You Can’t Blame Big Government Spending All on the Pandemic

Congress recently passed coronavirus stimulus 3.0, adding another $1.9 trillion in federal spending to the already massive fiscal 2021 budget deficit. That brings total spending related to COVID-19 to somewhere in the neighborhood of $5 trillion.

Meanwhile, the national debt has skyrocketed past $28 trillion. The US government has added $5 trillion to the debt in less than 18 months.

It might be tempting to blame all of this spending and the bloated government that comes with it on the coronavirus, but the trajectory of borrowing and spending was heading skyward even before the pandemic. In fact, the US government has been growing in size and scope for over 40 years, even as progressives bemoaned it as an era of government atrophy.

According to the progressive narrative, since at least the 1980s, we’ve lived in a hellscape of “laissez-faire” policy with capitalism running amok. This couldn’t be further from the truth. In fact, government has been getting bigger, stronger, and more involved in the daily lives of human beings for years now, and it started long before the pandemic.

This is demonstrable through a number of metrics summed up by an article by Ryan McMaken published back in 2019 by the Mises Wire.

From 1960 to 2018, federal tax receipts per capita increased from $3,523 to $5,973. That’s up 70%. And if you add state and local taxes to the mix, the increase is even bigger. Taxation per capita at all levels combined grew 118% from $5,247 in 1960 to $11,461 in 2018.

And these numbers factor in population growth. As McMaken points out, total spending and taxation outpaced population growth considerably.

Even with the big increase in tax revenue, the federal government still managed to increase its deficit spending.  Per capita federal spending increased by 191% from 1960 to 2018, climbing from $4,300 to $12,545.

It’s not just that Uncle Sam is digging around in your pocketbook. He’s getting increasingly involved in your life.

The number of pages published in the Code of Federal Regulations increased 710% from 1960 to 2018, and 37% over the past 20 years. As McMaken points out, “Every additional page represents new regulations, new rules, new punishments, and new fees. These are costs employers must contend with, and consumers must ultimately pay for. Protectionists who think that manufacturers would flock to the United States were it not for low tariffs might consider the regulatory burden placed on employers by our own domestic policies.”

With the increase in spending and regulations comes more bloated bureaucracy. The combined budgets for federal regulatory agencies more than tripled from under 20 billion in 1978 to 65 billion in 2019. Meanwhile, the number of employees working at various federal regulatory agencies doubled over the past 40 years, rising from 140,000 full-time equivalent positions in 1978 to 280,000 as of 2019.

Ironically, a lot of people on the left actually believe the last 40 years represents some kind of conservative nirvana where the power and influence of government have atrophied. In the minds of many progressives, the coronavirus was a blessing in disguise. Whatever restraint there might have been on spending and growing government was washed away by three rounds of stimulus.

In a recent article, McMaken likens this as the dawn of a modern “new deal.” This is not good news.

This has long been part of the plan according to social democrats and progressives. After all, there’s been a lot of talk from the Left for years about the need for a “new new deal.” Whether it centered on environmentalism or on health care, everyone in these circles agrees on one thing: we needed a new surge in the size and scope of the government sector.

And now it’s happened. We’re in a new era when an ongoing crisis justifies any number of drastic new measures enacted by governments. To question this, the media and the pundits insist, constitutes “denying science” or “wanting grandma to die.” The only question now is how long this new era of unbridled government expansion will last.

Moreover, just as the New Deal turned an ordinary downturn into a decade-long depression—and did nothing to “end” the Depression—this new new deal will only ensure that any real recovery is years away.