The progressive or modern liberal policy agenda is advancing under President Barack Obama and the Democrat-controlled Congress. The progressive policy agenda includes expanding the entitlement state through health-care reform, strengthening and expanding the regulatory state over business and finance, regulating environmentalism through cap and trade legislation, and utilizing Keynesian spending in a futile attempt to pull the nation out of the recession. This policy agenda rejects the constitutional principle of limited government and free-enterprise.
Government expansion is on the march and the fault for constitutional drifting can be shared by both Republicans and Democrats. The economic recession is one cause for the expansion of the federal government, although it should be noted that progressive goals such as universal health-care reform would have been pursued regardless of an economic downturn. Progressives have staked their faith in Keynesian economic theory, which calls for massive government spending to pull the nation out of the recession. The recession has also provided an open door for the progressives to further burden our economy through the administrative and regulatory state.
The Administration’s $862 billion stimulus has not resolved unemployment, which still stands at 9.5 percent. Federal spending is also out of control with a national debt of $13 trillion and a deficit of $1.5 trillion, which are both projected to rise in the coming years. Entitlement spending (Social Security, Medicare, and Medicaid), unless reformed, is projected to consume the federal budget in the near future, and this does not include the new health-care entitlement which will cost trillions.
These progressive policies are all causing uncertainty in the marketplace, and businesses are not sure what will happen in regard to regulation and taxation. For example, in January 2011 the tax cuts initiated under President George W. Bush are set to expire — and it appears that they will not be renewed — which will result in a major tax increase that will further put the economy in decline.
The solution to economic recovery and solving the financial crisis rests in returning back to limited constitutional government. This includes restoring traditional federalism, cutting spending, lowering taxes, and reducing the national debt, while defending the core traditions of America’s heritage and culture. Policymakers need to reaffirm faith in the Constitution and the free-market system. “Free market capitalism is the best path to prosperity,” as noted by economist and former Reagan administration official, Larry Kudlow.
John Hendrickson is a research analyst for the Public Interest Institute in Mount Pleasant.