The conservative stance on the issue of economics and the scope of the federal government is crucial to understanding the conservative worldview. The nation was founded upon the notion that a large national government, wielding ultimate power over the citizens was to be avoided. The country’s founders, having recently fled government persecution in England, wrote the Constitution in such a way as to protect the citizens from a government with expanding power. However, as we will explain, our government is moving slowly towards that which our Constitution was intended to prohibit. In this post, we hope to lay out the fundamental beliefs held by conservatives in the area of how government policy affects our economy, business, taxes and welfare. We will also be showing where we believe liberal policies have not worked, and will never work.

Our nation is sliding down a slippery slope toward totalitarian socialism. We will detail exactly what that political ideology looks like in a future post. However, for practical purposes, here is a one-sentence definition of liberalism. Sen. Joseph Clark (D-PA, 1957-1969), states that liberalism consists of "meeting the material needs of the masses through the full power of centralized government." Now, we cannot speak for you, but as Ronald Reagan said in his brilliant “A Time for Choosing” speech, we do not like to be referred to by liberal elitists as simply part of “the masses.” Reagan goes on to say, “A government can’t control the economy without controlling the people.” That is the reason why we believe that the “welfare state,” which is slowly taking shape in America as we speak, is so dangerous.

THE WELFARE STATE

In this discussion, we will refer to the term “welfare state” to mean a nation in which the government decides to take the profits made by hard working citizens, and redistribute them to citizens who are not net contributors to the economy. America is generally considered more conservative than other nations on the whole, but in the area of welfare, America has embraced socialistic ideas more than most other nations. Almost half, 43% of all public spending is on social welfare programs. America spends more of its GDP on healthcare entitlement programs than any other nation in the world. Examples of welfare programs include Medicare, Temporary Assistance for Needy Families, Medicaid, Aid for Families with Dependant Children, Social Security, Old Age Survivors and Disability Insurance, Food Stamps, Unemployment Insurance, Earned Income Tax Credit, Supplemental Security Income and many others. The sheer number of welfare programs alone speaks to the fact that our country is moving slowly toward socialism. A public figure with whom most of you are familiar, U.S. Senator Hillary Clinton (D-NY), has outlined a plan to provide government-funded healthcare to every American. This would not be a small step toward socialism, this would be socialism, alive and well in our “free” country. There are several reasons why a universal healthcare plan would be disastrous.

• If “HillaryCare” were implemented, the government would be taking control of 1/7th of the U.S. economy, a supposedly free-market.

• It would be the largest government program ever seen in this country.

• Large government programs demand large tax increases.

• The original plan includes criminal penalties for people who try to pay for unapproved health care out of their own pockets. This is an example of the government literally making capitalism illegal.

• The estimated cost of the Clinton plan is $110 billion a year. However, estimates of the cost of government programs have a history of being low. For example the largest part of the medicare program, part A, was estimated at its inception in 1965 to cost $9 billion by 1990, but the actual cost in 1990 was $67 billion. Here we see an example of the projected cost of a welfare program and the actual cost being wildly different. If we applied the same ratio of estimated cost to actual cost to HillaryCare, we would see that her program could potentially cost $818 billion dollars per year.

There are helpful analyses of her plan here, here, and here.
The moral of the story is this: The more we spend on welfare programs, the more we drift toward socialism in the long run, and the more harm we do to the economy in the short run.

GOVERNMENT SPENDING

By 2009 the annual budget will have nearly doubled in 13 years, reaching its highest figure ever at $3.1 trillion. Our government spending has been increasing exponentially like this for years, as you can see in the chart below. Actually, the budget for next year is so high, it’s off this chart.


This flies in the face of logic, as we can also see that our national debt is reaching gargantuan proportions. If you look to the right sidebar of this page, you will see a “national debt counter.” We have chosen to keep this element part of our page, as a reminder of what government spending can do. That being said, at this moment, if we look at the amount of national debt, divided by the number of citizens of the U.S., we can see that each citizen owes over $30,000. However, if we look at how much the average citizen pays in taxes over a lifetime, we find something even more startling. The average couple making twice minimum wage, can expect to pay $300,000 dollars in taxes over their lifetime. That’s five times as much as they would owe the government to pay off the debt. See this article for more details. So we can see that the government is more than able to pay off the debt simply from taxes alone. However, year after year, administration after administration, our government spends, and spends, and spends, with no regard for the mammoth national debt. There are two good sites, here , and here that are good ways to watch how the government spends. To close this topic, we leave you with a summary of government spending, by Harvard economics professor, Martin Feldstein. “Increased government spending can provide a temporary stimulus to demand and output but in the longer run higher levels of government spending crowd out private investment or require higher taxes that weaken growth by reducing incentives to save, invest, innovate, and work.”

THE NUMBER OF FEDERAL EMPLOYEES

A good example of the expanding size of the government is the number of government employees. Altogether, the government employs nearly 15 million people, according to this Washington Post article. Compare that to the total workforce, and we’ll see that one out of every ten working people in this country is working for the government. Most federal employees are part of the bureaucracy, that is, any large complex government agency. The growth of bureaucracies, each with it’s own desires for financial support, contributes to our national deficit and the general inefficiency of the government. The Oxford English Dictionary’s definition of the term red tape is “excessive bureaucracy or adherence to rules and formalities.” The basic problem with bureaucracies, according to the tenth edition AP Government and Politics text, is that they are “subject to competing sources of political authority, must function in a constitutional system of divided powers and federalism, have vague goals, and lack incentive systems that will encourage efficiency.” This scenario is the direct opposite of what is found in a well-run private business. This cartoon nicely summarizes the problem of huge numbers of government employees, and lack of efficiency.

GOVERNMENT REGULATION

A key aspect of conservative thought involving size of government is a desire to see less government regulation. We’ve seen time and time again that restriction of free enterprise by federal regulation has had negative economic effects, and that lifting those regulations has had positive effects. Let’s look, for example, at the effects of Ronald Reagan’s deregulation of the oil industry. In his first week in office, Reagan lifted many of the crude oil price controls. The result was an unprecedented boom in oil production and a dramatic reduction in prices. Read more about the regulation of the oil industry in this article, written by Ron Paul. An example of the harmful effects of regulation can be seen in the automotive industry. In California, a bill was passed (AB1493) whose goal was to “achieve the maximum feasible reduction of greenhouse gases emitted by passenger vehicles.” These regulations might seem harmless on the surface, but they will add an estimated $3,000 to the average price of a new car, and “The automobile industry estimates that it will close about eight plants… resulting in the loss of thousands of American jobs,” says Rep. John Dingell. These are just some of the effects of some of government regulation of private business. Read more about government regulation here.

GOVERNMENT PROGRAMS JUST DON’T WORK

Ronald Reagan gave a helpful summary of government inefficiency when he said the following, “One way to make sure crime doesn't pay would be to let the government run it.” For an example of a government-run program that is failing miserably, we need not look further than our own education system. We believe the current system of public education is not doing an adequate job in equipping the children of this nation. In the Organization for Economic Cooperation and Development's Program for International Student Assessment 2003, U.S. 15 year olds ranked 24th of 38 out of the worlds developed countries in mathematics, 19th of 38 in science, 12th of 38 in reading, and 26th of 38 in problem solving. In a nation of our stature and wealth, this is unacceptable. The national average government expenditure per student for public education is over $10,000 per year. With the government paying that much per student, there is no excuse for mediocre or second-rate education in our country. Conversely, it is estimated by the Department of Education that the average tuition for all private schools, elementary and secondary, is $3,116 per year. According to National Center for Educational Statistics data, 88 percent of private high school students apply to college, compared to 57 percent of public high school students. And reports from the College Board indicate that SAT scores for private school students are well above the national average. Here we can see how a private industry is offering a product of much higher quality at a much lower cost than the government program. Read more about the failure of government programs here.

TAXES

A key aspect of governmental control on the lives of individual citizens is the issue of taxes. The government, through the personal income tax has control over its citizens' actual disposable income. The more money the government takes in taxes, the less people have to spend for themselves and thus drive the economy. President Ronald Reagan signed tax cuts into law which arguably stimulated a doubling in total tax revenues (from five hundred billion to one trillion dollars). Conversely, President Bill Clinton’s tax increases of 1993 brought many negative effects upon our economy. Analysts have concluded that because of Clinton’s tax hikes, economic output from 1993 through 1996 was $208 billion less than it would have been -- a loss equal to nearly $2,100 per household, and the gross domestic product would have grown $66 billion more over the period than it actually did, according to figures from the National Center for Policy Analysis. All we need to do is look at history to see that tax cuts stimulate the economy and tax increases cause it to slip dramatically. Also, we believe that the nation would benefit from the implementation of a flat income tax. Currently, there are 17 nations who have adopted such a tax. Nations that have adopted flat tax systems generally have experienced very positive outcomes. Economic growth increases, unemployment drops, and tax compliance improves. Nations such as Estonia and Slovakia are widely viewed as role models since both have engaged in dramatic reform and are reaping enormous economic benefits, according to this article from the Cato Institute. We believe that such a tax, would put more money into the pockets of the American people, who would in turn, spend that money and thus boost the economy. In addition, we would be remiss if we did not mention that the U.S. has the second highest corporate tax rate in the world, according to this report by The Tax Foundation, which we highly recommend you read. High taxes on corporations force companies to:

• Decrease the quality of goods produced

• Increase the price of goods produced

• Decrease investment

• Decrease productivity

A good summary of the effects of high corporate taxes can be found in this National Post article.

CONCLUSION

Conservative principles of limited government work. They were at the core of the founding fathers’ vision for our country, and they were codified into law in the Constitution. The clear trend in modern America is toward socialistic thought, which leads to more “entitlement programs,” expanding government bureaucracy, higher taxes, economic stagnation, and ever-more intrusive regulations which curtail the freedoms of individual citizens. Left unchecked, this trend leads logically to Stalin’s Russia or Castro’s Cuba. It is our hope that by focusing on the size and scope of government, we will stimulate you, our readers, to consider and desire to preserve the unique principles upon which this nation was founded.

Josh