Bless Small Government

The budget deal to lift the debt ceiling ensures that government spending will contract at a time when consumer demand, normally the main driver of economic growth, is anemic.  This may be spectacularly misguided, but ours supposedly is a center-right nation.  Americans, we are told, like their government the way they like their house pets: neutered.  ‘Tis the season, then, to be jolly.

Or not.

But before getting too glum over our fiscal foolhardiness, it’s worth considering some decidedly positive ways that our chosen path will help bring about what those who insincerely malign big government secretly fear: small government. Here are a few examples in no particular order:

1. A Punier Pentagon
Can a nation with some of the lowest tax rates in the industrial world also spend the most, by far, on its defense?  Since 2001, the Pentagon budget has risen roughly 70 percent, from just over $400 billion annually to a hair under $700 billion.  That’s more than the rest of the world’s defense budgets combined.  What justifies this massive outlay?  The scourge of underwear bombers

The debt deal cuts about $350 billion from the Pentagon over the next decade.  If Congress cannot agree by November on where to find an additional $1.5 trillion in savings, then the defense budget will be automatically reduced by $1 trillion more.  Let’s hope that happens.  A massive military creates perverse incentives.  As Madeleine Albright said, “What’s the point of having this superb military…if we can’t use it?”  The problem is that we’re not all that good at picking our fights.  America hasn’t had an unambiguous victory in a major conflict since World War Two.  Instead we specialize in misguided quagmires.  Austerity will impose prudence.

2.  Cutting Corporate Welfare
The US coughs up as much as $30 billion annually for agricultural subsidies.  According to the Environmental Working Group, ten percent of the country’s largest and richest farms capture three-quarters of the loot.  And what do we get for our money?  Market distortions that skew our diet and destroy our environment.  The subsidies also push down global commodity prices, hurting farmers in developing countries.  One fiscal hawk in Congress called the handouts “low hanging fruit.”  It’s harvest time.

Can we afford rewarding oil companies with $5 billion in subsidies a year, especially when industry profits exceed $30 billion?  The same can be asked about $6 billion in giveaways to ethanol producers, which mostly goes into the pockets of the owners of refineries that blend corn-based fuel with gasoline, i.e., oil companies.  The answer on both counts is no.

The nuclear industry also feeds from the public trough.  According to a report by the Union of Concerned Scientists, the industry would not even be viable without Uncle Sam’s help.  What’s more, according to the same report, purchasing kilowatts on the open market would be more cost effective for consumers anyway.  Still, the Obama administration is proposing $54 billion in loan guarantees to facilitate the construction of new nuclear plants—a non-starter when Washington is penniless.

3. Curtailing the “War on Drugs”
One of the biggest big government indulgences is the “War on Drugs,” a 40-year, $1 trillion fiasco that has not been effective at reducing drug use but has been very effective at incarcerating millions of non-violent offenders (amongst its many destructive consequences).  Even the US drug czar concedes that the campaign “has not been successful.”  Yet we keep doubling down: At $15.1 billion, today’s annual drug-fighting budget is 31 times larger than what it was when Nixon first began the anti-drug crusade.

Tight budgets will force a rethink.  The War won’t be officially ended, but some changes are in store.  Sentencing guidelines will be adjusted and treatment promoted to mitigate staggering incarceration costs. (Half a million people are currently in prison for drug offenses).  Some degree of decriminalization of marijuana is also likely.

That government will shrink in ways that many on the right will decry testifies to the hypocrisy of modern conservatism’s core catechism: maligning Washington.  Cutting agricultural subsides, for example, will negatively impact 17 Republicans in Congress who, according to the Environmental Working Group, have collectively received over $5 million in payments since 2005 (those ranks include Tea Party darling Michele Bachmann).  Of course, many vital government programs also will be needlessly starved because of the anti-stimulative impact of our harebrained fiscal policies.  But at least in some cases, unlike so much else in this age of austerity, sacrifice will be shared and, occasionally, even desirable.

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