Democratic presidents.
I’ll come back to that below. But, first things first. The reason we have big government is because of the growth of entitlements: Social Security, Medicare, Medicaid, disability insurance, etc. Entitlements are nothing more than taking from Peter and giving to Paul. They are consuming an ever increasing share of federal spending and they are the principal reason for one of two nightmares in our future: (1) ever-increasing deficits for as far as the eye can see or (2) an ever-increasing tax burden.
As Nicholas Eberstadt wrote in the Wall Street Journal the other day, entitlement spending in 2010 at all levels of government totaled $2.2 trillion in 2010. That equals $7,200 for every man, woman and child in the country. It approaches a staggering $29,000 for a family of four.
Get ready for things to get worse. The Census Bureau tells us that one out of every two households is now receiving benefits under at least one entitlement program. As the population ages the costs of these programs will grow much faster than our ability to pay for them (our national income).
The Congressional Budget Office has projected how bad things are likely to be. Without any new legislation, taxes will claim two-thirds of the income of middle income families by midcentury if we are to keep all the promises we have made. Taxes on higher income folks will claim more than 90 percent of all that they earn.
So who is to blame for this state of affairs? Lyndon Johnson, of course, gave us Medicare, Medicaid and the rest of the Great Society. But when Johnson left office, these programs were relatively small. The main expansion came under Republican presidents Richard Nixon and Gerald Ford. Not only that, the expansions were largely the result of executive orders! That is, they didn’t have to happen.
The growth of the entitlement state moderated somewhat under presidents Carter, Reagan, and George H.W. Bush. Because of welfare reform under Bill Clinton, there was actually the prospect of some contraction. But during the presidency of George W. Bush, Republicans pushed for a new drug benefit under Medicare with a huge unfunded liability — greater in fact than the unfunded liability under Social Security.
Eberstadt summarizes the past 50 years this way:
From a purely statistical standpoint, the growth of entitlement spending over the past half-century has been distinctly greater under Republican administrations than Democratic ones. Between 1960 and 2010, the growth of entitlement spending was exponential, but in any given year, it was on the whole roughly 8% higher if the president happened to be a Republican rather than a Democrat.
Of course, the past may not repeat itself. We may have entered a new era. Barack Obama is the first Democratic president since Lyndon Johnson to call for a larger entitlement state — especially with the enactment of ObamaCare. Further, Republican nominee Mitt Romney has pledged to repeal ObamaCare as soon as he is elected.
Still, it’s worth remembering past deeds in addition to words. If Republicans succeed in electing the Romney/Ryan ticket, let’s hope they don’t suffer buyer’s remorse.
Democrats and Republicans – a choice between cancer and polio. We know what another 4-years of Obama will mean fiscally to our country – we can only (ironically) “hope” that Romney/Ryan will be true to their words and reverse this 50-year trend.
Government’s incentive is to grow no matter which party controls the White House.
It has grown so large that Americans are afraid of the government instead of the other way around, as the Founders intended.
And it will continue to grow as long as we let it.
“That equals $7,200 for every man, woman and child in the country. It approaches a staggering $29,000 for a family of four”
I wonder over the next four years are we going to see a population decrease in the middle class. The cost of additional family members may be a problem for generation X.
Very interesting post.
This is truly a sad state of affairs. Power is apparently very heady, and it is much easier to say “yes” to a squeaky wheel than to say “no.” Only very principled legislators, the standard-bearer being Ron Paul, are willing to divest themselves of power to live under the contraints of the Constitution.
We would have done well to stick to the Constitutional and reject Social Security, Medicare and Medicaid from the start. I don’t care that so many people have benefitted– it is immoral to “benefit” at the expense of future taxpayers. These statistics prove that we have entered into a death spiral that will not end well.
Have to agree with Brian.
Always thought the donkey was accurate.
I am willing to pay the $7200 today and call it quits.
Note the 2.2 trillion in 2010 is approximately the tax revenue to the government. In other words, all the other stuff is on credit! Some should be eliminated yesterday, like EPA, EdU DOE, DOT, etc., but that also means no money for defense, no matter how little one thinks DOD should be. And defense I think was one of the few things government was supposed to do for the nation.
One has to wonder if Democrats (and their more moderate Republican brethren) look beyond the next election when deciding whether to vote for an income transfer program; or do they even consider what’s good for the long-term survival of the country? What’s good for re-election; and what’s good for constituents, is often not what’s good for the country.
It seems to me the most damaging legislation ever passed was the decision to tax incomes rather than consumption. The ability to create endless special beneficiaries of both benefits and subsidies makes it impossible for legislators to resist. I think the only sustainable solution will be to pass some form of the Fair Tax and eliminate the IRS. Is that really possible??
Thus far, Mitt Romney seems not to be pandering to the independents for votes. He has remained fairley consistent with his same views from the primary and has not really shifted much. For someone who is deeply concerned about our financial future, this is comforting. However, as election day nears, the incentive to garner more votes will be strong, and the temptation to become more moderate will increase.
But what is our alternative? We have to hope that Romney, with his business experience and turning around the Utah Olympics is the right man to turn our economy around. Certainly, better than a community organizer such as Obama who has proven that he is way over his head.
BTW Bill Clinton ( D) was moderated by a Republican House and Senate. Clinton vetoed the work requirement for Welfare twice before he actually signed it, due to pressure from Republicans.
Your side must be in crisis. Looking for something to complain about.
Silly.
Sorry the polls are going bad for you. How we see if big money and voter restriction can give you a win.
Stan
Entitlements win votes, but they break the system in the long run.
I am sure all the data is technically correct, but I also think it invites and incorrect conclusion. For example, Bush’s Part D program was perhaps a more conservative response than other options to the ever increasing political noise demanding relief from Rx costs. It was in the period of the Bush presidency that drug costs rapidly accelerated relative to other health expenses, and it would be naive to expect something was not going to be done about it for Medicare beneficiaries. We should also not forget that the only way we were able to save HSAs was to agree to the Part D deal.
It is not my intention to absolve GWB of responsibility for adding to the deficit. The “No Child Left Behind” program was an inexcusable and ill conceived alliance with the democrats IMO.
On the other hand we cannot ignore the fact that traditionally it has been the GOP that has been the only thing standing between us and entitlement induced financial disaster. The evidence should be clear given the results of the first two years of Obama’s complete control of the government. I also submit that much of the government spending during GOP Presidencies was the result of defense spending, of which, on balance, I have no problem. It seems that this type of (defense) spending always becomes necessary after a democrat President strips out military support and leaves office.
Government sevice is corrupting. The powere we give our suposed representavives is all powereful. Everything that is wrong with our country like the exploding debt was created and voted on by our elected representavtives, mostly for their reelection benifit. Our Government as it exists today needs to be dismantaled and reconstructed as it was intended to be small, consise and based on peresonal responsibility. The question we need to ask ourselves is: How Did It Get So Bad and what are we going to do about it?
John:
You may have “tipped your hat” when you stated “here is something that may surprise you.” Perhaps you were divulging that the greater entitlement spending under Republican presidents surprised you. If so, you had a theory prior to seeing the data. Here are some other data that may surprise you as well.
Under Republican presidents for the interval 1926 through 2011 average annual GDP growth was less—2.3 vs. 4.85 percent, the annual return on the S&P 500 index was significantly less—9.58 vs. 14.91 percent, federal expenditures as a percent of GDP were more—19.62 vs. 17.60 percent, and defense spending as a percent of GDP was less—7.31 vs. 9.09 percent. These relationships hold when lagging the data 1 and 2 years except the stock market did marginally better with a one-year lag ( 66 basis points per annum) under Republican presidents.
The results were much the same when the president’s party also controlled both houses of Congress. The only difference was the annual return of the S&P 500 index which favored the Republicans by 4.49 percent on average annually. Interestingly, gross federal debt as a percent of GDP was greater when Republicans controlled the White House and Congress than when the Democrats did.
The Republicans often site President Reagan as their economic hero. The Democrats site Clinton. Clinton bested Reagan on GDP growth, spending, the stock market, unemployment, inflation, and the deficit. Republicans may wish to take credit for this because of the 1994 election, but it was Clinton’s term. It is notable that during his eight years in the White House, Democrats controlled Congress for only two.
It’s not clear what these data tell us. Are Democrats better stewards of the economy? Is the economy largely influenced by party or is it policy? Does it even matter which party is in power? Do Republicans talk a good game but fail when on the playing field? Are these data not representative enough of the economy to draw any conclusions about party or policy? The list of questions is long.
I suspect that few pundits from either party or from either end of the ideological spectrum are aware of these facts. If they were, Democrats would trumpet their historical success, and Republicans would gather in the spin room crafting their response.
I’m left with this. Even though there have been historical differences in economic results by party, not necessarily causal, and historical differences in economic philosophy, one thing is crystal clear: government has grown to dangerous levels, and both parties are responsible. Today’s aspirants for control of the White House and Congress starting in January, 2013 have stated virtually nothing about significantly reducing the size of the federal government, and thereby increasing individual liberty and freedom. Both parties see government as the solution to many of our challenges, not the cause. Their differences are at the margin. You and I may be surprised at the data, but we should not be surprised at the end game.
Bill
Bill writes, “It’s not clear what these data tell us.”
With due respect the data you mentioned tells us nothing at all with regard to strategic economic evaluation. To take this type of data seriously would be the equivalent of blaming the 9-11 disaster on airplanes.
In large part political strategies involving economic issues do not play out until years after enactment – even decades. Common sense tells us that Clinton reaped the rewards of Reagan’s tax policies in spite of himself. We don’t need data to follow the bouncing ball on how tax policy impacts economic growth.
We can argue all day about the mistakes of this president or that president on individual initiatives, but how can anyone question that since 1930 that the democratic party is the party of entitlements? It is patently inaccurate to presume that “both parties” see “government as the solution. Note that incumbent Republicans who reveal such tendencies are losing their jobs right and left to fiscally conservative opposition.
Perhaps you have not been listening to Paul Ryan, because all he talks about is “significantly reducing the size of the federal government”. No, the difference between the two parties in 2012 is obvious, regardless of how one chooses to spin data.
To Frank Timmins:
Frankly, LOL.
So since, because of lagged effects, Reagan gets credit for economic growth in the Clinton era, Bush gets the blame for economic growth during the Obama era. On the Timmons’ theory, Obama has it right.
To Uwe Reinhardt
I’m afraid you skimmed a little too far over the top in your assessment Mr. Reinhardt. Bush was “still” getting the benefits from the Reagan era just as his father before him as well as Clinton. He (Bush)also helped with his tax policy, but was undone by his new federal programs. He had only two years with a friendly legislature to get anything of importance accomplished, and he blew it (primarily because of using all his political capital on the Iraq war).
Clinton also happened to be lucky enough to land in office at the same time the dot.com explosion was spewing capital all over the place, and, to his credit was willing to go along with some welfare reform (even if he did so kicking and screaming). But he had no major wars to fund (although he had a chance to prevent 9-11 but didn’t have the stomach to kill Bin Laden), so he was able to cruise through his terms without much economic upheaval.
Obama, on the other hand, in only two years doubled (tripled) down on Bush’s deficit spending instead of trying to reverse the trend (as he promised), so he has no one but himself to blame (other than John Keynes and his now discredited economic theories). We don’t even need to get into the economic impact of his personal agenda with the unions and idiotic taxing obession.
To Frankt Timmins:
Still LOL at how you strain to support your very simple macro economic theory, which can be stated thus:
“Every positive development under a Democratic president is a lagged effect of something a previous a republican President has done, and every negative development under a Democratic president is that president’s fault.”
Basically, that is your thesis.
When GW Bush took office, the federal debt stood at $5.6 trillion. When he left office it stood at $10 trillion. And his last federal budget (for fiscal 2009 starting in The fall of 2008) had a $1.3 trillion deficit built in.
It is sometimes conveniently forgotten that as a result of the recession at started in 2007, federal revenues as a percent of GDP plummeted. That is a major source of ese use deficits which, as noted, started under Bush.
To Uwe Reinhardt:
It seems that “simple” theory is an excellent starting point as it clears the air of purposeful obfuscation, which is the guiding principle of liberal economic dogma.
You say, “It is sometimes conveniently forgotten that as a result of the recession at started in 2007,…”. Well, there doesn’t seem to be consensus on when the recession actually did start, and I suppose one can use whatever date nicely supports one’s argument. In any case, I don’t see the relevance. I have already said that GWB increased the deficit. Did you mention the amount Obama’s current deficit total?
Perhaps and even better tool would be to compare Bush and Obama budget deficits relative to the GDP during their years in office.
Henry Aaron, an economist at the Brookings Institute, has projected that in ten years the national debt per citizen will be the same as it is in Greece this year. In 2022, borrowing money for our nation’s cash flow needs will not be possible. Obviously, there won’t be any entitlements programs either. Please note that the largest contributer to the national debt is the level of inefficiency within our nation’s healthcare industry. Nothing on the current horizon will affect this level of inefficiency. My judgement is that our current preoccupation with economic levers will do nothing for improving the efficiency of our nations healthcare.