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Beware the Big vs. Small Govt Trap: It's Only About 4%. Yes, 4%

That is, there just is no big government versus small government debate. Just some differences along the spending continuum between 18-19 and 22-23% of GDP. But, watch the Democrats get snookered into it.
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Americans recently seem to do a good job of getting lathered, even violent, about 4%.

Until recently, our great, wrenching, economic debate has been focused on whether a whopping 4.6% increase in tax rates on incomes over $250,000 would undermine the American work ethic, shred the nation's the moral fiber, and constitute the "Second Coming of Socialism".

Now, with the passage of the tax cut extension, providing us a harrowing, last-minute, reprieve from such a fate, we face another monumental debate about the proper size of government -- with the difference, again, being a whopping 4%. Conservatives think government should spend no more than 18-19% of GDP. Liberals about 22-23%.

Let's get the hype machines oiled (at $92/barrel, not an inexpensive undertaking), the fake smoke to come out of our ears and nostrils readied, and so that the conclusion that we must screw the most vulnerable people in our country because "the government is too big" seems inexorable.

OK, 4% of our $14.75 trillion GDP is a lot of money. $590 billion to be exact. About the size of the Pentagon's annual budget. Not including our wars.

Depending on how that money is spent, or not, can determine whether we have clean renewable energy, health care security, a decent old age pension, world-class education, and so forth. But, it is less than the $700 billion TARP that former Goldman Sachs Chair, Treasury Secretary Henry Paulson, engineered for his Wall Street buddies when they tanked the economy -- and, if you recall, he wanted it all without any oversight, ever.

It is certainly not the distinction between "big government" and "small government" the rightwing would have us believe so they can use it as an excuse to whack the middle class once again.

That is, there just is no big government versus small government debate. Just some differences along the continuum between 18-19 and 22-23% of GDP. But, watch the Democrats get snookered into it.

Important differences, to be sure, over how we spend our money, but the idea that a 4% difference in how much we spend makes one position consistent with small, limited government, and the other with a big, intrusive government is a farce. Just like everything else the Republicans tell us. Nonetheless, watch the Democrats fall right into their trap.

Even President Clinton did. In his SOTU following the Gingrich debacle, Clinton proclaimed "the era of big government is over". Well, no, it wasn't over. Because it never happened. Never.

So, instead of having a civil, fact-based discussion about whether and when to spend that 4%, we are about to descend into another farcical food fight, brought to you with multiple commercial breaks by a willing, uncritical media, and the victims will not even have a place at the table.

A properly informed and functioning party, which the Democrats most certainly are not, would focus instead on all the benefits of high-speed rail, renewable energy, medical breakthroughs, world-class education, retaining intact a program (Social Security) that has worked brilliantly for 75 years -- the last time we junked a program with such a long, sterling track-record was eliminating Glass-Steagall, and that worked out well for everyone -- and upon which our entire economy, not just seniors depend as it enables people to be more entrepreneurial and spend more during their pre-senior years. And, they would dismiss the Republican complaints not as unimportant, but certainly nothing to get all hot and bothered about. 4%.

Such a properly informed and functioning party might even point out that Social Security contributes not a single penny to our national debt. That's even less than 4-cents!

I predict now, before the SOTU, that the pundits will take up the Republican complaints about big government, the Democratic side will get snookered into a food fight about it, our major needs will go unmet, and the most vulnerable people in society will suffer... still more. All over 4%. You betcha.

Prepare the popcorn. And, cry.

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