The Cost of Winning: Global Development Policies and Broken Social Contracts by Michael Cosgrove

Author:Michael Cosgrove [Cosgrove, Michael]
Language: eng
Format: epub
Tags: Developing & Emerging Countries, Social Science, Political Science, General
ISBN: 9781351293068
Google: 5vZKDwAAQBAJ
Goodreads: 38505399
Publisher: Routledge
Published: 1995-01-01T00:00:00+00:00

12

Government Taxes and Outlays

President Clinton had it right during the 1992 campaign when he compared the economic environment under George Bush to the Herbert Hoover economy. A striking similarity existed between the economic times of the 1930s and that of the late 1980s and early 1990s, even though macroeconomic numbers in President Bush’s term and, in particular, during the 1992 election year were much better than those in the 1930s. It is ironic that President Bush, the foreign-policy president, would lose the election because the American taxpayer was tapped out from serving as world leader, as voters wanted someone who would attempt to repair broken social contracts. Social contracts were broken in the 1930s, and FDR put together the New Deal to help in repair. FDR’s success during the 1930s, together with success in World War II, helped fuel the idea that government can solve all problems. The operating premise that FDR left imbedded in society is that “the answer” is “more government.” The model evolved, continually fed by politicians, that says, Don’t worry, the government will take the initiative and responsibility to solve domestic as well as international problems. The United States as a nation drifted from the individual taking responsibility for his well-being and actions to one where taxpayers, through higher taxes, funded a larger and larger bureaucracy to take that responsibility.

President Bush fed the federal bureaucracy while state and local governments were increasing their take, so that total government outlays climbed as a proportion of national income (figure 12.1). President Bush, having grown up during the 1930s and a pilot during World War II, had experienced positive impacts of government involvement in domestic and international affairs. In the post-World War II period, he became a participant in developing and implementing foreign policy. This wealth-sharing effort turned into a huge success as it prevented a hot war from developing, and the USSR finally disintegrated. It is easy to understand why President Bush, due to his life experiences, reversed Reagan administration tax and spending policies and never understood that he was following in footsteps of Herbert Hoover. American voters, knowing something was wrong with the model of bigger and bigger government, had elected President Reagan to two terms on the theme of encouraging wealth creation.

FIGURE 12.1 Government Takes Over 40 Percent of Your Income

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