Stimulus and Big Government

A lot of conservatives have been arguing that the stimulus bill represents a fundamental shift in the size and scope of the government.  Jon Hood may be overwraught, but I think his take is really quite characteristic:

The current struggle against bailout/stimulus mania has been a clarifying moment, it seems to me.  In the social-democrat future that the American Left wants, the private sphere must give way as costs are socialized and power is centralized. (Quoted here)

Perhaps some of this rhetoric is being deployed in bad faith, and people don’t believe it. However, I think a number of conservatives do, and I don’t get why.  Generalizations tend to break down with regard to a bill as large and varied as the stimulus, but I think most of its spending is temporary.  Some projects, like school construction, will tend to incur later government costs, but I suspect those are the exception.  

If the stimulus bill doesn’t directly lead to spending past the new few years, how could it lead to a long-term change in the scope of government? The only plausible mechanism is by via increasing the national debt, but here we should think that the most plausible effect will be to crowd out desired Democratic spending.  Perhaps an increased debt will leave us splitting the difference–the overall size of government will be bigger, counting interest on the debt, but less of that increase will be from health care than we would have expected during the 2008 presidential race.  In fact, there’s a progressive case to be made for scrutinizing the stimulus spending much more carefully than we have been–the parts of the bill that spend money but aren’t likely to be stimulative directly hamstring larger progressive goals.  Of course, it’s open to a conservative to think that within the realm of big-government boondoggles, health care is more desirable than the stimulus.   

I also find myself in sympathy with the suggestion that we decouple the fastest acting elements of the stimulus bill from the slower, long term elements, which can be revisited more carefully later in the year (–Ed: Don’t you realize you’re a bit late with this opinion? –No one ever said I gave rapid commentary.  See the sidebar).  Similarly, why not make the aid to state governments in the form of some type of loan, so as to lessen the fiscal shock for the federal government and avoid the moral hazard problem.  This would just shift the fiscal burden to decreased state spending/increased state taxation during the next economic expansion, but I think that’s ok–state spending is irrationally procyclical.


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