Everyone right now is worried about the so-called fiscal cliff—a truckload of new taxes (and an across-the-board cut in government spending) that will take place at the end of the year if Washington can’t come to an agreement. There’s no question those taxes will put a strain on many Americans—Americans who are already feeling the strain of a bad economy. But what’s being ignored in the debate is this: we’ve already fallen headfirst off the freedom cliff.
Over the last century, the U.S. government’s role has transformed from the original one of protecting individual freedom to redistributing wealth (Medicaid, welfare, Social Security, farm subsidies etc.), usurping economic functions that should be private (mail, education, mortgage securitization), and interfering in voluntary economic transactions (virtually everything done by Washington’s alphabet regulatory agencies). Given the omnipresent role of the state in our affairs, is it any wonder we’re facing a massive deficit?
A government that limits its function to protecting American freedom via a police force, military, and legal system, is relatively affordable. War-time aside, during the whole of the 19th century, when the U.S. came closest to capitalism, federal government spending as a percent of GDP stayed around 3%.
What about state and local government? Tack on another 6% or so. And then keep in mind: this was not perfect capitalism. Particularly at the state and local levels, government was doing things it should not be doing, such as building roads and canals and operating the post office.
The biggest problem today is not that our leaders cannot come to an agreement. It’s that they are trying to satisfy the irreconcilable views of Americans: We want government to do everything—but we want our freedom. We want government to fulfill everyone’s every need—but we don’t want to pay for it.
The result? We have two political parties that agree on what government is doing but are bickering over how to make it affordable. The Democrats say the key is raising taxes. The Republicans say the key is to jigger with the programs and make some minor cuts. But no one is asking: should government be doing things other than protecting our freedom?
Consider the question raised.