What Made the U.S. Government So Big?

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If you're going to argue that the size of government is the defining debate in modern politics, you should probably explain why the government is so big. It's not because of new laws. It's because of old laws.

David Brooks latest column argued that "as government grew," moderates and independents recoiled and conservatives revolted. Brooks is right that people are angry. Four out of five Americans don't trust the government according to a new Pew poll, the highest level of public dissatisfaction in history. But that anger has much more to do with the recession -- plus a dash of complex conservative angst -- than with Obama's new spending initiatives.

Let's look at the numbers: the feds spent $3.5 trillion in 2009, $600 billion more than in fiscal year 2008. What made the US government so big? Jim Horney at the Center on Budget and Policy Priorities explained that some of it was natural growth in government. Discretionary spending tends to increase every year, and defense spending in particular perked up to catch up with war costs.

But much of the changes came from mandatory increases as a result of the recession. Existing laws to provide aid to the unemployment added $80 billion because more Americans lost their jobs. Another $20 billion went to SNAP assistance because more Americans became eligible for food stamps. Then there are the bailouts: about $250 billion went through TARP and stabilizing payments to Fannie and Freddie initiated in bills passed under President Bush and administered by the Obama administration.

What about the $800 billion Recovery Act? It didn't increase the size of government by $800 billion. The CBO estimated that through December 2009, the stimulus raised federal spending by $158 billion and cut taxes by $114 billion. The largest stimulus programs aren't new services, but support to help states pay for old services: the Medicaid Federal Medical Assistance Percentage (FMAP) and the State Fiscal Stabilization Fund (SFSF).*

In short, our government is growing because of what past presidents have promised and voters have consistently supported at the polls: Medicare, Medicaid, Social Security, the Federal Unemployment Tax Act. Clive Crook put it nicely: "Big Government is no longer a prospect to ward off. That choice has been made."

That statement is powerful, and it has at least two implications. First, we need to stop pretending that Democrats suddenly "have become the government party." Every party is the government  party when it controls the government.

Second, now that we've made the Big Government choice, we have to pay for it. The David Brookses of the world need to explain to Americans that this isn't about Obama. It's about all of us, collectively, making decades of promises that we haven't promised to pay for. We will need new taxes, or dramatic and potentially painful reforms to our entitlement programs. That is where this debate should be.

________

*Brooks doesn't mention health care reform, but if that's leading the Big Government revolt, then some context is required. The reform bill will indeed increase government's role in health care by about $100-$200 billion by the middle of the decade and into the 2020s. At that point, Medicare and the employer tax exclusion will cost well over $1 trillion. But the plan would also cut Medicare by $450 billion in the next 10 years and enact an excise tax to eat into the employer subsidy. So while it would be wrong to argue that the health care reform act somehow decreases the role of the government, I would argue that it does not change government's role in health care as dramatically as its detractors suggest.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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