When Spending Is Regulation: The Grand Unification Theory of Government Growth

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Alongside helplessness in the face of a looming $27 trillion debt, debating administrative state policy hasn’t been much help in forestalling federal government growth.

We of the market or classical liberal persuasion would tend to break federal regulation up into economic, environmental, health/safety, and labor and then haggle about “cost-benefit” analysis. But that has proven naive.

The progressive left perpetually denies any net-negative human cost associated with the regulatory enterprise, instead claiming benefits for an untethered, unmeasurable mass in its entirety. Not mere denial of cost, but an insistence that bureaucratic applications of anticipatory force generate wealth.

Once the administrative state (term made up in 1948) became the primary mode

of government, it was already too late.

But it goes beyond that, to a synergy between spending and regulation that amplify both. While most administrative state regulation stands outside the reach of measurement altogether (net benefit claims notwithstanding), burdens with propagating costs arise from top-down, “national-agenda” legislation and federal spending on what is not thought of as regulation at all but in fact is.

I don’t mean the common notion that taxes alter incentives. Big spending isn’t just a substitute for regulation of human lives, but a powerful form of it.

The latest incarnation is the grandest—a consolidation of decades of progressive efforts at cultivating of human beings through the spending and regulatory reaction to a pandemic. Record jobless claims result not from the virus, but the reactions to it, bringing much of the progressive and socialist agenda to fruition, up to and including the federalization of payrolls.

In the simplified version of Einstein’s equivalence principle, gravity equals acceleration for a freely falling body (that letter phrase somewhat defines the U.S. and its institutions in 2020). But as gravity and acceleration of the same, so too are spending and regulation, in a grand unified theory of sorts.

The pandemic is fatal to American limited government, a regime already on a ventilator before COVID-19. But a hyper-consolidated national government is immune and will outlast the pandemic, bestowing untold costs of lost liberties.

Consider the significance of President Donald Trump, infamous for his deregulatory stance,  favorably describing some of the spending and intervention programs of the CARES Act in anticipation of doing still more himself by executive order if congressional negotiations remain deadlocked.

We enacted a $3 trillion economic relief package. The Paycheck Protection Program alone saved over 50 million jobs. We delivered $300 billion to direct cash payments to Americans. We approved $500 billion for our hardest-hit industries—$500 billion.

We allowed struggling homeowners to reduce or defer their mortgage payments, and we put a nationwide moratorium on evictions from federally backed properties. It was a big thing, a very big thing.

We also suspended student loan payments for six months, and we’re looking to do that additionally and for additional periods of time.

Whatever one thinks of the federal COVID-19 response, little of this vast expansion of regulatory and fiscal social engineering will show up as regulatory costs in the Office of Management and Budget’s annual Reports to Congress other than as budget rules or transfer rules that play no part in cost-benefit analysis, and do not figure into regulatory aggregates even as they may trump all that has come before.

Republican leadership is obligated to go through the motions of disagreements over the details of the next gigantic package, but its parameters are preordained by their March 2020 overreaction that makes some rank-and-file objections beside the point now. Some observations and implications:

  • The pre-CARES Act Families First Coronavirus Response Act had already adopted progressive sick- and family-leave employer mandates at precisely the moment new burdens could least be afforded.
  • The powers of the Treasury and the Federal Reserve are greatly expanded in providing trillions in business support, including which live or die, with attendant fraud and poor oversight.
  • Universal basic income entails sweeping social engineering regulation desperately sought by progressives, now validated by the CARES Act’s $600 weekly payment, that, according to the Congressional Budget Office, “exceeded the weekly amounts they could expect to earn from work” for “roughly five of every six recipients.” This has now become a major sticking point.
  • Regulation would be expanded by moves like the “Banking for All Act” and FedCoin with consumer deposit accounts at the Fed set up to receive newly minted government dollars, as well as perhaps govern private expenditures and surveil. Likewise government-dominated smart city projects with surveillance capabilities could keep commerce policed and automated services shut down as much as they like in future crises.
  • Since these new interventions are unlikely to rescue the economy any more than the first ones did, we are likely to see new clamoring for federal jobs programs, perhaps under the guise of infrastructure stimulus

Regime-change progressivism is not merely immune to crisis, it thrives on it. Republicans’ compromises, necessitated by the preexisting administrative state, lend legitimacy to and enable both progressive victories over limited government. As federalism and all attendant concepts restraining government succumb to coronavirus, amounts being spent are said by some to rival outlays on the Revolutionary War, Civil War, and World Wars I and II combined.

Thus it becomes increasingly apparent that the progressive spending wish list to which conservatives gradually yield also constitutes a regulatory wish list to govern businesses and individuals’ very lives. That vision insists that government support even the able-bodied and vigorous, rather than treat them as sovereign individuals expected to stand on their own two feet.

Resilience? Not a chance. Policy seems more consistent (at this, the third economic bailout in two decades) with a design to remove any such thing as an autonomous individual via the “grand unification” of spending and regulation, not merely dispensing the vision of America’s Framers, but overthrowing it. For more validation, simply read the Green New Deal prospectus, a vision more about controlling you than lowering the temperature outside. It shares with the COVID response the inducement to rationalize still further social regulation the moment the next crisis arrives and put government at the center of business decisions.

America’s crisis is less the coronavirus—which we can deal with humanely and in targeted fashion—than the replacement of its form of governance. Alleged rescue spending bills, particularly those like the HEROES Act, are designed to make new levels of spending and regulation permanent parts of the American landscape.

Instead of this grand unification of spending and regulation, what’s needed now is a Crisis Exploitation Prevention Act. We have stimulus bills, but there must be rainy day bills and actual preparations. Without that shift, limited government cannot survive. We must recognize that a substantial proportion of policy makers and the public do not want it to survive. That’s why debate over cost-benefit analysis of government intervention is fruitless.

The spending and regulation induced by the response to the coronavirus crisis are no crisis at all for an invigorated, grateful administrative state.