Why the Government Will Shrink, Even if Obama Wins Reelection
Government is the answer.
This theme surfaces frequently in President Obama’s campaign speeches, as he tries to convince voters that helpful new policies from Washington will solve their problems. During a recent speech in Roanoke, Virginia, Obama generated unflattering headlines by saying, “If you’ve got a business—you didn’t build that,” then ticking off a list of marvels like the Golden Gate Bridge, the Hoover Dam and the Internet that exist only because of government largesse.
Obama is basically handing his Republican opponent, Mitt Romney, a tactical win by defining himself as a big-government Democrat. Why Obama would do this is mystifying. The popularity of the federal government has been falling sharply, not rising, and Americans by a large margin say Washington is a bigger threat to the nation’s future than big business or big labor. Promising voters more of something they dislike doesn’t seem like a winning strategy.
Yet fears of a swelling federal government are unfounded, no matter who wins in November. The next decade will almost certainly be one in which government shrinks—at all levels—because there simply won’t be enough money to fund a government that’s even as big as what we have now.
Bureaucratic downsizing is already happening at the state and local levels, where governments can’t borrow quite as lavishly as Washington and cutbacks have been necessary to deal with shrinking budgets. Employment levels have fallen by about three percent since 2009 among both state and local government, while many city and state services are being cut. A new report on the future of state finances, led by former Federal Reserve Chairman Paul Volcker, suggests these trends could continue for years and perhaps intensify.