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The Conservative Curmudgeon
June 21, 2012

Democrats and Republicans are Co-Conspirators in Back Room Deals
and Government Cronyism (or Politics as Usual)
by Allan C. Brownfeld

ALEXANDRIA, VA — Government spending and government debt have been skyrocketing. Under President George W. Bush, the debt reached unprecedented levels. Under President Barack Obama, it has exploded still further. Whichever party is in power, the government gets larger and the debt increases.

Our political system, sadly, rewards big spenders. Every organized special interest group in the American society — including farmers, teachers, labor unions, manufacturers, Wall Street financiers, and realtors — wants one form or another of government subsidization for themselves.

All of these groups have active political action committees, which promise rewards for those who open the government coffers to them — and penalties for those who do not. The incentive is clearly one-sided. As Democrats used to say in the New Deal days, the way to electoral success is clear: "Spend and spend, tax and tax, elect and elect." Republicans, too, have learned this lesson. Since neither the Republicans nor the Democrats is eager to antagonize voters by raising taxes to pay for the extravagant spending, the budget deficits grow each year.

In May, for example, President Obama reauthorized the Export-Import Bank of the United States, raising its lending authority 40 percent to $140 billion by 2014. He acted one day before the 78-year-old federal bank would have been shut down if he had not signed the bill. During the 2008 presidential campaign, Mr. Obama called the bank "little more than a fund for corporate welfare."

Despite President Obama's frequent criticism of corporate jets, the bill includes $1 billion in subsidies for jet manufacturers, which have experienced a steep decline in demand in recent years. Export-Import Bank supporters in the business community — who pay lip service to "free markets" but campaign vigorously for government subsidies — welcomed the President's support. John Murphy, vice president for international affairs at the U.S. Chamber of Commerce, said that the President's action was "Great news for thousands of American workers and businesses of all sizes." The National Association of Manufacturers — and both Republicans and Democrats in Congress — supported the bank’s reauthorization.

Tim Phillips, president of Americans for Prosperity, described the bank in these terms: "In (it's) nearly 80 years, the official credit export agency of the United States has financed over $450 billion in purchases. Ex-Im allows the federal government to pick winners and losers in the market, and all too often, that leads to back room deals and government cronyism.... It is a heinous practice that gives money to a small number of politically connected companies while leaving taxpayers with the risk.... The American taxpayer does not exist in order to keep businesses from failing."

Republicans and Democrats are co-conspirators in this enterprise. The incentive structure for both parties is precisely the same. Republicans may talk of the "free market" and argue that Democrats are against it, but both parties raise their funds on Wall Street and in corporate boardrooms, and both parties have supported bailouts of failed businesses and subsidies for others.

Voters say that they are against big government and oppose deficit spending, but when it comes to their own particular share of the federal pie, they act in a different manner entirely. This is nothing new. Longtime Minnesota Republican Congressman Walter Judd once recalled that a Republican businessman from his district "who normally decried deficit spending berated me for voting against a bill which would have brought several million federal dollars into our city. My answer was, 'Where do you think federal funds for Minneapolis come from? People in St. Paul?'... My years in public life have taught me that politicians and citizens alike invariably claim that government spending should be restrained — except where the restraints cut off federal dollars flowing into their cities, their businesses, or their pocketbooks."

If each group were to curb its demands on government, it would be easy to restore health to our economy. Human nature, however, leads to the unfortunate situation in which, under representative government, people have learned that through political pressure they can vote funds for themselves that have, in fact, been earned by the hard work of others.

This point was made 200 years ago by the British historian Alexander Tytler: "A democracy cannot exist as a permanent form of government. It can only exist until the voters discover they can vote themselves largess out of the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury — with the result that democracy collapses over a loose fiscal policy, always to be followed by a dictatorship."

Hopefully, we can avoid fulfilling this prediction. It is an illusion to think that such a thing as "government money" exists. The only money that government has is what it first takes from its citizens. Many years ago, Senator William Proxmire (D-Wisconsin) pointed out that no one ever petitions members of Congress to "leave us alone." Everyone who comes before Congress, he lamented, wants something. Members of Congress — of both parties — have the same incentive, to give each group what it wants to ensure support for the future. The result is that government spending — and government debt — grow relentlessly.

Unless we find a way to change this incentive structure, it seems unlikely that we will bring government spending and deficits under control. As the presidential campaign gets under way, neither party is addressing this crucial question. Politics as usual, unfortunately, will not help us to resolve the very real problems we face.

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The Conservative Curmudgeon is copyright © 2012 by Allan C. Brownfeld and the Fitzgerald Griffin Foundation. All rights reserved. Editors may use this column if this copyright information is included.

Allan C. Brownfeld is the author of five books, the latest of which is The Revolution Lobby (Council for Inter-American Security). He has been a staff aide to a U.S. Vice President, Members of Congress, and the U.S. Senate Internal Subcommittee.

He is associate editor of The Lincoln Reveiw and a contributing editor to such publications as Human Events, The St. Croix Review, and The Washington Report on Middle East Affairs.

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© 2012 Fitzgerald Griffin Foundation