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Press Release

    Washington Take Note: Taxpayers Still Want Less

    09/11/2003

    As the race towards the Democratic presidential primaries heats up, President Bush has come under fire, particularly for policies on Iraq. But the president is also drawing fire for other policies, including federal spending. A recent study by the Brookings Institution found that the size of government under Bush has increased, not decreased. Just recently, the president has asked for an additional $87 billion in federal spending to fund ongoing activities in Iraq. While government continues to grow, voters remain skeptical of big government and high taxes. In the most recent direct measure of taxpayer sentiment, voters in Alabama rejected Republican Gov. Bob Riley’s $1.2 billion tax hike by a two-to-one margin. Limited government, it appears, is still popular with the voters.

    Like most states, Alabama faced a budgetary crisis in the wake of the economic downturn. Past spending practices and lower revenues forced the state into deficit. However, rather than proposals to trim the waste and rein in government, newly elected Gov. Riley introduced the largest tax increase in the state’s history. In fact, the $1.2 billion tax hike was roughly two times larger than the amount needed to cover the $675 million budgetary shortfall. While the initiative garnered support from the education establishment and teacher’s unions (major recipients of new funding), the average voter was less sanguine about the growth of government and defeated the measure at the ballot box.

    Unfortunately, Washington faces a spending crisis as well. Even with a Republican Congress and White House, big government continues to be a threat. Federal spending is predicted to total almost $2.2 trillion this year—just over 20 percent of the nation’s output. In addition, the Congressional Budget Office estimates the deficit for the first 11 months of fiscal year 2003 to be $402 billion —$202 billion more than the same measure a year earlier. The Brookings Institution study on the size of government, by Paul Light, finds that the federal government workforce (employees and contractors) now totals 12.1 million, up 1.1 million from 1999. As Light notes, “…most of the 1.1 million new on- and off-budget jobs appear to reflect increased spending since the Bush administration entered office.”

    In many respects, the increase in spending should not be surprising. Public choice economists such as James Buchanan and Gordon Tullock have long argued that political institutions do not provide incentives to restrain spending, regardless of the party in power. In one sense, the legislature acts as a clearinghouse, raising revenues from the public that are then distributed to particular groups and projects. Driven by re-election, politicians compete to ensure their constituents and supporters receive their share of federal spending. In this instance, however, political power, not voluntary exchange in the marketplace, determines how these resources are allocated.

    These pressures exist irrespective of political party, generating a constant push to spend more and increase the size and scope of government. The recent surpluses in the federal budget were not due to a newfound spending discipline; they were the effect of a growing economy that generated revenue at a rate faster than Congress was spending. Congress quickly adapted its behavior, increasing spending to the point where deficits returned. Government’s propensity to grow is not new. The Constitution was the nation’s first attempt to constrain the growth of government. However, over time politicians have found ways around many of the restrictions in the Constitution, leading today’s advocates of limited government to view institutional reform as the only means of restraining the size and scope of government. Knowing that all politicians face the same incentives, policies such as a balanced budget amendment or a supermajority requirement for tax increases can slow the growth of government.

    That President Bush’s term in office has been marked by extraordinary circumstances cannot be questioned. The terrorist attack of September 11th and the war with Iraq have place unexpected pressures on his administration. However, Republican control in Washington has coincided with an expansion of government on all fronts, not simply war-related expenditures. President Bush came to office with a mandate for limited government and earned popular support with his tax cuts. Since then, voters reiterated that mandate with a historic election that placed both the House and Senate under Republican control. Just this week, voters in Alabama once again made clear their preference for limited government by rejecting the Republican governor’s tax hike. With an election around the corner, politicians of all stripes should take note: The majority of voters across the country want lower taxes, less government, and more freedom.