Bush v. Reagan on the Size of Government

Let me just add my two cents to what PGL just wrote about whether Reagan was really a small-government conservative, and to what degree Bush has betrayed that legacy. To start with, let me repost a picture that I like from an old post entitled “Spending Growth in Context“:

Firstly, I would agree that Reagan was not really a small-government conservative, in the sense that the federal government did not shrink during the Reagan years.

However, Reagan did do something quite striking which should not be understated: he dramatically shrank the role of government in most areas of domestic policy (other than entitlements), and replaced it with an equally dramatic increase in defense spending. In other words, he oversaw a major redistribution of federal money away from domestic discretionary programs and toward the military-industrial complex. If that describes a small-government conservative (and it might – I’m not quite sure, to be honest), then Reagan was one.

Secondly, it is equally clear that up until 2005, at least, Bush was no spendthrift, except for on defense. Non-defense discretionary spending is up a bit under Bush, but only a bit. On the other hand, Bush has overseen the largest expansion of entitlement responsibilities for the federal government in many years, and so the dark blue Medicare line in the graph will likely jump significantly in coming years as a direct result of Bush’s awful Medicare drug benefit.

Nevertheless, as PGL pointed out, it remains true that the fiscal mess that we are currently in is overwhelmingly due to tax cuts, not spending increases. And that has much to do with why fixing this fiscal mess will probably involve more tax increases than spending cuts.