Take the Money Out of Politics: Reduce the Size of Government

Two recent news items spark today’s column:
1) Norman Hsu, one of Hilary Clinton’s top fund raisers, has been making headlines for his illegal activities (Clinton Expresses Surprise at Big Money Donor’s Wanted Status)
2) Hillary Clinton Could Use Bill Clinton’s Foreign Cash for 2008 Campaign. Though it is against the law for a candidate to take political contributions from foreigners, it is perfectly legal for a candidate to use personal income earned in foreign countries (Bill Clinton has made more than $27 million from overseas speaking engagements).

These two items have got me thinking about the Campaign Finance Reform legislation that was supposed to “take the money out of politics.” John McCain, a chief sponsor of that legislation said it’s passage would “help change the public’s widespread belief that politicians have no greater purpose than our own re-election. And to that end, we will respond disproportionately to the needs of those interests that can best finance our ambition, even if those interests conflict with the public interest.” (http://www.everything2.com/index.pl?node_id=988757)

I don’t want to debate the points of this legislation, though I do think it is bad law and completely ineffective, as demonstrated by the two news items above. What I do want to discuss is a far better way to take the money out of politics: Reduce the Size of Government.

The only way to take money out of politics is to take money away from the government. When a candidate wins, regardless of the campaign finance process, that winner is in control of a $3 Trillion dollar federal budget (that’s trillion with 12 zeros). Reforming the campaign finance process only addresses a symptom of the problem. The root problem is that the Federal government is too powerful and its coffers are way too bloated. As Ronald Reagan said, “government is not a solution to our problem, government is the problem.” And I love that Walter E. Williams always promotes, “the moral superiority of personal liberty and its main ingredient — limited government.”

Now in theory, Republicans generally support limited government and Democrats usually support big government. True to the title of my blog, I wanted to get some data to quantify this and analyze the size of government under Republicans and Democrats. To do this, I plotted the size of government over the past 60 years, with size of government defined as the amount of tax revenues in proportion to the size of the overall economy. The results were not what I expected and quite fascinating.

I expected to see the size of government going consistently up over the years, but to my amazement, it has remained relatively constant at about 20% (tax revenues are equal to about 20% of the GDP, or the federal government is controlling about 20% of the economy). While I feel this is way too high, I was pleasantly surprised to find that, over the long-run (60 years in this case), the size of government is not trending upward.

But if you take a closer look at the data, you will see some definite trends that differentiate Republicans from Democrats. Without exception, when a Republican president is in the White House, the size of government decreases, when a Democrat is president, the size of government increases. Even more interesting is what you find if you look at two-term Republican presidents. Again, without exception, Republican presidents reduced the size of government in their first term, but increased the size of government in their second term. Democrat two-term presidents unabashedly increased the size of government in both terms.

My theory: both parties are appealing to their base during their first term in order to get re-elected (the Republican base wants smaller government, the Democrat base wants bigger government). What I’m not sure of is why second-term Republicans change course. Perhaps it is due to a desire to build a legacy through enacting government programs. But I’d be interested to hear your theories: Why do Republican presidents reduced the size of government in their first term, but increased the size of government in their second term?

Though second-term Republicans change course and increase the size of government, they always net, overall, a reduction. And thank goodness they do because if it was left up to the Democrats, the size of government do nothing but increase and our freedoms, in turn, would do nothing but decrease.

1 reply
  1. jigs
    jigs says:

    I completely agree with the premise of this post. I believe the government is too large and limits freedom too much.

    However, I have a different idea for the methodology. I posted it over at my blog. Check it out and let me know what you think.


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