Big Government or Free Market Economy?

It seems since the beginning of time people have had this debate about whether bigger is better.


Thomas Jefferson said, A government big enough to give you everything you want, is strong enough to take everything you have.

Over the past few decades more and more Americans express a fear about the government getting too big, according to the Gallop Poll.


However, this finding is significantly affected by ones political persuasion. Republicans are very concerned--a majority of Independents are concerned. But Democrats don't mind Big Government. Instead, they are disturbed about Big Business.


In his first inaugural address, President Ronald Reagan said, Government is not the solution to our problem; government is the problem.

A generation later, that attitude still resonates with a solid majority of Americans. A new Rasmussen Reports national telephone survey finds that 59% of voters agree with Reagan, and just 28% disagree.

In 2004, the Independent Institute released an article about how federal spending had increased the fastest in 30 years. Here is what they had to say:

President George W. Bush is now on his way to becoming the first full-term president since John Quincy Adams (1825-1829) to not veto a single bill. The result is a Congress that has been completely unconstrained in satiating its appetite for pork and corporate welfare.

In response, Democratic challenger John Kerry has maligned alleged spending cuts and called for even higher taxes and spending. The consequence is that we now have two parties competing to see which can grow government faster.

From the massive increases in agricultural subsidies in the farm bill of 2002, to the new Medicare prescription drug entitlement of 2003; from the 47% increase in the defense budget, to the 80% increase in education spending, George W. Bush has demonstrated that “limited government” is not part of his political vocabulary.


As hefty as that spending is, President Bush cannot hold a candle to the massive spending campaign of President Obama.

In an amusing manner, David Henderson writes, What should we call people who seem to regard government as the solution regardless of the evidence? I propose the term government fundamentalists.

To which economist Jeff Hummel added, If markets don't work, have government intervene. If government intervention doesn't work, have government intervene further.

Federal Reserve Chairman Ben Bernanke urged Congress and the Obama administration to start plotting a strategy to curb record-high U.S. budget deficits. Failing to do so could eventually erode investor confidence and endanger the economy's prospects for long-term health, he says.


Even as we take steps to address the recession and threats to financial stability, maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance, Bernanke says.

The White House estimates that the government will rack up an unprecedented $1.6 trillion budget deficit this year. That would be more than four times last year's all-time high.

As we recover from this unprecedented crisis, we will cut our fiscal deficit, we will eliminate the extraordinary government support that we have put in place to overcome the crisis, says Treasury Secretary Timothy Geithner.

National Economic Council Director Larry Summers defended the Obama administration’s response to the financial crisis. He maintains the White House would intervene in the private sector only when absolutely necessary and would aim to have minimal impact on markets.


The actions we take are those of necessity, not choice. What is crucial and where our focus has been as we have intervened when necessary is on the intervention being temporary, based on market principles, and minimally intrusive, Summers says. We do not want to be owners, we want to be stewards of structural soundness.