The Era of Big Government

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I agree with Jon Chait that Jim Kessler from Third Way has hit upon some good advice here about the State of the Union* address:

The President ought to make long term economic growth the theme of his State of the Union. He should declare that with the passage of health care reform, America’s 85-year quest to weave a strong safety net is now complete. From there he would describe a clear, tangible, and compelling destination for the nation – that of American excellence. It is a destination where America has the strongest, most vibrant, and most advanced economy on earth.

This isn’t precisely how I would put it, but Kessler is right about this. When Bill Clinton pronounced that “the era of big government is over” in 1995, he was clearly wrong. And since that time we’ve gotten SCHIP, Medicare started covering prescription drugs, and now we have the Affordable Care Act. So the era of big government wasn’t over in 1995 and it’s not over in 2010, but what is over is the era of big government liberalism. That’s not to say there will be no new changes to health care policy or to education policy or any of the rest of it. But there aren’t any major new fundamental commitments to be undertaken and there isn’t any more money to undertake it with.

Future public policy has to be about ways to maximize sustainable economic growth, and ways to maximize the efficiency with which services are delivered. Right now Medicare is projected to cost more money than Democrats are willing to tax, and yet Republicans are positioning themselves as defenders of the program against the ACA’s insidious cuts. The future of American politics is really about how to square this circle. How to find the revenue in viable ways, and how to streamline these services to maximize value to citizens and minimize rent-seeking. Big government isn’t over, or going away. It’s utterly victorious and yet at its limits.

* Take this all with the basic proviso that I doubt it matters very much what the president says. The fact is he’s going to give the speech so he might as well try to give it a good one.