A country can cut the size of government for years, even as its economy grows. Canada’s economy grew substantially after it slashed government spending in the 1990s, and it continued to reduce government spending as a share of its economy for years, taking government spending down from 53% in 1992 to 39% in 2007. Similarly, government spending fell by 15% of GDP in Sweden between 1993 and 2001.
But the Niskanen Center’s Will Wilkinson claims that such a fall in government spending “never happens in countries with political systems like ours.” He writes that “’Wagner’s Law’ says that as an economy’s per capita output grows larger over time, government spending consumes a larger share of that output…. [I]t wouldn’t be a miracle if GDP increased for a few decades, but the government’s share of GDP didn’t. Yet that never happens in countries with political systems like ours.”
But as Canada’s example illustrates, it does happen. Wilkinson’s claim seems to be an attempt to rationalize recent increases in government spending caused by the very politicians he himself helped elect. Despite the fact that Wilkinson has a generally sound grasp of free-market economics, he perversely votes for the very liberal politicians most wedded to increasing the size of the government. This is due to his deep-seated, politically-correct feelings of racial guilt.
When Barack Obama defeated John McCain for the presidency, Wilkinson was so elated that he “cried” with joy, writing: “I’m glad Obama won … I cried…. It means something profound that a black man was elected to the most visible, high-status position our society offers.” Wilkinson is haunted by the hobgoblin of “white supremacy” and imagines it lurking behind many popular causes: he even sees a yearning for white supremacy as being behind the populist appeal of principled, pro-free-market, libertarian-leaning politicians like Senator Rand Paul.
Although Obama’s big-government propensities were obvious when he was elected, Wilkinson foolishly reassured himself that they wouldn’t matter, because Republicans could block Obama’s efforts to increase the size of government. He wrote, “I’m glad Barack Obama is going to be president. And I’m glad that the Republicans held enough Senate seats to offer significant opposition.” But this was a deeply silly argument: Republicans lacked the seats to block huge expansions in the size of the regulatory state like Obamacare and the Dodd-Frank law, and the Democrats were able to surmount filibusters to pass the $800 billion stimulus package (on a largely party-line vote) and Obamacare (on a completely party-line vote). Obama also signed a $410 billion supplemental spending bill that George Bush had opposed as too costly.
What makes cutting the size of American government increasingly difficult — although not impossible — is not “Wagner’s law,” but immigration, especially mass immigration of unskilled immigrants. Immigration is changing America’s demographics and increasing the size of constituencies that tend to support increases in government spending, and more rules and regulations. Since Will Wilkinson’s Niskanen Center supports unrestricted immigration, and an amnesty for illegal immigrants, it has an incentive to depict the growth of government as something that is inevitable, due to “Wagner’s law,” rather than being partly the avoidable result of mass immigration, which is something that could have been prevented by more effective border control.
A libertarian think-tank employee who once worked for a political polling firm conceded as much to me . . . : “Even working class whites are more pro-free-market on average than most upscale and prosperous non-whites.” This conclusion is backed up by polls of Asians and Hispanics, who comprise most recent immigrants.
As the liberal publication American Prospect notes,
Asian American voters have consistently favored the Democratic Party and the positions that Democrats endorse. For example, Asian American majorities have supported steps to expand health-care access, such as the Affordable Care Act (asked in the 2012 NAAS). Asian Americans are also strong supporters of gun control (asked by AAPI Data in 2014 and 2016), and they tend to support bigger government spending even if it means paying higher taxes (asked in 2012 surveys by Pew and NAAS)…. The 2008 and 2012 NAAS data show that Asian Americans are rewarding parties and candidates who share their views about issues such as health care, government spending, and gun control … a Pew survey from early 2012 indicates that Asian Americans prefer a bigger government that provides more services to a smaller government providing fewer services (55% to 36%, respectively). That’s the opposite of what Pew found for the public as a whole (39% to 52%, respectively).
Similarly, a liberal writer in the Daily Beast (formerly Newsweek) notes:
[W]hat’s the real reason Hispanics aren’t voting Republican? Economics…Hispanics…feel that the economic system is ‘stacked against them’ and they do ‘want stuff’ like health care, college-tuition assistance, and other government benefits that might help them get ahead. According to Pew, while only 41 percent of Americans as a whole say they want a bigger government that provides more services, a whopping 75 percent of Hispanics do…. It’s quite normal that Hispanics, whose average household income trails non-Hispanic whites by more than a third, would seek government assistance in bridging the gap.
Romney didn’t do that much better than Trump with Hispanics. Romney lost among Hispanics mostly due to his positions on economics, not immigration.
Anti-communism used to help the GOP do better among Asians and Hispanics. But anti-communism is a waning force in politics. A Vietnamese-American who fled communism in Vietnam, or a Cuban who fled oppression in Castro’s Cuba, might well vote Republican out of anti-communism, but that didn’t make them free-marketeers, nor do their children vote based on the same concerns. Cuban Americans are more pro-Republican than most Hispanic subcultures, but they still support national healthcare in public opinion polls. The average Cuban-American Republican is almost as pro-government on economic policy as a white non-Hispanic Democrat. Vietnamese-Americans are the most conservative Asian-American constituency, but even they voted for Obama by a narrow margin in 2012.
Anti-communist immigrants are now dying of old age, and their kids don’t vote based on anti-communism. Millennials don’t even know much about communism or socialism. Many millennials believe that George W. Bush killed more people than Soviet communist dictator Joseph Stalin, whose regime killed at least 20 million people. Many Millennials like socialism.
In aiming at swing voters, working-class whites are the low-hanging fruit for the GOP, not middle-class minorities. That reliance is unfortunate, given demographic trends, but it is a reality.
Liberalizing immigration, or providing an amnesty for illegal aliens, also directly results in increased welfare costs, by expanding the range of welfare and refundable tax credits that the households of illegal aliens are eligible for.
When Obama sought to offer temporary legal status to five million illegal aliens by executive action — an action blocked as illegal by the Fifth Circuit Court of Appeals — even open-borders advocates noted that this would increase government spending by billions. The result of Obama’s action was that hundreds of thousands of illegal aliens suddenly qualifed for the Earned Income Tax Credit, which gives taxpayer money to low-income workers with kids. A single mother with three kids and an annual income of $17,000 could get back as much as $6,000 from taxpayers, according to the Tax Policy Center. “I fear the long-run impact on overall fiscal policy will be negative,” said Dan Mitchell, a budget expert at the Cato institute, which opposes immigration restrictions. In his comments to Politico, he cited the negative “effect when you look at the impact of amnesty on tax revenues and the burden of government spending.” Even prior to this action, illegal aliens were already getting at least $4 billion per year in refundable child tax credits, according to the IRS’s Inspector General.
According to the Center for Immigration Studies:
- In 2012, 51% of households headed by an immigrant (legal or illegal) reported that they used at least one welfare program during the year, compared to 30% of native households. Welfare in this study includes Medicaid and cash, food, and housing programs.
- Welfare use is high for both new arrivals and well-established immigrants. Of households headed by immigrants who have been in the country for more than two decades, 48% percent access welfare.
- Welfare use varies among immigrant groups. Households headed by immigrants from Central America and Mexico (73%), the Caribbean (51%), and Africa (48%) have the highest overall welfare use. Those from East Asia (32%), Europe (26%), and South Asia (17%) have the lowest.
As Jason Richwine, PhD of the Center for Immigration Studies explains, “In September 2015, the Center for Immigration Studies published a landmark study of immigration and welfare use, showing that 51% of immigrant-headed households used at least one federal welfare program — cash, food, housing, or medical care — compared to 30% of native households.”
As that CIS study found:
- The average household headed by an immigrant (legal or illegal) costs taxpayers $6,234 in federal welfare benefits, which is 41% higher than the $4,431 received by the average native household.
- The average immigrant household consumes 33% more cash welfare, 57% more food assistance, and 44% more Medicaid dollars than the average native household. Housing costs are about the same for both groups.
- At $8,251, households headed by immigrants from Central America and Mexico have the highest welfare costs of any sending region — 86% higher than the costs of native households.
- Illegal immigrant households cost an average of $5,692 (driven largely by the presence of U.S.-born children), while legal immigrant households cost $6,378