Debt debate: the myth of the good old days before big government
As Republicans focus on budget cuts, let's travel to the 1800s to see what it really looked like before Big Bad Federal Government. Economic downturns resulted in food riots, social unrest, industrial violence. We don't have that today, thanks to big government.
New York — Once upon a time, Americans were sturdy and self-sufficient. They didn’t rely on politicians for a handout; instead, they pulled themselves up by their bootstraps.
Then along came the Big Bad Federal Government, with its needless services and regulations, softening a once-proud people into a nation of wimps. And it left us with an enormous unpaid bill, which we’re passing along to our children and grandchildren.
That’s the myth you’ve been hearing from Republicans over the past few weeks, during the debate over raising the federal debt ceiling. Like all such stories, it contains a kernel of truth: The federal deficit is enormous, and we must find new ways to rein it in. The only real question is how.
And it’s here that the GOP myth-machine descends into full-scale fantasy. All we need to do is cut the budget, Republicans say, and all will be well.
It won’t be. And to see why, it might be useful to look at what America really looked like – not how the GOP imagines it – in the years before Big Government.
It wasn’t pretty, especially when the economy took its periodic dips. Every student of American economic history has to memorize the dates of these downturns, which have struck like clockwork every two or three decades: 1819, 1837, 1857, 1873, 1893, and so on. And before our own era, every crisis brought with it massive social upheaval, disorder, and violence.
Consider the so-called Panic of 1837, when an estimated one-third of factory workers lost their jobs. With food prices rising – and without any sustained government assistance – Americans took to the streets to demanded “bread, meat, rent, and fuel,” as protesters chanted. And when their pleas fell on deaf ears, they rioted.
In New York, a mob raided the store of a wealthy flour merchant. “Barrels of flour were tumbled into the street from the doors, and thrown in rapid succession from the windows,” one newspaper reported. Women filled their aprons with flour, “like the crones who strip the dead in battle,” the outraged paper added.
Twenty years later, amid the next great downturn, 15,000 unemployed protesters gathered in Manhattan’s Tompkins Square Park, marched to Wall Street, and shouted, “We want work” as they paraded around the Stock Exchange. A mob would later occupy City Hall, until US marines forced them out.
But the greatest violence occurred on America’s industrial frontier. In Pittsburgh, for example, militiamen fired on crowds that had seized railroad switches during an 1877 strike. Twenty people were killed; in response, mobs burned over 100 locomotives and 2,000 railroad cars. Over the next quarter-century, the National Guard and the regular US Army were called out over 500 times to quell labor disputes.
Strike-related bloodshed continued into the 20th century, whenever the economy dipped. In 1934, at the heart of the Great Depression, 13 striking textile workers were killed. Meanwhile, a wave of “sit-down” strikes seized the automobile industry. Police tried to remove workers with tear-gas; the laborers fought back with firehoses.
Today, by some measures, the United States faces its greatest economic calamity since the 1930s. Between 14 million and 21 million Americans who want jobs don’t have them; and another 8 million or 9 million are working part-time because they can’t find full-time positions. You can see them at pawn shops and homeless shelters, on unemployment lines and in soup kitchens.
But you won’t see them rioting or looting, or engaging in pitched battles with cops or soldiers. And there’s one big reason for that: Big Government. Put simply, the federal government has created a safety net that provides for all of us. So when we’re down on our luck, we can scrape by without scraping each other.
To be sure, the net still has lots of holes. And even with them, it costs lots and lots of money. In 1960, so-called entitlements – Social Security, veterans’ benefits, and Aid to Families with Dependent Children – accounted for just over a quarter of the federal budget. By 2000, with the addition of Medicare and Medicaid, 60 percent of the budget went to entitlements.
That wouldn’t be a problem, necessarily, if we were willing to tax ourselves for it. Unfortunately, we’re not. Although the national debt stabilized under Bill Clinton, it spiked massively during George W. Bush’s presidency. The main reason were Bush’s tax cuts, which resulted in roughly $1 trillion in lost revenues.
In the end, reducing the deficit will obviously require some combination of tax increases and entitlement reform. But it won’t do simply to cut Big Bad Government and return to the Good Old Days, as the GOP supposes. The Good Old Days were awful, for millions of Americans. And Big Government made them better.