If major government and economic reforms aren't put in place now, during this unprecedented boom in both the economy and individual confidence, an opportunity could be lost for decades. Once an economic slowdown, or a recession, begins, it seems unlikely that Congress or the public will become enthusiastic supporters of privatizing Social Security, or refunding the budget deficit, or reducing the size of government. Neither political leaders nor their constituents have shown much inclination for major Social Security reform or tax cuts.
Individuals and corporations have become richer in income and savings during the economic expansion that began in 1982. But they've also become more dependent on, or at least bigger users of, government programs, subsidies and entitlements. One might think the opposite: that people and corporations would become less dependent and more self-reliant as they become richer.
When an economic downturn occurs it seems unlikely, based on the current mood of the country -- however unfortunate this misguided view in government solutions -- that either the public or Congress will clamor for fewer government programs to bring the economy out of a malaise.
Alan Greenspan, the Federal Reserve Board chairman, was at least partially correct when he spoke of this era of "irrational exuberance." He was talking about the continuing enthusiasm for equity markets, even as valuations soar higher and higher; but one can appropriate his famous phrase and attach a different meaning to it. The public has been irrational in its support of bigger government, even as individuals have become more wealthy.
A couple of years ago, President Clinton in his State of the Union address said the era of big government was over. But the truth is that government is getting bigger.
On one side of the federal budget equation, spending is projected to rise to $2.3 trillion in 2009 from $1.7 trillion in 1999, an increase of 3.2% a year, according to the Senate Budget Committee. As a share of the economy, the committee projects spending will decrease to 17.5% of gross domestic product in 2009 from 19.5% in 1999.
On the other side, federal revenue collection is projected to grow to $2.7 trillion in 2009 from $1.8 trillion in 1999. The bulk of the federal revenue comes from individual income tax receipts, which are projected to grow to $1.3 trillion in 2009 from $863 billion in 1999.
As a share of GDP, federal revenue will hardly decline. In 2009, total federal revenue is projected to be 20.2% of GDP, down slightly from 20.7% in 1999. Individual income tax receipts also are projected to decline only slightly as a share of GDP, to 9.8% in 2009 from 9.9% in 1999.
In no way can anyone interpret these numbers as the end of big government.
Part of the reason for condoning bigger government may be greed.
People want more and enjoy the short-term benefits they receive without thinking about the long-term consequences of having to pay for them. Mr. Clinton, who is, as someone noted, the first "indisgraceable" president, has engendered this selfishness. But the real blame lies with the people who have forgotten the values of limited government and self-reliance, which sound like words from the quaint frontier, buried by bulldozers and sealed under the concrete of development, now financed by a booming Wall Street.