Big government costs more than money

Office of the Secretary Wednesday, Jan. 28, 1976

"BIG GOVERNMENT COSTS !vORE 1HAN !vONEY1'

Every year about income tax time the .American public gets the feeling that a pickpocket has been on the loose. The costly explosion of govermnent spending has become a major concern of most .Americans -- and rightly so. The staggering costs of the 1960 decade's social reforms have become the base of inflation in the 1970's.

Only the most stringent of budgets will hold federal spending under $400 billion in the upcoming fiscal year. Cuts are extremely difficult to make. Without any new legislation whatsoever, the programs already on the books will sorely tax this nation's powers to finance them.

Indeed, when President Ford announced his reconunendations for a federal budget of under $395 billion, cries of despair went up all over Capitol Hill. "It's unrealistic; you can't do that," the big spenders cried. ''How can you expect us to work within a set limitation on spending, we don't even know which old programs we'll want to expand -- or what new ones we'll want to

instigate!"

NONSENSE. The most unrealistic notion of all is the mistaken idea that the federal government can go on spending more and more money, without limits; that it can go on spending more money without impairing the productive capacity of our nation -- either through excessive taxation or through excessive

inflation, or both.

Address by Secretary of Agriculture Earl

L.

Tcxlay's number one concern of all Americans should be, "Are we

spending ourselves into irreversible trouble? Are we painting ourselves into a financial corner?

Let's put the federal government's potential $400 billion budget in perspective. As a nation it took us over 180 years to reach our first

$100 billion federal budget, in 1962 in the early years of the Great Society.

Then, only nine years later in 1971, the budget for the United States government rolled past the $200 billion mark.

It took us just four more years to reach $300 billion in 1975.

Now, only two years later (1976-77 fiscal year), the big spenders are blithely talking about flying past the $400 billion mark -- as if there were

. nothing unusuaL about this game of doubling expenditures faster and faster. There'? an old story about the king who offered to pay off a debt to a wise man in any manner the latter deemed fit.

''Easy," said the wise man, pulling out a chess board. "Just put one grain of wheat on the first square, double that amount on the second, double that amount on the third -- and so on."

Even with tcxlay's agricultural plenty, there's not enough grain in the world to fill the requirements of the last square on the board.

Yet the continued doubling of federal expenditures, the liberal spenders assure us, will surely lead to prosperity in the end, if only we'll go along with them.

NONSENSE.

Goverrnnent in this country is plenty big already. As it gets bigger it puts a heavier load on your back and mine; it places a heavier toll on the productive capacity of all of America. Over a third of our present Gross

National Product already goes to some form of government. Within 15 years that share could exceed SO percent. We could literally have half of the people working just to support the other half.

That doesn't sound to me much like the ideal economy.

The cry is heard that without massive government spending and deficit budgets, our nation could not have turned around the recession of last year. There are proper times and proper circurnstances for using fiscal and monetary stimulants -- but neither should they be used excessively or without end. Too soon the tail begins to wag the dog.

What's needed is not a larger public sector in this country, but more private capital investment. More productive capacity in our nation's businesses, factories and farms to match our growing society. More capital investment in new machinery and new equipment. More private investment, rather than more goverrnnent doles.

We've been investing in larger goverrnnent, rather than in new manufacturing plants and equipment in recent years. We've produced and consumed too much for today, and not enough for tomorrow.

Big goverrnnent often not only saps the economic strength of our country, it does something even worse. It saps our strength as individuals.

What a far cry that is from our nation's bold beginnings!

It's time to consider what we may be giving up as individuals when we turn over more and more of our problems to an ever-stronger central government. It's time to consider what our individual states may be giving up as viable, autonomous units when they look toward Washington for funding.

One of the unique strengths of this nation has been the political autonomy of the individual states. Even though the states were bound tightly together in a network of free trade, communication, and access to livelihood; the founding fathers deemed it wise to permit states the political freedom to handle local matters in local fashion. But today, as more power and financial resources are concentrated in Washington, that freedom is being eroded.

Rather than keeping control of government as close to the people as possible, as was the original intent of our nation's founding documents, it's being pulled away from them to Washington through centralization of financing and of power.

Increasingly the shots are called from Washington. Tax dollars flow to Washington as the federal government requires ever more revenues to keep it going. Federal power-brokers then decide how much money shall be handed back to local levels of government -- with appropriate strings attached. Uncle Sam tells you what you can do, because Uncle Sam writes the check.

President Ford has tried to move the federal government toward block grants of dollars to the states, and to local units of government, to do away with many of the strings, but Congress doesn't see it that way. Block grants of revenue back to the states with no strings attached would eliminate a lot of pork barrel politics. Letting local people decide how best their own share of tax revenues might be spent would return a lot of lost power to the states.

But that's not going to come about easily. It's pretty powerful stuff for some member of Congress to sit in Washington and control specific program grants A, B, C, and D -- and then take personal credit as he doles them out one at a time to the folks back home.

General revenue sharing, as begun under President Nixon in 1972, was a significant step in returning political and economic power to the states. At the end of this calendar year, that program will have returned $30.2 billion

to 50 states and 39,000 units of local government.

President Ford wants to see this sort of no-strings revenue sharing expanded. His new budget moves substantially in that direction. But when you attempt to consolidate the various sorts of categorical grants into general grants with no strings, you've really got your hands full. Federal power-grabbers are not about to give up control unless they're forced to do so by new legislation.

Money is power; it's political clout. As someone once remarked, ''Money isn't everything -- but it's a long way ahead of whatever comes second. 11

Economic freedom and political freedom have always been closely bound; they always will be. Recognition of this is one of the unique things about America; these freedoms are at the very foundation of the high level of productivity and affluence of our nation.

Two great doctrines of freedom were written in 1776: Thomas Jefferson's draft of the Declaration of Independence, and Adam Smith's The Wealth of Nations.

The Declaration of Independence dealt with political freedom, and The Wealth of Nations dealt with economic freedom. For two centuries these two freedoms have been full partners in the .American experience. As a consequence our system has produced the highest level of affluence, comfort, good health and education .

mankind has ever known.

Smith and Jefferson were both vitally concerned with the ties between economic freedom and policial freedom. They saw the dangers of continually expanding the powers of the public sector at the expense of the private sector. When big govenunent grows still bigger, private initiative and personal

opportunities are often under pressure. the part of the individual become less.

Opportunities for originality on

Was hybrid corn developed by a farmer on a coilIDlune? Did Thomas Edison invent the light bulb while he was working for the People's Party with no additional award for his personal incentives? Did Henry Ford work for the state?

When you hear the cries of the social reformers and the welfare lobbyists, you hear the cries of the egalitarians -- those who would pull the best down rather than build the bottom up,through increased productivity and individual freedom.

You seldom equalize~ in egalitarian systems, you only equalize down. You seldom produce more, you only change the distribution of less. You don't raise the hopes of mankjnd, you only stifle them.

As the tentacles of centralized goverrnnent extend ever further into private life, the push seldom is to produce more~- the push usually is to alter the distribution pattern of what is already produced.

As we seek in this nation to reach an equitable balance between social welfare and individual initiative, between the federal goveTilffient and the states, between the public sector and the private sector, we must never lose sight of the fact that we are a great nation because we are composed of

individuals who enjoy the world's maximtin degree of political and economic freedoms.

The cost of big government can be higher than we sometimes think.

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Advance for Release at 6:30 A.M. EST, Wednesday, Jan. 28, 1976