This article was published in the Winter 1995-96 issue of Formulations
by the Free Nation Foundation
Roll Back U.S. Government?
Not This Time
by Marc D. Joffe
for the New Country Foundation

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Limited Objectives
Power to the States, Not to the People
Waning Support
1994:  Just Another 1980
Libertarian party: Nowhere Fast

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Soon after we started the New Country Foundation late last year (1994), a libertarian friend suggested that our efforts were unnecessary. After all, he argued, with the Republican revolution sweeping the nation, we could achieve most of our objectives right here at home.

This opinion appeared to have merit. While libertarian purists have reason to quibble (they always do), the fact is that many of the Republicans who control the 104th Congress are really trying to radically shrink the federal government. And, at least at the beginning of the year, they seemed to have the power to make a serious dent.

I and other NCF members were skeptical, and, as the year comes to a close, I believe our skepticism is being validated. At the time of this writing, the budget showdown between the President and Congress was still underway, so the shape of the final budget was not yet known. But even at this juncture, the case for long term pessimism is once again strengthening.

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Limited Objectives

As the Economist observed in early November, the final Republican budget was not all that radical. While initial versions of the plan called for the elimination of numerous governmental functions (including three whole cabinet-level departments), most of these programs were restored during the committee process. The Republicans maintained the same spending totals by substituting across the board budget cuts for the targeted elimination of whole programs.

The practice of maintaining government activities with the same mandates, but reduced funding, is a familiar budget balancing tactic. It is also one that doesn't work in the long term.

The rationale for making small across the board cuts in government programs is that since all programs contain some waste, it should be possible to reduce their funding without affecting the quality of service provided. While possible, this outcome is unlikely. Government programs are not businesses, and bureaucrats are not businessmen. When Congress reduces the appropriation for a particular program, the bureaucrats who administer that program are not prone to look for ways to work smarter or harder. The more common response is to translate the funding reductions into service reductions.

At some point, the decline in program service begins to annoy the constituency for that program. They then pressure political leaders to restore funding, and, more often than not, spending levels are restored.

One of the more celebrated examples of this was the "hollow" armed forces of the 1970's. After Vietnam, Democrats found it easy to cut back on defense spending. Unfortunately, these spending reductions were not accompanied by a concomitant reduction in the Pentagon's mission. America remained the world's policeman, with forces deployed on three continents and a charter to intervene almost anywhere at the drop of a hat.

In order to fulfill this mission, the Pentagon required a large number of troops, and lots of well maintained high-tech weapons systems. When the Democrats cut back funding, the Pentagon responded by cutting back on troop strength, procurement and maintenance. This gave military advocates the opportunity to complain that the Defense Department lacked the manpower and equipment to carry out its mission. Republicans capitalized on these arguments in the 1980 campaign. And once in power, the Reagan administration sharply increased military spending.

Government programs are like fat cells. When you go on a diet, you don't kill fat cells, but merely shrink them. As soon as you stop dieting, your fat cells grow back and you rapidly become overweight again. If you could somehow remove these fat cells by liposuction, for example you are more likely to remain thin.

This is what the Republican Congress needs to do. It needs to suck these fatty government programs out of our economic system. Instead, it is merely putting us on a short term diet one whose beneficial effects can be easily reversed by the next Democratic binge.

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Power to the States, Not to the People

Of course, the Republicans are trying to get the Federal government completely out of certain areas most notably welfare. In fact many Republicans have joined libertarians in criticizing the New Deal and Great Society on Tenth Amendment grounds.

The Tenth Amendment states that "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States, respectively, or to the people."

Unfortunately, the Republicans always opt to delegate powers back to the former, rather than the latter. From the individual's point of view, shifting the responsibility for welfare and Medicaid from Federal to State government may not make very much difference. He or she must still pay taxes to a bureaucratic authority that administers these programs. And, if this individual is unfortunate enough to live in a liberal state, this decentralization of federal programs may actually prove detrimental.

Republicans argue that states can administer welfare programs less expensively than can the Federal government. Moreover, because of the competition among states for taxpaying businesses and citizens, there may be a so-called "race to the bottom" in which states try to outdo one another to cut program costs.

This phenomenon may occur, but the final result might well be a return of the affected programs to Federal control. With all states racing to the bottom, the quality of services and quantity of benefits will fall. Program advocates can then focus public attention on the inadequacy of benefits under state administration, and thereby create political support for renewed Federal control. To achieve lasting reductions in the burden of government, there simply is no substitute for convincing the vast majority of people that government (at any level) should not get involved in certain aspects of life.

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Waning Support

Despite their relatively limited objectives, Republicans are still seeing public opinion turning against them. Although the political winds shift quickly, polls taken at the time of this writing show growing support for President Clinton and declining support for the Republican Congress. The consensus seems to be that we want a balanced budget and lower taxes, but we don't want too many "harsh" budget cuts to achieve them.

If these public opinion trends persist, Clinton will be re-elected in 1996 and the Republican Congressional majority will be diminished. Clinton will be able to take credit for steadily declining deficits during his administration the result of cyclical economic growth rather than any of his initiatives. His campaign will use this record as evidence that lower deficits are possible without the pain offered by the Republicans.

Once re-elected, and without having to worry about a future campaign, Clinton will be free to shift back to the left (where he feels most comfortable), and may actually be able to push new spending initiatives through a divided Congress.

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1994: Just Another 1980

In the end, I believe libertarians will look back on the 1994 election as another false hope, not unlike 1980. Back then, Reagan promised a lot more than he could deliver. While he did make some improvements most notably the reduction in marginal tax rates his administration failed to arrest, let alone reverse, the relentless growth in government spending and power. In the final analysis, the Republican 104th Congress will probably achieve similar results.

It seems that the popularity of smaller government is a cyclical phenomenon. After some period of government expansion, the public becomes fed up and votes in advocates of spending reduction. The small government people hack away for a while until they're seen as too harsh or too aligned with the wealthy. Public opinion then turns against them, and pro-government politicians are returned to office.

Over the long run, this cycle takes us toward bigger government. Advocates of greater spending have more time and more incentive to push toward their objectives than do their opponents. The strongest opponents of spending are typically business people, whose primary focus can never be on Washington for too long; after all, they have businesses to run. The lobbyists and bureaucrats who want greater spending are always around, since they don't have anything better to do. They can afford to be patient, to refine their arguments and wait for opportunities to develop. Ultimately, they can outlast the budget cutters.

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Libertarian Party: Nowhere Fast

In the first issue of New Country Report (September 1994), I argued that the Liberarian Party had virtually no chance of ever electing a libertarian President or Congress. It thus came as something a surprise when, shortly after I wrote that article, Harry Browne the famed opponent of libertarian activism announced his candidacy for the LP Presidential nomination, and went on to suggest that he had a serious chance of actually winning!

His rationale was that the 1994 election represented a libertarian watershed. He suggested that the majority of the electorate had finally realized that the time had come for significant cutbacks in government spending, that the Republicans would be unable to deliver and that they would turn to the LP in 1996 for greater spending cuts. I believe that Browne has mistaken a cyclical fluctuation in the public's mood for a long term trend. The vast majority of Americans are simply not ready for the radical libertarian approach, and will not be any time in the foreseeable future.

As far as I can tell, Browne's campaign is running well below initial expectations, and will not be a significant factor next year either in New Hampshire or nationwide. Once the results are in, perhaps Harry will come to agree with us in the New Country Foundation that the best prospects for liberty remain somewhere outside the United States. D


Marc D. Joffe is a self-employed computer consultant based in northern New Jersey. He is also a founding member of The New Country Foundation. He holds an MBA in Finance from New York University.

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