We’re all Democrats now

In a recent piece for Bloomberg, Amity Shlaes points out that modern-day natural disasters have helped to turn us all into Democrats. Expecting the government gravy train to come to the rescue any time a major storm turns a significant portion of the American population upside down has become the new normal, even among so-called anti-big government proponents. Shlaes makes the case, using the Holland Tunnel as an example, that state governments—and in many instances, private investment—have built the vast majority of American infrastructure. As Shlaes puts it: “States sought the blessing of the federal government, not its presence.”

Those days are long gone. States now begin petitioning the fed even before storms hit. Senators and Representatives brag to their constituents (most notably around election time) about how much federal money they have funneled back into their home state. Shlaes writes:

Looking over American history, state or city authority in infrastructure was often the rule. Except during wars, state governments played a larger role in the economy than Washington. That relationship only reversed in the mid-1930s, with President Franklin Roosevelt’s New Deal.

Note that paragraph well. Before the New Deal, state governments spent more on infrastructure than the fed. After the New Deal, however, that all changed. Could this possibly have been by design, or was this simply the way things worked out? Surely this wasn’t intentional, right? Yeah, right.

By comparing federal government spending to floodwater, Shlaes makes the obvious point that once the federal government has spent a particular amount of money, that amount becomes the new budget consideration for the next year. In other words, once government spending rises, it never recedes. The “high-water mark” for government spending is never visible because the spending only continues to increase:

In a National Bureau of Economic Research paper titled “A Century and a Half of Public Expenditures,” M. Slade Kendrick noted that from the War of 1812 on, one kind of emergency—war—tended to raise the level of all federal spending, not just for the duration of the war but also for the period after. That spending increased for civil projects as well as for military outlays. The reasons for this are probably as much psychological as mathematical: When people are in a state of fear, they get in the habit of looking to big protectors.

And there is no bigger “protector” around today than the American federal government.

This viscous circle is only made worse by states bargaining and wrangling to get their hands on the federal money. What used to stay within their own budgets is now being sent to Washington and the states are left to beg, borrow, and steal to get their hands on it. When the money comes back (if it does), it is obviously far less than the original amount due to the federal “godfather” taking its cut. Rather than risk getting cut off from the federal teat, state governors play the game of least resistance and pander to the fed for more and more money. The children have learned well the lessons of the father.

Shlaes concludes her article by writing: “It’s important, though, to remember that the only reason voters or politicians place so much faith in Washington is that they can scarcely remember a time when the federal government wasn’t the rescuer.” True that. The New Deal was a raging success in this regard. And until the majority of Americans—especially in times of crisis—stop looking to the federal government for help, we can only expect this role of “rescuer” to get deeper and wider. You don’t kill a beast by feeding it.