Government Is Not the Problem: Thirty Years of Bad Economic Policy

By Madrick, Jeff | Commonweal, October 10, 2008 | Go to article overview

Government Is Not the Problem: Thirty Years of Bad Economic Policy


Madrick, Jeff, Commonweal


Conventional wisdom in America today holds that high levels of taxes and government spending diminish America's prosperity. The claim strikes a deep intuitive chord, not only among those on the Right, but also among many on today's Left. Indeed, the antitax credo has become so obvious to so many over the past thirty years, and rolls off the tongues of policymakers from both parties with such fluency, that one would think evidence needn't even be gathered to support it. "Closed case: tax cuts mean growth," wrote former Tennessee Republican Sen. Fred Thompson, as if there could be no alternative argument.

Republican followers of Ronald Reagan remain the most ardent supporters of the anti-big-government idea. But many Democrats only partially disagree. To the conventional Democrat today, tax increases and increased government spending should be minimized or, better still, avoided. That is partly simple electoral calculation--holding any other position is considered politically self-destructive--but it has also become a matter of belief, as Democrats have revised their traditional views and made deficit reduction their primary government objective.

This ideological revision was accomplished over a decade ago. President Bill Clinton successfully raised taxes on better-off Americans in 1993, but with the express purpose of reducing the federal deficit, not developing new social programs. The Democratic Leadership Council (DLC), which Clinton helped found in the mid-1980s, continued to urge Democrats to tread lightly regarding tax increases and the new social programs that require them. The triumph of Republicans in the 1994 congressional elections reinforced the perception that American public opinion had turned against government, and in his State of the Union address of January 1996, Clinton proudly announced that "the era of big government is over."

Strategically, the Republicans had won. Thus, even though Clinton had hundreds of billions of dollars of budget surpluses to bestow in the late 1990s, he left federal spending on transportation, education, and poverty programs below the levels reached (as a proportion of GDP) under his Republican predecessors, Bush and Reagan. And despite the reduction in growth of military spending made possible by the end of the cold war, Clinton generally resorted to tax credits for funding his social goals, whether providing help for the working poor or programs to expand health insurance, retirement savings, and an affordable college education. Such an approach fit neatly into the new conventional wisdom that bigger government was a danger to prosperity, reflecting the ascendant ideology of greater reliance on free markets. "Market incentives" became the new buzz phrase among middle-of-the-road Democratic economists. The approach also had the great virtue of not requiring a tax increase to support a social program. But in fact it was costly to government; tax revenues were lost.

Meanwhile, with Clinton's encouragement, Wall Street hadn't had such a friendly response from Democrats in anyone's memory. The dominant new faith in markets motivated broad federal deregulation. Under George W. Bush, the laxity of federal oversight has taken an obvious toll--most notably in the credit crisis of 2008, but also in areas such as food and drug safety, airline traffic and safety, and tragically in the aftermath of Hurricane Katrina. Yet few Democrats acknowledge how much they themselves contributed to a weakened regulatory attitude in the United States. Jimmy Carter was a sincere believer in deregulation, and along with airline and trucking deregulation (which were arguably sensible), he gave financial deregulation a decided push. And under Clinton, much of the New Deal regulatory apparatus designed to restrain financial market excesses was formally and proudly eliminated.

And so centrist Democrats joined with Republicans to produce an ideological turning point, one that moved the nation to adopt an antigovernment faith. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Government Is Not the Problem: Thirty Years of Bad Economic Policy
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.