The Republicans – Party Of Small Government?

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During the 2012 Presidential campaign Vice Presidential candidate Paul Ryan uttered this statement, “borrowing and spending is not the way to prosperity.” While this is certainly true, the context in which Ryan made this claim should leave observers of recent American history scratching their heads. Ryan was attacking Democrats as the “party of big government”, interested mainly in raising taxes, borrowing money, and spending ever larger amounts to build a welfare state behemoth. While the Democratic faithful might take issue with this characterization, most Republicans, Libertarians, and independents find little wrong with it. The problem comes when he starts talking about his own party. The Republican campaign spiel goes something like this – vote for me because I’ll reign in spending, shrink the deficit, and lower your taxes, unlike those evil socialist Democrats. But does the “Red Team” really walk the walk, or are they all talk?

Hopefully you, unlike many Americans and most journalists, are aware that spending and taxing decisions are made by Congress. The President submits a budget to Congress (though the current President seems incapable of getting it there on schedule) detailing how he would like to see revenues spent, but Congress usually treats it as lining for a bird cage. He can also twist arms behind the scenes, and even surreptitiously move money around once an appropriation becomes law, but for the most part Congress controls the nation’s wallet. Also, these spending decisions are primarily made in the autumn preceding the year that the money is spent. President Obama is frequently lambasted by Republicans for a $1.3 trillion deficit his first year in office (2009), but most of the spending decisions for that year were made by Congress in 2008, before he became President, including the unprecedented $700 billion TARP bill that was rammed through Congress (to be fair, Senator Obama voted FOR TARP as did Paul Ryan). In other words, Republicans blame him for something that happened before he was elected.

Knowing these two things I looked back at history to determine if the Republicans actually are the party of “small” government, or is this just another case of politicians blowing smoke up your wazoo? I looked at federal government spending and revenue data dating back to 1900, using 2005 dollars – in other words inflation is taken into account. I also adjusted the data to account for the growing US population and figured out how much money was being spent and collected on an individual basis. This was then compared to a time-line of which party controlled Congress and who was President. If we were living in 1950 instead of 2013 it turns out that their claims would be true. Once upon a time, the Republicans really were the party of small government.

In 1900 the government spent $169 per person. That’s not $169 in 1900 dollars, that’s $169 in current dollars! In that year taxes only came to $180 per person per year. Think about that. That’s roughly equal to what modern Americans pays in FICA taxes in just two weeks! In 1900 Republicans controlled Congress and the Presidency and kept that control until just before World War I. During that time they took what seems like a ridiculously small government now and made it smaller. By 1916, federal spending fell to $135 per person, a decrease of 20%!

Then the Democrats took over both the Legislative and the Executive branches and decided to get involved in a war on the other side of the ocean. Doing so is expensive, so spending soared to $1,597 per person.

After the war Republicans regained control and under Calvin Coolidge, probably the closest the country has ever come to having a Libertarian President, spending fell to $296 per person. The size of the government was cut by 81%, and the economy chugged along. Can you imagine the Progressives’ cries of misery if something like that was tried today!

But in 1930 the Republicans went insane, passing the Smoot-Hawley Tariff Act along with several other “regulatory” laws, and turned a recession into the Great Depression. Predictably the nation got angry and kicked them out. In fact, so many Democrats were elected that the Republican party came close to going out of existence. With almost authoritarian control of the government the Democrats couldn’t help themselves and passed boatloads of laws imposing myriad economic restrictions, while jacking up spending. After Japan attacked the US spending accelerated even more, because fighting a war on the other sides of two oceans is really really expensive. By the end of World War II, in 1945, spending stood at $6,819 per person, an increase of 2,200%! Taxes, especially in a struggling economy, came nowhere near covering the spending spree and $14,254 was added to each persons share of the national debt.

Postwar spending fell to $1,665 per person, still 460% higher than it was in 1929, and it has never been that low again. Republicans briefly assumed control of Congress and the Presidency in 1953 – 1954, but these weren’t the Republicans of old. These were the Cold War Republicans who were ready to send American soldiers overseas at a moments notice and were convinced there was a Communist under every bed. They made a feeble attempt to shrink spending, cutting 13% in two years, but it was still as high as it was during the first year of US involvement in World War II. Fighting the Red Menace was very expensive.

From the mid 50s through 1995 Congress was either completely controlled by the Democrats or split between the two parties. The stereotype of Democrats as the “tax and spend” party held true to form. The government, as measured by spending, got 161% bigger. In 1995 our benevolent overseers were spending $7,026 per person, more than it cost to defeat Nazi Germany and Imperial Japan. For the pleasure of having a wartime government in a peacetime country each of us was being charged $6,266 apiece. For the first time in 40 years Americans got fed up and kicked the Democrats out of Congress.

The Newt Gingrich Republicans took charge vowing to slash bureaucracy, slash spending, slash regulations, and get the government off our backs! They lied.

For the next 12 years they had virtually complete control of Congress and after Bush 43 was elected they controlled the Presidency too. With only a slight pause our gargantuan government got even bigger. By 2006 spending was up to $8,627 and each American had to pony up $7,821. The Republicans had “cut” government by making it 22% bigger! Not only that but they saddled us with the most Orwellian agency ever conceived, the Department of Homeland Security, in an effort to fight the Towelhead Menace. Turns out fighting “terrorists” (defined as anyone with an Arabic sounding name) is really really really expensive.

Predictably, the Democrats ran with the ball the Republicans handed them and our current Democratic President, with a “bipartisan” Congress, is spending $9,758 per person to give us the most intrusive and restrictive government in the nation’s history.

Let’s put that number in perspective.
– The government is now 38% bigger than it was in 1995 when the Republicans vowed to shrink government.
– The government is now 146% bigger than it was in 1970 when we were fighting a war in Vietnam and against poverty, building the interstate highway system, and putting men on the moon.
– The government is now 43% bigger than it was in 1945 when we were fighting World War II.
– The government is now 3,196% bigger than it was when Calvin Coolidge was President.
The government is now 5,673% bigger than it was in 1900.

Here’s the ironic thing. Since the “Republican Revolution” in 1995, whenever the “limited government” Republicans grab control of Congress and the Presidency they raise spending by $160 per person per year. The “tax and spend” Democrats have actually CUT spending by $146 per person per year. But when we really get screwed is when they work together. Whenever both parties have power, they have grown the government by $297 per person per year!

So when Paul Ryan, or any other Republican, tries to tell you they are the party of smaller government your BS meter should be going off full blast.

About Author

Wayne Middlesteadt

Wayne Middlesteadt is a 1986 graduate of Georgia Tech and has an MBA from Georgia State University. Currently working as a financial writer and track and field historian, his latest book is Five Ways To Beat The Market.

  • James Barros

    What does it mean for the Presidency to be split between two parties?

    • Wayne Middlesteadt

      I’m sorry if I didn’t make this clear. When I say split, I mean a Republican is President and the Democrats control Congress (or the two houses of Congress or split), or vice versa. The Republicans only control the government when the President is Republican and the Republicans have a majority in each house of Congress. Same for the Democrats. Otherwise the government is split.

      • James Barros

        Makes sense then. Thank you for the clarification.