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Growth comes from smaller governments

Freedom Editorial

There is little question that former President Clinton offered an effective speech at the Democratic convention, filled with charm, humor and a superficially plausible list of reasons for voters to prefer a Democratic administration to the current model. On closer examination, however, his contentions, especially on taxes, spending and other domestic policy, don’t make the case as well as they might have seemed to in the flush of convention-hall excitement.

Like most Democrats, Clinton assailed President Bush’s tax cuts, virtually the only attractive and successful aspect of the current administration’s domestic policies. The implication? Taxes should never be cut and just might not be high enough.

Furthermore, after almost four years of record increases in spending — and not just on military and intelligence-related programs, but the biggest increases in discretionary domestic spending since the Great Society — the basic criticism Clinton makes is that the Bushies didn’t spend enough and made a few minor cuts in a few favorite programs.

This is curious in a way. During eight years in office, Clinton actually held the line on spending fairly well, promoted freer international trade, and signed a welfare-reform bill that cut welfare rolls and increased emplyment rolls. President Bush is a big spender, protectionist and entitlement increaser (see the Medicare drug benefit) by comparison.

Clinton’s complaints, however, suggest that he was relatively fiscally responsible because he had to contend with a Republican-majority Congress. He doesn’t seem to understand that government spending restraint (in addition to the sustainable aspects of the dot-com boom) had something to do with economic growth and prosperity during his time in office.

Instead, his affection for maximum spending on government programs suggests that what he really believes is that economic growth and prosperity flow from big and expanding government. If he had had a chance to put his true beliefs into practice while in office, instead of having to contend with pesky Republicans, Monicagate and the like, the federal government might have grown faster than it has under President Bush. Certainly Clinton’s State of the Union speeches were filled with proposals for more spending — proposals that, fortunately for the health of the economy (and his legacy) were not enacted.

The ancient truth still holds. If you tax something you get less of it. When you tax productive activity you have less economic activity and development — and therefore less opportunity and fewer good jobs. Economic growth is best facilitated by smaller government than by more active government.

Unfortunately, neither major party seems to understand that at this point in out history.