Article: The Myth of Republican Fiscal Conservatism

Seeing Rudy Giuliani and Mitt Romney fight over who is more of a fiscal conservative made me think that they are actually barking up the wrong tree. You see, although the Republican Party claims to be the party of "small government", and many fiscal conservatives vote Republican for that reason, the record shows that the last Republican fiscal conservative president was Richard Nixon. What? Not even Reagan? No. Reagan was no more fiscally conservative than the so much maligned Jimmy Carter.

The following set of charts shows Government expenditures as a percentage of GDP, quarter by quarter since 1947. This method allows us to really know how much money our government is spending, not in dollar terms, which are meaningless, but in relationship to the wealth of the nation.

There are three presidencies during which government expenditures declined significantly: Dwight D. Eisenhower's, Richard Nixon's and Bill Clinton's. Maybe it is just a coincidence that the two presidents that did more to reduce government expenditures were attacked from Congress.

So, let's see in greater detail how Republican administrations fared compared to Democratic administrations. Not surprisingly, we see a big spike in government expenditures relative to national wealth during the Truman administration. This is during the Korean conflict, from 1950 to 1953.

In 1953, we find the first post-war Republican president, Eisenhower.

Eisenhower was able to reduce government spending from a top of 24.5% of GDP to a low of 20.05% of GDP. After that, the next relevant spike is during the Johnson administration and the Vietnam War.

Amazingly enough, the Vietnam War was, in relative terms, less expensive to the Nation than the Korean conflict. The number of dollars spent is much higher, of course, but in terms of the national wealth, the expenditure is lower than it was during the Korean conflict, with a top of 23.3% of the GDP. You could say that richer nations can afford wars that are more expensive.

And now, for Dick Nixon.

As you can see, during the Nixon administration, government expenditures were curved from 22.7% to 20.2%, a brave effort that wiped 2.5% but which pales compared to Ike's.

After that, nothing much happens really. So I am going to jump to the revered Ronald Reagan, who is the one who cemented the double talk of small government and big spending.

The Reagan administration "favored tax cuts and smaller government, introducing the largest tax cuts in American history" (according to that source of common wisdom that is Wikipedia).

And here is when we come to face the myth of smaller government, a myth created by the Reagan administration and perpetuated by the current administration.

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