The Spending Sickness Makes for Unhealthy Reform

Michael Medved

8/26/2009 12:01:00 AM - Michael Medved

Government at all levels now eats up twice the share of the national economy it consumed 60 years ago. Are the government services you receive twice as valuable?

That challenge should become the key question in the ongoing battle over Obamacare. Given the obvious tendency of government to spend more and more with no discernable benefit to the public, why should anyone expect a better result from a huge expansion of the federal role in medical care?

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The numbers already tell a horrifying story about the reckless expansion of government. In 1951, despite the bloody and costly burdens of the Korean War, spending for federal, state and local governments consumed 22.38% of the total American economy, as measured in Gross Domestic Product (GDP). This year (2009) government at all levels will spend at least 45% of every dollar American individuals and industries manage to earn an all-time record for peacetime, approaching the 52.97% that governments used in 1945 at the very height of World War II. To put the current number in perspective, Lyndon Johnson drew near universal condemnation for his irresponsible guns and butter budget of 1968, with bloated government programs to back his Great Society schemes at the same time we supported more than a half-million fighting men in Vietnam. LBJs spending (which helped cost him the presidency) never exceeded 30.46% of GDP; Obamas, at an estimated 45.19% this year (without Obamacare!) is some 50% higher!

How has the public gained from this appalling increase? What aspects of our lives have improved due to expensive new government programs since 1951, or even 1968? In other words, what have we bought with all the trillions and trillions of increased spending?

Before attempting to answer that question, its important to clear away two lies frequently used by liberals to confuse the public on this all-important issue.


The first lie suggests that the chief reason for higher governmental spending involves vast increases in money for defense, wars, foreign aid and other programs related to national security.

In fact, this security spending hasnt gone up at all as a share of the national economy its actually decreased sharply in recent decades and the wars in Iraq and Afghanistan brought only relatively minor increases. In 1951, with overall government spending less than half what it is today, the defense budget was nearly twice its 2009 level. (9% to 4.7%). In other words, military spending as a percentage of all governmental spending is today only one-fourth what it was sixty years ago.

In 1968, due to Vietnam, military spending rose to 9.8%. That number (of defense spending as a percentage of GDP) came down after the conclusion of the war in Southeast Asia, and sank to a modern low of 3% under Bill Clintona level criticized by many military planners as irresponsibly low. Defense spending has increased steadily since then (to an estimated 4.7% this year) under the pressures of the War on Terror. The defense budget nevertheless remains historically low far below its levels under Eisenhower, say, or Kennedy, or Reagan (6%). In explaining the outrageous increase in federal, state and local spending, its obvious that defense and international entanglements had nothing to do with it.

The main cause for the doubling of governmental expenditures involves three areas of inexorable expansion: entitlements, social programs and bureaucracy. Since Obama care would bring dramatic additional growth in all three areas, its important to consider the way that previous boosts for relevant federal, state and local budgets utterly failed in improving governmental efficiency or effectiveness. If theres a single governmental program that has steadily improved over the last sixty years (while budgets steadily enlarged) I cant think of it. Public education offers an especially dispiriting example, with per-pupil spending nearly tripling and relative performance showing either alarming declines or a disappointing lack of positive results.


The second effort by Obama apologists to justify his runaway spending involves their favorite tactic whenever they face serious criticism: blame it all on Bush. According to this logic, the previous administration deserves most of the criticism for sky-rocketing deficits and risky raids on the federal treasury. Democratic propagandists try to suggest that President Obama is actually trying mightily to regain control of the fiscal catastrophe he inherited from his feckless and reckless predecessor.

The numbers actually tell a totally different story. While state and local spending rose implacably (state spending more than tripled since 1951) federal spending as a share of the national economy has remained uncannily stable for fifty years under both Republicans and Democrats. In President Richard Nixons first year (1969), the feds spent 18.65% of the GDP. That number inched upward to its recent high under Ronald Reagan (22.86% in 1983) then sank down again under Bill Clinton and George W. Bush. In the first Bush year (2001) the federal government chewed up 18.40% and by the time of his final year (2008) that figure had gone up to 20.91% -- a worrisome increase, but still well below Reagan-era levels.

Then came the financial collapse of 2008, the federal bailouts, the Obama stimulus package and much, much more and the projections for 2009 show the federal government spending 28.07% of the total economy an increase of nearly a third to a new postwar high (even without Obamacare). This year, even if conservatives succeed in blocking massive new spending programs, Barack Obama will have presided over an increase in federal spending as a share of the economy that equals the combined increases of 11 previous presidents over the last sixty years.

Moreover, the deficit numbers also indicate the profound differences between the Bush and Obama approaches to spending. For all eight years of his term, President Bushs deficit spending hovered right around the 2.4% average (as a share of the total economy) for postwar America. His worst year (2004) saw the deficit balloon to a worrisome 3.53% and best year came in 2007, when he whittled down the deficit to a very respectable 1.16%. Two years later, with Obama as president, the 2009 figure stands at an appalling 11.2% (estimated) and is almost certain to go much higher. In two years, in other words, the federal deficit increased by more than 1,000%. Obamas deficit (even without the out-of-control increases for health care reform) will be at least three times greater than the deficit in Bushs worst year.

The worst part of this situation is that even the most ridiculously optimistic predictions by the administration see only minor improvement. For 2010, their rosy calculations envision a deficit of 8.54% of the GDP or still nearly three times worse than the final year of Bush. The passage of expensive new programs like Obamacare and Cap-and-trade (which would slow the growth that produces revenues) could make the situation immeasurably more dangerous.

While Republicans and Democrats debate valid health care issues like care-rationing, and tort reform, and Medicare cuts, and bureaucratic interference, and taxpayer funded abortions, the one transcendent concern involves the inevitable cost for the Presidents program. He means to provide federal health insurance for some 46 million people currently uninsured. Even in the extremely unlikely event that the feds could pay for all those new customers at an average cost (or subsidy) of just $2,500 a year per person for insurance it still comes to $100 billion more in federal spending every yeara commitment that would instantly darken the nations fiscal prospects.

The likelihood of further explosions in the national debt represent a genuine threat to national security, with real chances for out-of-control inflation, a badly battered and devalued dollar, and the disastrous downgrading of federal debt by worried creditors. The utter disregard to any sense of fiscal discipline represents a menace to our way of life at least as serious as the murderous minions of Islamo-Nazi terror.

Even before the new billions and, ultimately, trillions the president proposes devoting to his health care reform, the spending is unprecedented, perilous and unsustainable. The growth in governmental expenditure in no way reflects (or fuels) an improvement in governmental services, and the overall increases have no connection to jumps in defense spending (which has actually gone down, as a percentage of the economy). Finally, the Bush spending record may be disappointing, but the Obama record looks downright disastrous. The president may claim to be following a trail blazed by George W. Bush but he is, in fact, headed off on his own, dragging an increasingly worried country into uncharted and profoundly dangerous territory.