Is government really incompetent and are debt and deficits really problems?
As a new Biden administration prepares to take office, anti-government Republicans are renewing their efforts to convince Americans that government is irretrievably incompetent and corrupt. Ronald Reagan said in his first Inaugural Address in 1981 that “government is the problem.” Republicans have built on this statement to convince Americans that government is more of a problem, more corrupt and more incompetent than corporations led by overpaid CEO’s whose stock goes up when they fire people, who devastated manufacturers like General Electric, and who have championed the lemming-like rush to China.
Republicans also want Americans to believe that government cannot afford programs to give middle-and working-class people more income and health care security. Instead the GOP contends that the “individualism” that characterized the U.S. when 80 percent of Americans worked on farms, and the generosity of “work givers” will take care of working people.
The GOP narrative further asserts that government debt is more dangerous than the frequent surges and contractions of private debt that have been the cause of almost all U.S. recessions and that the government is in danger of going broke if it spends more generously on its people.
The U.S. government in the past century, contrary to the Republican narrative, has done important things that have made the lives of ordinary people better and more secure. Most important perhaps is Social Security (1935), which Democrats pushed through Congress. It protects 64 million Americans and is the only source of income for roughly half of these. It can and should be more generous but most working Americans faced a far bleaker old age before Democrats created this program. Back then the elderly had to depend on meager savings that only a minority could accumulate, the resources of their children, and the bread line. It will be good if President Biden can make Social Security more generous, but Democrats have made progress already and certainly will try to make more.
Health insurance is another government success although American health care is still an inadequate, costly, needlessly paper-choked mess compared to what working people have in other countries. Medicare and Medicaid now cover 107 million elderly and lower income Americans. Both were created during Lyndon Johnson’s administration in 1965 when Democrats also controlled both houses of Congress. The Affordable Care Act, a.k.a. ObamaCare — 2010 is the latest Democratic effort to expand and improve health care that Republicans have repeatedly tried to overturn.
Americans who had health insurance before the government programs, Medicare, Medicaid, and ObamaCare were mostly covered through employers. Except when unions played a role, this made them dependent on terms dictated by private insurers and their bosses. Health insurance still is 30 to 40 percent more expensive in the U.S. than in Canada and other advanced countries largely because Republicans have fought since World War II to make it a pot of gold for an assortment of local and national profiteers.
Government also helps farmers. They had as little economic security as urban workers before Democrats improved the security of both groups. The Agricultural Adjustment Acts of 1933 and 1938, passed by Democrats and enhanced by subsequent legislation, now support prices for 39 percent of America’s 2.1 million farms and are a huge boon to the Midwestern Farm Belt, the South and West.
Government has made lives better in other regions too. The complex of dams created by the Tennessee Valley Authority beginning in 1935 brought opportunity to seven once-poor Southern and Appalachian states despite fierce opposition from conservative legislators, coal interests and utility companies. Similarly, the Bonneville Power Authority dam complex in the Northwest built during the late 1930s and 40s and the Hoover Dam serving the Southwest were government projects that weakened the grip of private power companies holding back development in these areas.
Only 10 percent of farms in Nebraska were electrified before the Rural Electrification Administration wired them in the 1930s and 40s. The REA was backed by Democrats and a few progressive Republicans like Sen. George Norris. Private companies that opposed government-financed electrification argued that rural areas could not be served profitably, just as their ideological heirs do today when they oppose universal rural broadband. Contrary to the GOP’s “government is the problem” mantra, Americans have always understood that government is essential to protect ordinary people against abuses by powerful private actors.
The examples above are just a few of the most important achievements of American government that improve the lives of the people and limit the ability of powerful private interests to exploit middle class and lower-income Americans. The Republican contention that our elected government is more likely to be corrupt, inefficient, and exploitative than private sector actors needs to be viewed against this background of government achievements and what all Americans know about private boardroom collusion and mistakes, money grabs, bankruptcies, scandals and government bailouts.
The claim that the U.S. cannot afford a large expansion of Social Security, health insurance, public works and the like is always a central part of the Republican anti-government narrative. Fear of government debt, a key part of the GOP narrative is already is being voiced loudly months before the Biden administration takes office. There is no need to get into theoretical arguments here about why government spending and debt is not a problem. The verifiable fact is that government over-spending and debt has not been a cause of any of the depressions and deflations that devastated ordinary working Americans in the 19th, 20th and 21st centuries. To the contrary, the problem is always the collapse of private debt bubbles like the mortgage debt expansion underlying the 2008 Financial Crisis. It does not matter whether the private debt bubble was incurred to buy land, invest in railroads, speculate in stocks, or purchase other corporations and real estate. On the other hand, when the U.S. government has spent prolifically as it did for the Civil War, World War I and World War II, the country and the World were better for it and the economy soared.
It is a tragedy that United States and its people — who are blessed with resources, talents and freedoms that no other country on Earth can match — continue to be held back by crippling ideas fostered by ideologues about what the government’s role is and what it can afford.
Paul A. London, Ph.D., was a senior policy adviser and deputy undersecretary of Commerce for Economics and Statistics in the 1990s, a deputy assistant administrator at the Federal Energy Administration and Energy Department, and a visiting fellow at the American Enterprise Institute. A legislative assistant to Sen. Walter Mondale (D-Minn.) in the 1970s, he was a foreign service officer in Paris and Vietnam and is the author of two books, including “The Competition Solution: The Bipartisan Secret Behind American Prosperity” (2005).
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