Fiscal Ideals and the Role of Government

September 11th, 2010 by Lee Eldridge

CongressA few years ago I was exchanging emails with a friend who is a devout liberal. He wrote a very eloquent paragraph about liberalism and what being a liberal meant to him. I wish I had saved it. The paragraph described him well. It also described me well except for one sentence, and I remember it well: “We want to empower the government to help the people.” This is really the core difference between fiscal liberals and fiscal conservatives. For me, I would rewrite this to be: “I want to empower the people to help themselves.”

Strip away the politics. Strip away the political party rhetoric. Strip away the name calling and the finger pointing. What really separates fiscal conservatives, moderates and liberals? Their ideals for the size and role of government.

So how do we measure how conservative, moderate or liberal our government is? By how fast our government is growing. The faster our government grows, the more power they wield. The more control they wield. The more they regulate. The more they redistribute our collective money through social programs. The more they impose their will on our economy. The more liberal they become.

And who controls government growth? Not the President. I have said for years that the President gets too much praise when things go well, and too much criticism when they don’t. Congress is the one who writes our laws and sets our budgets, not the President.

It’s interesting that in just the last fifteen years, we’ve been able to witness three pretty distinct fiscal groups controlling Congress. The fiscal conservatives controlled Congress from the 1994 election through the end of the ’90s. Congress become more moderate from about 2000 until the democrats took over in 2006. And since then a liberal Congress has dramatically increased the size of the federal government.

This list shows the yearly increase in federal expenditures (size of government) calculated in current dollars:

1995: 3.7%
1996: 2.9%
1997: 2.6%
1998: 3.2%
1999: 3%
2000: 5.1%
2001: 4.1%
2002: 7.9%
2003: 7.4%
2004: 6.2%
2005: 7.8%
2006: 7.4%
2007: 2.8%
2008: 9.3%
2009: 17.9%

Before I calculated these numbers, I suspected that this was about what I’d find. I would designate anything less than 4% growth as fiscally conservative. Would probably lump 4-8% growth as moderate. And anything above 8% as fairly rapid government expansion. The only number that really sticks out is the 2007 number, but keep in mind that we were beginning to suspect that a recession was coming, and the 2007 budget was written by the 2006 Congress BEFORE the democrats took control following that year’s mid-term election.

Now nothing exists in a vacuum. During this time we’ve had two recessions, 9/11 and two subsequent wars. But do you know that in the last 40 years, the only years we’ve had a budget surplus were from 1998-2001? The economy was strong, unemployment was low, and government growth had been constrained by a fiscally conservative Congress and President Clinton. Coincidence? I don’t think so.

It’s no coincidence that our largest budget deficits coincide with the rapid expansion of our federal government. And it’s no coincidence that this rapid expansion of our federal government is continuing to stifle our economy.

Empower the government or empower the people? I will trust empowering the people every time.

Note: Information about federal outlays provided by the Tax Policy Center.

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11 Responses to “Fiscal Ideals and the Role of Government”

  1. Bobby Says:

    It’s this rapid growth from the dems that has created the public anger, created the tea party, and ulitmatly why the dems will lose big in this next election.

  2. Ralphie Says:

    Im back and Happy Hero’s Day!

    I dont think you or Bobby or any who consider themselves a member of Rush nation really understand the modern Democrat, or Liberal as you prefer to call us. The modern Liberal/Democrat does want to empower the people and doesnt want the government to be bigger as a goal for anything.

    If you look at your chart, Bush passed Tarp, which im guessing is responsible for that 2008 number (yes with Congress’s approval). We have already debated who caused the meltdown responsible for all this god damned stimulus. I believe it was your party of choice in the Boardroom that caused this horrible financial mess we are in (derivates, subprime, stripping away financial regulations, eroding our tax base, uneeded wars that we fought and paid for alone because of cowboy diplomacy, etc)

    I think the govt should empower the people with tax cuts for small businesses, and stop giving tax cuts to big businesses? And you know what, the R’s would kill that bill every day of the week. They already have killed Obama’s efforts to give money to small businesses. They only want money for fat cats, a la corporate welfare.

    The truth is that when you get elected you are responsible for the budget and the welfare of all the citizens. A dollar not spent in one area can easily result in 5 dollars spent in another area. Thats macro economics, boardroom style.

    Rebublicans want to hide behind demogoguery(sp?) so they can win elections while Obama has the courage to articulate longer term macro economic solutions – stuff that gets him panned in right wing jargon filled blogs like this one. Im not saying all his ideas will work or that all of them I agree with. But it should be clear to the educated person who is paying attention that he is trying to solve problems. Do you believe we are in perilous times economically Lee? What do you think the govt should do about it? What should they do about starving people (serious question)?

    So do you think there should be a happy medium Lee, or are you in favor of all the financial policies of you party of choice in the Boardroom? I remember last time I asked you that you said you were even against or ‘scared’ of derivatives fraud regulation. I didnt realize derivative traders were so crucial to our economy. Curiously, where do you disagree with them in the boardroom?

    What would be your tools for empowering the citizens, going back to the core concept of your post?

  3. Lee Eldridge Says:

    Hello Ralphie. And Happy Hero’s Day to you too.

    My goal of this piece is not politics, political parties or policies. As a fiscal conservative and a social liberal I have policy issues with every president and every version of Congress. You continue to label me a Republican, though I am not. I have strong disagreements with the R’s and the D’s. Both parties have been corrupted by power and money. I dislike most politicians because few have the courage of their convictions to be honest and to behave with integrity. They lie and mislead at every opportunity to paint their opposition in a bad light. Most of them have agendas that have little to do with the betterment of our country and our people.

    And you have completely mis-characterized my comments about financial regulations. What I said was that Congress had failed to fix two of the biggest culprits in our financial meltdown (Freddie and Fannie), and that the bill greatly expanded the government’s power to take over private business. I certainly NEVER said I was against derivative fraud regulations. You falsely accused me of it then, and have falsely accused me of it now.

    You can read the original post here: http://www.leeeldridge.com/obamas-agenda-different-than-we-were-told/

    You have posed a few specific questions that unfortunately I don’t have the time to write about at the moment. Will try to come back tomorrow.

  4. Ralphie Says:

    Let me start by re-quoting you from that post:
    “And when the bill gives our federal government unprecedented power to takeover financial institutions engaging in “risky” business, I begin to get nervous. Real nervous.”

    What were those ‘risky’ business practices? The practices definitely included derivatives trading, near the top of the list, and a host of other non-value added, dupe-the-ignorant common investor snake oil bullshit. Selling bad debt to each other like a hot potato, while the tax payer ends up picking up the tab for the bad bets. Fixing all that makes you ‘real nervous’? More nervous then not fixing it?

    Lee i call you a Republican in the same way i would call any Tea Partier a republican, and they would hate it too. I call you a Republican because im sure you didnt vote for Obama. You use all the same buzzwords and talking points as the republican establishment. As a litmus test, you are immediately ‘scared’ by anything that sounds like a regulation, tax cut (revenue increaser) or any improvement in social policy. You call yourself an Independant, like so many other R’s that call themselves that because Bush embarrassed so many of yall.

    You stick your head in the sand and shoot arrows but dont have many suggestions for what he should do to solve our very real problems (other than brining in oil skimming barges from denmark or wherever). As far as intellectual dishonesty goes, no-one lies to the country more than your preferred party in the boardroom, the Republican party. Were death panels real Lee?

    So my last post ended with questions and you didnt answer any of them. I want your next post to pretend your the President and tell us what you would do to fix the debt crisis, the job crisis, the environmental crisis (also tell us if you think there is an environmental crisis), and any other crisis you believe is occurring. Do you think there should be any reform of the financial sector, at all? Do you think there needs to be any regulation any more or should the government ban all future regulations?

  5. Ralphie Says:

    And what do you think of Obama securing a 20B pledge from BP – was that a shakedown?

  6. Lee Eldridge Says:

    Ralphie, I don’t have the time or energy to respond to every question, every comment, every accusation and every mis-characterization. I guess you’ll just have to keep reading this blog to find out more.

    But once again your mis-characterize my comments about the banking bill. Consumer protection is a vital role of our federal government. I wholeheartedly support smart regulations and effective oversight.

    My CONCERN is that the government gave itself the power to TAKEOVER financial institutions that engage in “risky” business. If you can’t see the difference between smart regulations and the possible government takeover of private business, then I can’t help you on this one.

  7. ralphie Says:

    Lee, weve heard all your concerns, lets hear what you would do to solve our crises, after you tell us what crises you in fact believe are real and deserving of a federal response.

    Disprove my accusations and mischaracterizations. You do have time, you wrote a different post on something else today.

  8. Frank Says:

    Yes, Lee. Why don’t you drop everything and answer Ralphie’s questions? Instead of writing your blog about what you want to write about, you need to answer for all Independents, Republicans and Tea-Partiers. In fact, this post about the size of government has sparked questions about:
    • Rush Nation/right wing jargon/
    • TARP
    • Financial reform
    • Derivatives
    • Tax cuts vs. increases and macroeconomics
    • Death panels
    • Environmental crisis
    • 20B pledge from BP
    • Status quo.
    •GWB
    • And of course LIES by politicians, big business, and R’s.
    Woa, you’d better get crackin. Something tells me that it will fall on deaf ears so to speak. You can say you believe something and why, but apparently someone’s got your number. Ralphie has his mind made up about you no matter what you say. But I’m guessing you’ll take the time anyway for thoughtful and supported responses. In your own time, man.
    Me? – Gotta get back to work.

  9. ralphie Says:

    Hey, i would be thrilled to hear just one solution to one major crisis. Of course, we should start with Lee naming just one thing he thinks is a crisis that the President should act on immediately. We can build a library of solutions from there. If there are never any solutions, only observations about how much money is being spent or Tea party themes like being afraid of liberties being taken from large financial insitutions, then i think this blog will miss an opportunity. For every blog, you should add a ‘Here’s what i would do’ section. If you can blog, i can comment. Lighten up Frances!

  10. ralphie Says:

    I’m concerned that you trust republicans to decide what is ‘risky’ more than professinonal auditors and risk gurus. Or that you trust republicans more than democrats in general – still a troubling and mystifying thing given their attrocious track record of raping this country for so long now.

    So consumer protections are good so long as they are toothless. Boy, youre going to love the new Republican leadership coming down the line!

  11. Lee Eldridge Says:

    Hey Ralphie. Love the Stripes reference. Classic :)

    So regulations only have teeth when there’s the threat of government takeover of private business?

    It’s not about trust (though I don’t trust any of them), it’s about the role of government. I’m not a Libertarian. I think the gov’t plays an important role in consumer protection. But that doesn’t mean I think they should be taking over businesses.

    The dems may have written FANTASTIC new regulations for the financial industry. I’ve never commented on the new regulations. It’s not my industry. It’s not my area of expertise. You and I agree that we needed new regulations. But there are plenty of ways to give regulations “teeth” without giving the government express permission to takeover a business.

    And you’ve hit on one of my concerns. WHO is going to decide what’s “risky”? Would you be thinking this is a great idea if McCain / Palin / Boehner were in power? Because Obama / Pelosi / Reid aren’t going to be there forever. And I don’t want any of them taking over financial institutions.

    And as for solutions, give me a little time. I’ve been working on an approach for giving some opinions on solutions for this blog. But it really is time consuming. I can write a Chiefs post in 15 minutes. And I have WAY more sports readers on this blog than political readers (though the political readers certainly comment more often). Writing politics takes me much longer to accomplish. Maybe this fall I’ll unveil something new for you.