The size of the state

A big beast to tackle

Cutting spending down to size will be hard for a President Romney; boosting it any further will be hard for a re-elected President Obama

See article

Readers' comments



This is a rather disingenuous article, for it lumps security functions of the government in with regulatory functions. From the author's own data, it is evident that the regulatory apparatus has not grown in size at all. An honest accounting would have been to put the TSA and Homeland Security employment into an accounting category called "national security" that included the Border Patrol, the counter-terrorism part of the FBI, the CIA, NSA and Defense Dept.


My two cents worth is that is reelected President Obama will easily just by keeping present programs on autopilot be able to increase Federal spending AT LEAST twice the rate of inflation if not considerably more based on the evidence of past two years with a "conservative" Congress. President Romney will NOT be able to reduce government in real terms even with a strongly Republican Congress. The difference between the two is the general disdain for the private sector on the part of Democrats who view it only as a cash cow for their political schemes. That would make growth likely to be faster under President Romney and the chances of real financial melt down again less.

the unexamined life in reply to john4law

The President has zero distain for business. What he was expressing distain for was the idea that ANY person in society succeeds entirely on their own merits, which is patently untrue. Some of this is sheer luck, being in the right place or meeting the right person, but of equal importance are things like infrastructure and education which benefit everybody but which cost a lot to put in place and are thus rarely created by private individuals. Even when they are privately-owned and operated, they rarely benefit more than a narrow band of people such as those able to afford private tuition fees or who drive along one particular route and can pay the tolls exacted by the owner. State-and nation-wide systems for such things NEED to be put in place, or they simply will not be built on a large enough scale. That's why Eisenhower built the interstates. Tell me, precisely how much "private enterprise" was crowded out by that shamelessly big-government move?

john4law in reply to the unexamined life

"You didn't build it!" If you are an enthusiastic apologist for that collectivist bromide, then how about the President had NO responsibility other than being there and NOT getting in the way for the elimination of UBL or any other arguable success story of his Presidency. That seems like a lot more defensible proposition!

john4law in reply to the unexamined life

The correct quote which I heard with MY OWN EARS is: “if you’ve got a business, you didn’t build that. Somebody else made that happen”. That is no outlier statement! It is completely consistent with every policy and budget proposal this administration has made. If the left won't even cop its OWN
logic and thinking, then there is nothing but deceit, manipulation and vote buying in the American left's heart or mind!


The states of North Dakota and South Dakota, the states of Lousiana and Mississippi, the states of Virginia and West Virginia, should be unified to create the statesof DAKOTA, Virginia and Lousiana-Mississipi. That would save $billions, with bureaucracy cut by half. At the same time, and they will be taken into account more by investors.

Richard Michael Abraham

The Exceptional People And Country, USA IS SLOWLY CHOCKING

The United States, the greatest country in the history of this earth, cannot continue on President Obama's path or Governor Romney's journey.

The exceptional People and Country, USA is now feeding on its entrails.

There are no good paying jobs.

Americans are becoming servers, hamburg flippers, doing whatever they need to do to try to stay alive.

The average American cannot believe what's taking place in the United States and can't fathom the imminent collapse of Europe.

The corruption on Wall Street goes unchecked, eroding all wealth and the FED is printing dollars to keep the engines running destroying the value of a dollar, and what it can buy.

The economic U.S. engine is dead, the heart is not pumping, just flickering.

The day is near when the United States will cease to protect the World and instead, decide to save itself.

When that day comes, all those who rightfully or wrongfully criticize the United States may hearken a different tune.

The Unites States is chocking now, can barely breath, and must immediately change its course.

And yet, there's nobody with vision, fortitude, courage to take the helm.

Thus, what Spain and Spaniards feel today, America and Americans will feel tomorrow.

Richard Michael Abraham
The REDI Foundation


End Trickle-Down economics, problem solved.

guest-iomjnwl in reply to Laconophile

You ever see a successful multi-national corporation or business of any significant size run by one person?

Ever know of a rich person who became wealthy with NO ONE purchasing his products or services? The rich are just as, if not more, indebted to everyone else, not vice versa.

CnKQ7pSia6 in reply to guest-iomjnwl

If you buy a car from Toyota, are they somehow "indebted" to you? If so, how? Did you just give them your money and got nothing in return? Didn't you both pay each other - one in money, one in kind?

Are men like Bill Gates, Thomas Edison, Sergey Brin indebted to us for bestowing on them the favor and buying their products? Really? Takes an enormous amount of hubris to claim that.

Isn't it actually the other way round? i.e. we're in debt to them for having invented stuff that improved our standard of living.

guest-iomjnwl in reply to CnKQ7pSia6

Bill Gates borrowed money from his Dad ($75000 if I'm not mistaken) to buy QDOS which he then licensed to IBM. The personal computer would never have existed without development in the public sector;
Thomas Edison was a prolific inventor who also happened to employ other prolific inventors, including the brilliant Nicola Tesla. Without their efforts, he would have never achieved the heights he did;
Sergey Brin developed his search engine with a partner, Larry Page. Both initially funded Google with loans from friends and associates. Their technology was built on the same Internet technology that was initially funded by the U.S. government.
Do you notice the trend? No one does anything alone or in a vacuum. And it is the millions of people who purchased their products and services that made them wealthy.
The guy who actually invented the OS that Bill Gates purchased is not rich. Edison never equitably compensated Tesla for his contributions. Brin didn't invent the technology on which his search engine was built.
So the producers themselves are indebted to others. And none of them would be who they are if the market had rejected their offerings.

rebels8 in reply to CnKQ7pSia6

Humans are naturally social creatures and we have an interconnected global economy today. So pretty much everybody is indebted to everybody else. And this includes both the present and the past.

Chairman Rao in reply to guest-iomjnwl

When Apple sells me an iPhone, I get the phone and they get my 700$. There is no more gratitude that they owe me because I was their consumer. The transaction already took place and both parties are better off. I can't claim down the line that Apple is indebted to me since I once bought a phone from them. I am not doing them a favor by buying their phone. I actually wanted the phone and I benefitted from the product.

This belief that somehow the producers are indebted to the consumers because they consume is ridiculous. Consumption is not charity work. People consume because they need to. I buy milk because I need it. The dairy farm is not indebted to me for my purchase any more than I am indebted to them for providing the milk. We are both giving something and gaining something in return.

It is sad that I have to explain this here on the Economist forum where thousands seem to not grasp these elementary concepts.

CnKQ7pSia6 in reply to guest-iomjnwl

Two terms that keep getting used as synonyms, despite a clear difference between them are SOCIETY and STATE.The state means the government and its surrounding apparatus. Society is family, friends etc.

Now that I've clarified that, read through the well detailed examples you've mentioned. Almost all involve a person benefiting from his/her SOCIETY. I don't see that many examples of STATE benefits like "X got a free $5M from the government". Friends and family are NOT the state.

It is patently ridiculous for the state to come over to me and say "See your family helped you out, right? Now give us 50% of what you have". How rubbish would such a claim be! Virtually all technology today started at some point with Thales, Pythogras and Euclid in ancient Greece and masters that came before and after that time. Does that mean an engineer in Silicon Valley somehow owes Mr. Obama et al a significant % of his wealth? There is no connection whatsoever. It is such a shamelessly and blatantly opportunistic claim - "hey you didn't invent all science by yourself - now give me some of your money!"

Firstly, whatever my family or friends do for me (or vice versa) is entirely between us. Period. Full stop. It is none of the government's business. My family or friends did not appoint Mr. Obama's tax collector as their representative, did they?. Neither did the geniuses of ages gone by. Yes, the state can legitimately claim limited credit for state services like a public school, roads etc. - but I and my family have already paid taxes for them already. Its not like we used them for free.

My office building has the janitor, security guard and garbage collector who clean the rubbish and guard the building. They get paid for it, right? Nobody is doing anyone a favor. Not me to them. not them to me. We have a mutually beneficial agreement. It would be seriously stupid for them to then claim that I owe them any invention I make while I am in the building - since I have already paid them their salary/wage. Its that plain and simple. If I buy a patent from someone, employ someone (as Edison did) and so on, I don't owe them anything more than they owe me something - its a mutually beneficial agreement. Same goes for consumers buying my product. Are they doing so out of charity? If they did, I'd be in debt. But they buy/use it because they benefit from it. Just as I benefit from selling it to them. Trade is made to win both ways. When its a mutually beneficial agreement - whether that be purchase or employment - there is no question of anyone being "indebted" to the other party.

CnKQ7pSia6 in reply to rebels8

If everyone is indebted to everybody else, then the term "indebted" becomes meaningless. Its like the old saying "He who praises everyone, praises no one".

As I've argued in the post below in response to guest-iomjnwl : the lion's share of what we owe to society is to our family and friends. But these are not the state or even society at large. They are very specific individuals in our life and the government/state has no business mucking into our mutual agreement to make a fast buck.

As to the debt owed to geniuses from the past, how do you settle that? Does an American civil engineer pay Greece something today since he uses geometrical concepts first enunciated by Pythogras? Or England since he last used penicillin when he was ill? Nobody is saying that we become successful 100% on our own. Attacking that position is a straw-man argument. The question is whether the state/government has any legitimacy in claiming payment for benefits conferred on you by your loved ones or by geniuses from the past tens of centuries. The answer to that has got to be NO.

guest-iomjnwl in reply to Chairman Rao

But you don't need an iPhone. And you could buy a goat to produce your own milk.

You make the assumption that consumers NEED to consume. They do not. You don't need an iPhone or a MacBook. For that matter, you don't NEED one solitary product provide by Apple. You don't NEED to buy food, many people produce their own every day.

My point is simply that the wealthy do not become rich in a vacuum. No one is doing anyone any favors. The world operated just fine before Verizon and most of the other huge multinationals. Consumption is not charity work but neither is producing.

If you got rich by providing products that people do not NEED but choose to buy anyway, then they are VOLUNTEERING to put money in your pocket. I'd say that makes the consumer very important, at least as important as the producer. People get rich by identifying and fulfilling the demands of the MARKET. No one has ever became rich by creating something that no one wants. It is a symbiotic relationship. So it is complete nonsense to act as if the producer is the one creating all the value in the relationship. Without consumers, a producer has nothing.

guest-iomjnwl in reply to CnKQ7pSia6

Microsoft gets paid every time a license of Windows is sold. So what compensation does the government deserve for all of the infrastructure and technology that EVERYONE, including businesses, use EVERYDAY?

That TAX is like a software license. Microsoft can decide to lower or increase the price pf its software license at will. However our government can't lower or raise taxes based on its business needs? That is preposterous. I use more things developed by our government on a daily basis than anything that came from a corporation and so do the rich.

Just like the price of buying a software license is the cost of doing business with Microsoft, taxes are the cost of doing business with our governments. They provide essential services to EVERYONE, including the wealthy. They provides laws to protect the structure and interests of businesses and a huge police/military apparatus to enforce those laws.

In theory, our government represents our will. If it is failing, WE are at fault. To blame government for our problems removes our responsibility to fix it. It's a cop out, one done for expediency.

Considering what our governments have and do produce on a daily basis that have benefited our society at large, the question of whether the state/government has any legitimacy in claiming payment for benefits conferred on you EVERY DAY, The answer to that has got to be YES.

Chairman Rao in reply to guest-iomjnwl

Are you suggesting I work on my own farm to produce corn, buy my own goat to produce milk, growing my own cotton and then weave my own clothing? Clearly not. Please don't preach your Gandhian economics here.

The producer can also just produce goat milk for me instead of iPhones. And several producers do. But some producers also produce an iPhone because I do want it as well more than I want an extra 700$ sitting in my bank account. We could live without a lot of things we have in this world. Beds, pillows, closets, even the 30 shirts in my closet. I could probably do with 3. But the reason I have 30 is not because I felt charitable towards H&M or Ralph Lauren. I felt like the amount I would pay for each marginal shirt was worth less to me than the value the shirt adds to my life. The amount I pay for the iPhone is worth less to me than the value the iPhone adds to my life. Hence, I trade that amount for the iPhone.

You seem to be making the mistake of assuming that just because I buy anything that is not essential to my biological functioning, my purpose or intention as a consumer is more noble than the producer, which is simply not true. They are both equally valuable and once the transaction takes place, there is no more indebtedness from any party to the other.

Without consumers, a producer is nothing but equally as much, without producers, a consumer is nothing. This includes goat milk producers equally as much as iPhone producers. If the consumer really didn't need the producer, the producer wouldn't exist. And if you really think people don't NEED an iPhone, you should say this to all those crazy people who put themselves at severe discomfort and stand in lines all night not only to have one but to have it first before others.

One last suggestion, you could also move to Afghanistan where the bullying of Apple and the lure of the iPhone have not taken root yet. Your magical herds of goats producing milk await.

guest-iomjnwl in reply to Chairman Rao

"Without consumers, a producer is nothing but equally as much, without producers, a consumer is nothing."

Utter nonsense. A consumer who can't or doesn't consume can just become a producer. It's either that or die. For that matter, you discount the numerous societies who existed just fine collectively without the concept of commerce. There's nothing Gandhian about it, it happens every day. You just live in a society that forces you to be dependent.

Bottom line, the rich didn't become rich in a vacuum which seems to be the stance of conservatives. The rich work extra-hard and deserve there riches. Maybe so but that does not absolve them of their responsibility to act fairly and, more importantly, contribute to a society that enabled their success. The rich benefit from our government in some form EVERY DAY. Whether it's in the use of technology funded by it or the roads built by it or any number of other benefits that have allowed entrepreneurship to thrive here. This notion that their taxes should not be raised a few measly percentage points is not only ridiculous be preposterous based on the contributions our government have made that has benefited businesses RIDICULOUSLY.

When people devolve to personal attacks, you know they have no ground left to stand on. I'll assume you are done.

BTW if you had been raised in Afghanistan, you would understand just how much the U.S. government has contributed to our society. Religious fundamentalist aren't so good at developing technology and infrastructure. Be glad you never had to find that out for yourself.

Chairman Rao in reply to guest-iomjnwl

We are not discussing taxes. I have not stated my beliefs as to what tax system I believe is the fairest so to attack me there is completely disingenuous.
We are discussing the role of trade and your strange notion of needs vs wants. Since we are getting into semantics - are you suggesting that if the purchase involved an item you needed, you are indebted to the producer whereas if the purchase involved an item you merely wanted, the producer is indebted to you?
"You just live in a society that forces you to be dependent."
How does the society force you to be dependent? Is there any society in the world that functions in this independent way you fantasize about? What is to stop you from farming on a small plot of land and owning a goat for milk?
Most importantly, why are you purchasing a computer to post these comments and further enriching Microsoft or Apple? Has society forced you to use these products? Or did you do it out of kindness for either of these two firms? I'm assuming you do have a phone. You either purchased it out of charity or under pressure from society, right? If not, then your wants/needs outweighed the losses in terms of effort, time, and money. No one owes you a thing. Imagine the alternative. If Apple, Microsoft, Samsung, etc. told you they do not wish to sell you their products so as not to be indebted to you, I imagine you would not like that very much as it would hurt your standard of living that you have gotten used to. Perhaps you should try living without these corporations so as to reduce your dependence on this evil corporate world. Believe me when I say that this society will not force any of the purchases on you, unlike what you think. Once you are able to do that, we can continue this conversation.
This was truly a waste of my time so I will not respond further.

CnKQ7pSia6 in reply to guest-iomjnwl

I think we're talking past each other here.

Nobody is disputing that we need to contribute to keep state services like roads, police, defense and courts running. The point of my post was to show that helping hands lent by family, friends and the like cannot be credited to the state. When people say "You didn't get here on your own", my reply is "Yes I didn't (nobody could), but most of the favors that I owe come from genetics, family, friends and luck."

Besides, the government in the US today spends only a part of the total budget on services like courts, police or roads. Redistributive taxation may have its own arguments but "payback for services provided" is not one of them.

The analogy between Microsoft and the government is not a good one. It really isn't. Because there is one critical factor that makes all the difference - Microsoft does not FORCE me to buy its software. Yes it can charge any price it likes and I am free to use a competitor's product or none at all. Same goes for every private sector product or service with the possible exception of a life saving drug that is controlled by one company (but arguments are not made based on exceptions). The government can and does force me to pay taxes. It therefore cannot raise or lower them without my permission. I think that's a factor so critical, anyone can see how it completely changes the rules of the game.

Even with my permission (and by that I mean, permission of the majority) there are limits on how much the government can tax me. It cannot for example decide to simply confiscate my property with a 100% tax rate.

As for your claim that you use more services from government than anything that comes from the private sector, that is purely incorrect. And by that I mean, you as a representative of the general populace. The government does not yet account for over 50% of the country's GDP (Thank God for that!). - your biggest expenses are rent/house mortgage, food, medicines and gas - all of which come from the private sector. Its just simple math - the private sector is bigger than the public one. At least so far.


The US of A is by far a rich country; still the richest!

It is maintaining 1000 military bases around the world fomenting trouble in every continent, fighting wars it has started in Iraq and Afghanistan, creating revolutions in the middle east, supporting terrorist groups in Syria, China, Russia and Northern Africa and shifting big military and naval forces to the China sea to surround China and encourage problems with its neighbors and maintaining torture camps in Guantanamo and God knows whereas.

All these must be costing the American tax payers billions every single day and these expensive actions seemingly supported by the American public who 'elected' these leaders!

One cannot see the worries if the 'exceptional' citizens of this 'great' country do not see any problem spending all these billions daily! As we say here, why fix the situation unless it's crook! And it's not crook as far as we can see the spending; it takes the rich to do it!

No worries mate, the exceptional country would fix it somehow!

Antiviral in reply to AussieLouis

I suspect that if a government-sponsored group in Vietnam blew up a dozen blocks of Sydney during a weekday, Australia would not turn the other cheek.
I also suspect that the US is not twisting anyone's arm to move those forces to the West Pacific. Without those forces, I suspect many of those countries would be losing territory right now, certainly Taiwan, Vietnam, and the Philippines. Without that naval base in Australia, China would probably be patrolling Australian waters today.

USS Geometer in reply to AussieLouis

Where are you from? "Supporting terrorist groups in Syria, China, Russia and Northern Africa?" "Creating revolutions in the Middle East?" The U.S. is supporting all those movements attempting to free themselves from authoritarian/dictatorships in those countries?
We have not been perfect, and some of those who have represented us in America have gotten it wrong. But don't conflate our mistakes with your subterfuge with respect to the facts in Syria, the Middle East and elsewhere.
Here is a newsflash for you - people don't like to be repressed and controlled by dictators. They don't want to be slaughtered when they try to speak their minds. Welcome to the 21st Century you backward fuck. It is those people who fight for their freedom. You have got to be either really dumb or a member of Russia or Syria's propaganda ministry.
Your post is disgusting and evil.

Michael Dunne in reply to AussieLouis

Interesting misrepresentations:

Possibly approaches 900 facilities. Big difference. I recall audits from several years ago that separately counted base housing, arsenals, airfields, workshops/depots, etc.

Also some sites are just leased buildings or unmanned posts, or temporary and/or shared facilities too.

To put things into perspective, supposedly only 13 countries hosted more than 1,000 troops/staff back in 2010:
Belgium, Germany, Italy, Spain, Turkey, the United Kingdom, Japan, Bahrain, Djibouti, South Korea, Iraq, Afghanistan and Kuwait.

Iraq is off the list now I bet, so we are down to 12.

Unless you have a credible source that is recent (and not some old Chalmers Johnson book), you ought to refrain from such exaggerations.

As for some bases, they are subsidized by the hosts. Like the Japanese, that pay $2 billion plus for that purpose.

Personally I am partial to closing down more bases and lowering the US' profile.

And the numbers had trended downwards in S. Korea and Japan over the past decade or so. 8,000 to 9,000 Marines will be moved back to US territory from Okinawa over the next 5 plus years for instance.

Otherwise, the US didn't start the Afghan war. Al Qaeda and the Taliban did by instigating violence.

john4law in reply to AussieLouis

Typical leftist desperation and recklessness. When the United States is being openly and arrogantly threatened with nuclear attack by rogue nations and their terror surrogates and cynical Russian and Chinese enablers and expansionists, the solution to no money for further entitlement vote buying is gutting Defense! Who needs a military to defend a limitless food stamp and unemployment check economy and culture!

CnKQ7pSia6 in reply to AussieLouis

You flatter America too much. America created the Arab Spring revolutions in the Middle East... come on now. Give the people of those countries some credit for all their courage and sacrifice at least.

While not all American military bases are necessary, one has to be living under a rock to say that it is America that foments trouble in critical zones such as the DMZ between North and South Korea. Just as America protected West Europe from the Soviet threat during the Cold War.

I'm in agreement about there being a lot of room for cutting the defense budget, but to read your post one would think that America is omnipotent, omnipresent and responsible for most of the evil in the world.

Michael Dunne in reply to Antiviral


I don't believe it is semantics though - From my understanding the site in Darwin remains wholly Australian, and that American troops are just being rotated through, with each unit/personnel arriving there on a temporary basis.

I would have to check, but believe that arrangement poses certain implications (like no base housing for dependents for starters, possibly less rules on dealing with misbehaving personnel, etc.)


The article mentions that federal government is equal to 24% of GDP. What the article leaves out is that combined federal, state, and local governmetn spending is equal to 42% of GDP (2010).

J. Kemp

The problem with government is somewhat analogous to the problem with health-care cost escalation in America with 3rd-party insurance. It goes something like this:

In health care, Doctor says: "You really should have that expensive procedure which I can provide. It won't cost you anything, because your insurance pays for it."

In government, Politician/Bureaucrat says: "Wouldn't it be great to expand our domain with this nifty program. It won't cost us a penny, because the taxpayer pays for it."

The fact that health care in America could balloon to 18% of GDP shows that America is a culture where such things -- including government spending -- could balloon endlessly, until America explodes like the debt-filled balloon it has become.

Very sad.

Michael Dunne in reply to J. Kemp

I thought he biggest jumps in spending though have been with discretionary spending for the military, no?

I thought with medicare/medicaid it is people meeting eligibility and taking up the benefits based on established criteria...

I assume the bailouts are pretty much coming to an end, with money being repaid (thought about $70 to $100 billion to go based on an interview of Neil Barofsky). Similarly, thought the stimulus money is at an end too.

If that is the case, is the empire building in a narrowly defined field of military strategy/spending/procurement/force levels management,and hence a tad more easily remediable?

Otherwise, I have never heard this from a doctor: "It won't cost you anything, because your insurance pays for it"

Actually with two doctors I heard the opposite - "I don't take insurance," or , "this isn't covered by insurance"


Romney is a Republican, so if he is elected he will drive the deficit into the stratosphere. The last Republican to even slightly decrease the size of the deficit was Eisenhower, and there haven't been any Eisenhower Republicans around for fifty years now.

Besides, who wants to decrease the size of the government. We need the government to stand up to the private sector. Right now we're on the road to serfdom with increasing privatization of, it seems, everything. It's just a big scam and a power grab. We wind up with less and paying more for it. Worse, we're expected to say thank you when we get a fraction of the value of our marginal labor left to us.

Michael Dunne in reply to Antiviral

Payroll taxes though are used to pay for the main social programs, over $800 billion I believe.

Otherwise, military spending and security are the biggest discretionary spending items. Defense is around $700 billion, while homeland security is over $50 billion.

Just curious, what is "victims" in reference too? Which people and which supporting programs?

Kaleberg2 in reply to Antiviral

Most of the "wealth" of the rich is just government issued money, government implemented "private property", shares of government chartered collectives, deeds to government enforced real estate and the like. The more government stuff you have control of, the more you should pay. Don't get all mystical about private property. It's a government service. There's nothing mystical about it. The wealthy just use more government services than the rest of us.

CnKQ7pSia6 in reply to Kaleberg2

Democrats controlled Congress for almost all of the years between Eisenhower and 1996. Congress is to be held most responsible for spending, taxes and deficits.

Today the government controls 40%+ of the US GDP. That's really high but apparently not enough for you. So how much will be? 50%? 60%? 75%?

The irony is that you don't trust businessmen but somehow you trust politicians with all that money - People who give you close to zero say on day to day spending decisions they make in cahoots with lobbyists and special interest groups. At least with a business, you can choose to not drink Pepsi or drive a Ford or choose Exxon's competitor. They don't FORCE you to buy their products. You want an entity (the government) which has the monopoly on violence/force to be controlling most of what this country makes?

CnKQ7pSia6 in reply to Kaleberg2

Please could you elaborate on your claim that private property is a "government service"? Does that include possessions like one's house, car, land, your own body etc.? Not unless we're a full fledged socialist paradise.

Or do you mean that government services like the justice system, police force etc. protect our rights to private property? Wouldn't that argument also mean that my right to own the fruits of my labor, my ideas, my very mind and body all at the pleasure of the government of the day?

And please could you also tell us how exactly do companies like Microsoft, Google or Facebook owe their business to government largesse? Seems somehow like the argument made by the local Mafia goon - "Hey we let you stay in business and don't shoot you. Thank us for it."

Michael Dunne in reply to CnKQ7pSia6

"Democrats controlled Congress for almost all of the years between Eisenhower and 1996."

But we had fiscal discipline of sorts under Ike and a democratic congress. How could we bring that back regardless of party?

Otherwise, I believe Newt Gingrich became leader of the House after the 1994 congressional elections...

Aside from that nit, in my opinion, any true conservative would treat concentrations of power in the private sector with similar suspicion as concentrations of public power.

CnKQ7pSia6 in reply to Michael Dunne

Michael -

Sorry about that mistake with the date.

Fiscal discipline will require shared sacrifice. It seems that everyone in this country is OK with raising taxes or cutting spending - just don't tax me more or cut out programs that I use. Therefore we shouldn't blame our leaders when we the people will punish anyone who tries to reform the system.

Besides how do you have concentration of power in the private sector? It isn't that Google, Ford, Walmart, Verizon, BoA and Exxon are part of some common club where they all agree to suppress us. The private sector is hugely fragmented - companies compete not only with others in their own specific sector but also with other companies that make substitute products (e.g. cable companies v. service companies like Netflix).

Yes, indeed the greatest threat to a free society is concentration of power in anybody's hands - private or public. But the problem is that concentration of power almost always comes in the public domain. And in the minority of cases where it comes to the private sector, it ends very quickly (just see where Microsoft is today compared to the 90s).

The logic for that private v. public mechanism is very simple - it is the way power is earned by players in each. In the private sector everyday you vote for several players by using your income in a very fragmented fashion. No single company controls 60 or 70% of your budget. No single company or conglomerate controls even 10% of all US consumer spending. You can tailor your "vote" for each product you buy.

Not so with the public sector. You have to pick one candidate, warts and all, even if you don't agree with all his positions. He's the lesser of the two evils. And he with his compatriots will control some 40% of all your output.

Antiviral in reply to Kaleberg2

That is an interesting few of wealth, one that many in the US share. Of course, de facto it is true. Stop paying property taxes and your county will take your property and sell it to someone else. At least in principle, what you said is not true, though. We are free to carry our money out of the US, although only at $10K a trip. Limitations on eminent domain also indicate that the owner is the citizen rather than the state.

Antiviral in reply to Michael Dunne

Payroll taxes have not fully funded Social Security for a few years, and have not fully funded Medicare since 2001. While in theory extra collected payroll taxes were saved, in practice they were spent in the past, leaving current generations to make up the difference. The result is that today the Federal Government takes ~15% of all wages earned in the US less that $100K/year for these programs, then must add a growing amount of income taxes to prop the programs up.
Social Security spending alone is $800 billion per year. Federal Medicare/Medicaid spending is another $800 billion per year. Together just those programs make up $1.6 trillion/year. Total US revenues are only $2.6 trillion per year. I agree that the rest of the world should shoulder more of their own defense spending, but cutting defense alone will not balance the budget.
The "victims" are all the chosen groups who receive government handouts. Roads, bridges, ports, railroads, and other infrastructure benefit everyone. Taking money from rich people to fund infrastructure improvements could be justified as increasing the size of the US pot. Taking money from money-making and taxpaying entrepreneurs and handing it to people in exchange for nothing helps no one else but the chosen ones, and at least slows down the growth of the US pot.

Michael Dunne in reply to CnKQ7pSia6


Thank you for your points. There is collusion, which this Libor affair may represent a recent example of, as well as the credit card companies fixing fees and terms and conditions.

Then it seems one doesn't have to have a monopoly to cause trouble. Enron seem to exemplify that, with disrupting power supplies on the west coast for economic gain (probably would not have believed it if not for the recordings of traders...).

Michael Dunne in reply to Antiviral


Interesting points. It has been awhile since I took a look at Medicare in detail (like four years).

I thought Medicare started outrunning receipts in 2008? At least Medicare Part A?

Found this point in a CNN article on the Trustee Report for open disclosure:

Don't other parts, like Part D involve certain people paying some sort of premium?

With payroll taxes, I pretty much expect increases in the future along with removal of caps shielding higher salaries.

CnKQ7pSia6 in reply to Michael Dunne

Michael -

I'm in complete agreement with your points. I believe in no more regulation than what is absolutely required. Such regulation should be very clear and concise (without tons of caveats) and it should be enforced in a fair, strict and consistent manner.

Being inherently untrustworthy of man's ability to resist the corruption that comes with power, I oppose big government the same way I would oppose a business monopoly. Any entity that controls as budget of well over $2 trillion is naturally going to attract power brokers the way honey attracts flies. There is no use trying to swat the flies away, the honey needs to be removed. While there certainly are some truly honest men in politics, overall you're not going to change human nature.

On the Enron issue, though I'm not thoroughly familiar with it, monopoly does not mean you're the only provider of service nationwide (hardly ever happens, the Bell Telephone company being a rare exception). You can well be the only game in town in a given geographical area, like the cable companies are, and abuse your power. Thankfully even that is ending with globalization and the information economy. Cable companies for example must now compete with the likes of Apple TV, Netflix and Amazon. The market finds a way - it is ruthless. Government must merely see to it that everyone plays by the rules.

Dr Kick

Our Founding Fathers (FFs) did not worry about the absolute size of the state. Thomas Paine's "Government is best which governs least" said nothing about size or scope of government.

The FF wanted a responsive and responsible government. That is to say, they wanted government to be as effective and efficient as it could be. They felt that the size of government should be in response to the people's needs, expressed through their elected officials.

So the question should not be the Far Right's "how to reduce" government. Rather it should be the Center or Center-Left's "how to get more for the buck out of government".

Think of the question from a sports perspective: Can the business of baseball (or soccer, etc.) be accomplished with fewer lawyers, marketeers, committees, etc.? Maybe, but who bothers with that?

The same is true (on a larger scale) with government.


One way to reduce the size and power of the state would be to replace all entitlements to individuals and subsidies to firms with a universal income scheme. This would take away power from government and business and transfer it to the people. This would be great for most of us but not for those who want to tell others how to live their lives.

(The author of this comment has a web log on economics at


About the US ellection:
(1) Ever sat in Arizona or Texas or any other non North-East coast state in a coffee shop and glimpsed at the TV: Europe and Asia felt als far away as Mars: most Americans are not interested in international politics, hence the don#t care. They care about USA.
(2) How much does the average educated US citizen understand about relationsships between taxes, budget deficits, inflation rate, exchange rate, international competetiveness and what have you not? But what the do understand certainly is: do I have a job, is it secure and if I do not have one what are the chances of getting one? Yes, it is the economics, but more precice: it's the labour market, stupid!

Frank Hollenbeck

In 1920, the government cut expenses 60%, cut taxes over 35%, cut the deficit by a third and balanced the budget. The economy was in a depression, but because the government took its licks, and put the money back into the private sector, where the money was taken from, the economy rebounded in a year, and by 1923 unemployment was below 3%. wake up smell the coffee, Economist!

youngspartan in reply to Frank Hollenbeck

yes but then in 1921 unemployment was 11.9% and 1922 was 7.6% before the unemployment rate dropped into healthy territory in 1923 ( While keynsianism is not the answer, to much austerity clearly doesn't work either (Europe).

The US needs to find a way to reduce its deficits and debt, because once government debts exceed 90% of GDP it can begin to drap GDP down by 1-2% annually. The US is currently around 70% of GDP so the situation needs to be resolved at some point in the near future. The best time to do this is not in a recession when cutting any business or government spending could have large ramifications for the economy as a whole. Waiting until 2014 or 2015 may be safer and healthier for the economy as a whole since it will give the automatic spending due to recession (unemployment checks, medicare, food stamps) a chance to go down a little bit. This will also ensure the situation can be assessed more accurately and not in an environment where government spending stats are a little skewed due to recession.

Throwing deadweight overboard will cause ships, aircraft, and floundering economies to rise. In 1920 the United States was lead by real Americans. They were pragmatic, they corrected their economic imbalances, and they would never have found themselves in the situation we are facing today.

fayn in reply to youngspartan

"to much austerity clearly doesn't work either (Europe)."

that is simply beacause there is NO austerity in europe. Yes, the govts are raising taxes and increasing regulation, but that couldnt by farther away from what "frank hollenbeck" described above as austerity. Can you see slashed social programs, can you see loosened labour market, can you see deregulation, can you see lowered taxes? I certainly dont, and I live here in EU.

Following the onset of the 1920-21 depression, the Harding administration sharply increased tariffs as well as moved to lower income taxes.

See Emergency Tariff of 1921, and then the subsequent Fordney-McCumber Tariff of 1922. Basically brought tariff rates on dutiable imports up to 35% or so, from less than 20%.

I believe the tax cuts took effect in 1922, so possibly after the economy rebounded.

As for spending, how much was due to programs related to WWI finally being put to bed? The armistice took place in November of 1918, and then there was an occupation and period of vigilance in 1919 until the Versailles peace agreement was concluded (like the British blockade of Germany). Have to assume it took some time to wind down contracts geared for 1919.

Michael Dunne in reply to guest-iomjjaa


I say this tongue in cheek, but the Great Depression did follow the recovery from the 1920 Depression, about eight years later.

Persisted through Herbert Hoover's administration, undermining his legacy. Afflicted many persons who had dealt with the prior depression in 1921...


easy to fix
1 close all depts except DOD and State, delegate all else to the States.
2 increase ss and medicare age to 75
and as the french would say the jeux son fait ( or something like that)

youngspartan in reply to aldol

eliminating the inefficient federal beaurocracy would be so helpful but I might want to keep some things like the Federal Reserve and the SEC as well. Can we have a 3rd dept called miscellaneous useful items? lol

Michael Dunne in reply to aldol

The department of energy produces and maintains our nuclear weapons. Not sure I would want that delegated to the states.

Also, not sure closing treasury, the mint, immigration and other entities tightly bound with enumerated constitutional powers of the Federal government would represent a great move.

So maybe have the MUI department that youngspartan speculated about..


"Federal regulators now touch areas of economic activity they once left alone, such as greenhouse-gas emissions."

Unfortunately, the executive branch has been forced to pick up the slack for a US Congress that lives sometime in the 14th century.


Yonkers, New York
27 July 2012

It is wrong for this author of this Essay to insinuate that John Maynard Keynes's prescriptions for combatting an economic recession or depression using creative and bold Fiscal Policies are now passe.

Those prescriptions are still as valid now as they were way back in the Thirties when the U.S. found itself in the midst of a horrible Depression. It was President Franklin Delano Roosevelt's New Deal make-work policies, plus the unfolding of World War II, which successfully got the U.S. out of that Great Depression.

Big Government did the job then, and Big Government will do it now that the U.S. is still struggling to put the Great Recession of 2008 behind it.

Make no mistake about that.

Mariano Patalinjug


Unfortunately I must agree, which is why we can expect another decade of recession.


It is complete and utter duplicity when the Republicans pretend that their party wants a smaller government. I will grant that there are self-identified "Republicans", marginalized oddballs and freaks, who are patsies enough to believe that the mainstream GOP shares their - never well thought out - fantasies. But the truth is that, while the GOP wants to take money from the poor and the brown, they will spend every penny taken and more on their own power base. No pol goes to the trouble of gaining power and then voluntarily decreases it.

xP-MDx in reply to bampbs

So as a conservative, I shouldn't vote on the basis of 'no confidence'?No government has ever gained a power and later returned it to the people. So what do you suggest the alternative to Republicans is for us conservatives? Your last sentence gives all the claim needed for my philosophy. You can either vote Republican and hope that some have enough integrity to reduce the State regardless of cynicism, or you can vote Democrat and never have to worry about even hoping that it will happen.

Wunala Dreaming

Quote: "But once in power, Republicans may well flinch at cutting such popular programmes without Democratic support."

Whether they flinch or not, what will be (depressingly) interesting is the following, as far as I am concerned:

- How both parties' PR machines will rev close to the redline to justify either cutting grandma's social security or not doing anything after screaming for the past 3 years about out-of-control entitlements; and,

- Both parties' electoral prospects after either decreasing transfer payments or not doing anything about them.

I think Tea Party-backed representatives and senators have dug themselves into a nice, deep hole policy-wise. Should the GOP regain control of both houses, not to mention 1600 Pennsylvania avenue, they will have no choice but to cut popular spending programmes.

Or to hire PR geniuses to somehow sell no reform as a victory for small government and American entrepreneurialism. My bet is on the latter.

Dr Kick in reply to Wunala Dreaming

Ms. Stein (Green Party) for President!
Dump selfish Mitt and his evil cohorts!
Dump the less than promised BHO2 and his weak party!
Throw both large parties to the wolves!
Take America back from the moneyed class!


"If you’ve got a business—you didn’t build that. Somebody else made that happen."

For many Republicans this line, even in context, is tantamount to a "Kinsley gaffe" - a pol inadvertently saying something revealing about oneself or one's beliefs in an unguarded moment without stopping to consider the political ramifications. It is reminiscent of the president's "bitter clingers" comment during the 2008 presidential campaign.

Mr. Obama has made a number of comments over the years that indicate at turns, hostility, indifference, naivete and ignorance towards/about business and businesspeople. And these beliefs inform his policy preferences.

tmbass in reply to timshel

Rebounding profits are attributable primarily to ultra-low borrowing costs due to Fed policy and to sharp corporate cost-cutting in the wake of the recession. The president can't take credit for the first and blames the need for the second on his predecessor. By historical standards, economic growth and related employment growth in this recovery is low relative to the size of the recession that preceded it. There are a host of reasons for this. Government fiscal, regulatory policies and the general business climate and the economic policies of foreign governments are some factors which the president has influenced. And in these areas there is, I feel, considerable room for improvement.

timshel in reply to tmbass

I never made the argument that the president is responsible for the profits, but we continually see the "red-tape" argument put before us as a big reason why businesses are not growing and hiring. It's complete horsesh*t. They aren't hiring because no one's buying! It's pretty straightforward.

There are many changes (perhaps more structural than regulatory) that I think we need, especially on Wall Street and with the health insurance industry. But we have not gotten useful changes in either one despite all of Obama's "accomplishments". It's very odd for me to hear conservatives complaining about how Obama has got everything bogged down in red tape and hates business, when in fact he has done almost nothing. We are approximately where we were 4 years ago. If I was a voting republican, I'd be thrilled with Obama..

tmbass in reply to timshel

Obama has, indeed, increased the regulatory burden on business. Perhaps these passages of the article eluded your attention:

"Even with these caveats, however, government has grown under Mr Obama. This is especially true of regulation, the biggest irritant to business. By the White House’s own reckoning, federal agencies, especially the Environmental Protection Agency (EPA), have issued more and pricier rules per year than under George W. Bush. And that is not even counting the hundreds of new rules dictated by Obamacare and the Dodd-Frank financial reform, most of which have yet to take effect.

Federal regulators now touch areas of economic activity they once left alone, such as greenhouse-gas emissions. The Consumer Financial Protection Bureau (CFPB), brought to life by Dodd-Frank, announced on July 16th that it will start regulating credit-reporting bureaus, such as Equifax, which help determine whether a consumer gets a loan. Existing rules are being enforced more energetically: the Commodity Futures Trading Commission’s $200m fine levied on Barclays, a British bank, for manipulating Libor, the inter-bank lending rate, was its largest ever."

Dodd-Frank and the Patient Affordable Care Act, in particular, are large expansions of the federal government's regulatory powers by historical standards.


Anyone wanting to evaluate the difference between a Romney and Obama presidency should compare, not the meaningless noise of a campaign, but the actions of each man while serving as an elected official. Comparing disparate blocks of experience, such as Romney's time as head of a private equity firm and Obama's time as a law professor, is pointless. Both are relatively pragmatic politicians who will disappoint the lunatic fringe from their own parties and will be instantly labeled as extreme by the blind partisans. Perhaps what is needed is an improved version of Ron Portman's bill to end government closures; rather than reducing the budget when congress fails to act, reduce the number of voting congress critters.


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