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                           Imprimis, On Line
                             February 1994
        
        IMPRIMIS (im-pr-mis), taking its name from the Latin
        term, "in the first place," is the publication of
        Hillsdale College. Executive Editor, Ronald L.
        Trowbridge; Managing Editor, Lissa Roche; Assistant,
        Patricia A. DuBois. Illustrations by Tom Curtis. The
        opinions expressed in IMPRIMIS may be, but are not
        necessarily, the views of Hillsdale College and its
        External Programs division. Copyright 1994. Permission
        to reprint in whole or part is hereby granted, provided
        a version of the following credit line is used:
        "Reprinted by permission from IMPRIMIS, the monthly
        journal of Hillsdale College." Subscription free upon
        request. ISSN 0277-8432. Circulation 505,000 worldwide,
        established 1972. IMPRIMIS trademark registered in U.S.
        Patent and Trade Office #1563325.
        
             ---------------------------------------------
        
           "A Return to Big Government - and How to Stop It"
                        by Caspar W. Weinberger
                         Chairman, Forbes Inc.
        
             ---------------------------------------------
        
                          Volume 23, Number 2
              Hillsdale College, Hillsdale, Michigan 49242
                             February 1994
        
             ---------------------------------------------
        
        Preview: No longer do our leading politicians agree
        with Thomas Jefferson that the government that is best
        is that which governs least. The 1990s have seen a
        return to big government. Former Secretary of Defense
        Caspar W. Weinberger says in order to stop it, we must
        first reclaim the old values of independence and self-
        reliance that were once the core of the American
        experience, and we must "believe in ourselves again."
        
             Mr. Weinberger addressed an audience of 450
        business and community leaders in Tulsa, Oklahoma at
        Hillsdale College's Shavano Institute for National
        Leadership September 1993 seminar, "Taking on Big
        Government."
        
        ---------------------------------------------
        
        As Americans, you and I share a common problem that
        threatens not only our future but the future of our
        children. It is not the size of the federal deficit, or
        the burden of overtaxation, or the shrinking purchasing
        power of our income. Nor is it the skyrocketing cost of
        health care, or the breakdown of public education, or
        the explosion of regulation.
        
             These are all symptoms of the real problem, which
        is big government.
        
        
                 Reagan and Rolling Back Big Government
        
        In the 1980s an extraordinary leader attempted to take
        on big government and to roll back its power over the
        lives of its citizens. Whatever one's opinion may be
        about the success of President Ronald Reagan in
        fulfilling his self-appointed mission, one thing is
        clear: He made the phrase, "Government is the problem,
        not the solution," a call to arms for millions of
        Americans who until then had given up hope of
        redirecting, let alone reforming, the political
        process.
        
             We were particularly fortunate that the sea change
        in our whole political agenda was supported by an
        equally courageous and visionary leader in Great
        Britain--Prime Minister Margaret Thatcher. This sea
        change was so profound, so powerful, that even many of
        its opponents admitted that it was the major
        intellectual and political event of the last half
        century and, combined with a strong defense policy, had
        more to do with destroying communism in Eastern Europe
        and the former Soviet Union than any other cause.
        
             Reagan made a compelling case that the whole
        approach to government since the days of Progressivism
        and the New Deal was wrong. Government does not, he
        argued, have the ability to meet more than a very
        narrow range of responsibilities, and there are real
        risks in using the federal bureaucracy as an instrument
        of change.
        
             The more we turn to government and the more
        government takes on, the more it costs and the more it
        takes from us, for government has no resources it has
        not first extracted from its citizens. So it is
        inevitable that as governmental power expands,
        individual freedom contracts.
        
        
                  Clinton and Expanding Big Government
        
        Now, sadly, under the new Democratic administration in
        the 1990s, we are seeing a deliberate repudiation of
        the sea change of the 1980s. President Clinton urges us
        to turn again to Washington, D.C., as the ultimate
        problem-solver. Of course, he does not share the same
        political mandate as Reagan. His is a minority
        government, which received only slightly more than 40
        percent of the popular vote. But President Clinton has
        sufficient power to undo much of what President Reagan
        accomplished.
        
             The U.S. is already suffering from a return to
        unchecked federal expansion and federal spending. There
        are more and more instances in which individuals'
        rights-- to make their own decisions, to exercise their
        own judgments, to reach their own goals--are subjugated
        to the state's "superior" right to intervene for "our
        own good." Sometimes this takes the form of an assault
        on private property laws in the name of dubious
        environmental theories. Sometimes it means the
        imposition of new, crippling regulations and taxes on
        small businesses. It can even distort freedom of
        religion into prohibition against prayer.
        
             Unchallenged big government is back-- with a
        vengeance. And President Clinton and his followers seem
        prepared to make sure that it grows at an even faster
        rate than before. They sincerely believe that big
        government is not only capable of solving nearly all
        our problems, but that it is the only agency that
        should solve them. In short, they trust big government
        more than they trust the American people. But they are
        always careful to deny this--just as they are always
        careful to create a rhetoric of "New Democrats" to
        appeal to the natural conservatism of the majority.
        
        
                        Socializing Health Care
        
        All the plans coming out of the White House these days
        spring from the philosophy that government must be
        enlarged, strengthened, and "reinvented." Look, for
        example, at the Clinton health care plan, which has
        been pitched as the main product of the "new and
        improved" federal bureaucracy. As one observer has
        said:
        
            "The Clinton health care plan is a sweeping
            bureaucratic attempt to control the means and ends
            of production. It dictates what doctors, hospitals,
            and insurance companies can charge and how they can
            conduct their businesses. It also dictates what
            services patients can receive and from whom. And
            then it taxes everyone to the hilt to pay for a far
            worse system than we have now."
        
        But of course they don't use the word "taxes." The
        preferred term is "compulsory premium payment." This is
        typical of the misleading sugar-coating the Clintons
        use to gloss over things they fear may lose them votes.
        
             If everybody is going to be insured and given an
        absolute right to health care, there is going to be a
        great increase in demand. But because the government is
        also going to place artificial limits on the supply
        (through price controls, regulations, and mandated
        health care collectives), severe rationing and sharply
        reduced quality of services will inevitably result.
        
             As for paying for its plan, the Clinton
        administration has declared that savings in Medicare
        and Medicaid of 20 percent will cover a large part, yet
        past experience shows that Congress will never cut this
        much. Even a 10 percent reduction would be, as a recent
        article in the Wall Street Journal has noted,
        unprecedented. Say, however, that a 10 percent
        reduction was achieved; combined with the increased
        demand that the Clinton plan fails to account for, at
        least an additional $70 billion will have to be raised
        through new taxes the first year, and the figure will
        increase every year. To make up for the tax revenue
        losses the plan encourages (through lay- offs, early
        retirements, and fewer new jobs), another $50 billion a
        year will also have to be found.
        
             The Clinton administration's response to such
        shortfalls will be to raise taxes even higher.
        Theoretically, it will have to raise personal income
        taxes 18 percent more (on top of all the other
        increases it has in store), but says the Journal, even
        that wouldn't be enough, because higher marginal tax
        rates would lead to less revenue-producing activity.
        The Clinton administration has tried to reassure that
        other alternatives like corporate taxes and so-called
        "sin taxes" will be heavily relied upon. However,
        corporate taxes will also result in less revenue, and
        even in this somewhat secular society of ours, I doubt
        that we can commit enough sin to pay for anything on
        the scale of the Clinton health care plan.
        
        
                Increasing Federal Spending and Taxation
        
        There is further evidence that the sea change of the
        1980s is being repudiated by our new pro-big government
        leaders in the 1990s.
        
             In January of 1993, President Clinton vowed that
        he was going to make substantial reductions in the U.S.
        deficit through a combination of deep spending cuts and
        "fair and equitable" changes in the tax code. Between
        the two, he predicted that there would be a $500
        billion reduction in the deficit by 1998-99.
        
             Now that the president's plan has actually been
        submitted, as opposed to his comforting rhetoric, we
        see that there are not going to be any real spending
        cuts, except, of course, in the area of defense, which
        is, to put it mildly, unpopular with the
        administration. Instead of cutting actual spending, the
        government will cut the size of spending increases--
        from about 7 percent to about 3.5 or 4 percent a year.
        
             And the "fair and equitable" changes in the tax
        code amount to new taxes on the overburdened middle
        class and especially on the "rich"--the 2 percent of
        our citizenry who already pay 30 percent (in some
        cases, close to 40 percent) of all taxes and who supply
        most of the capital for job-producing activities.
        
             The Clinton administration believes in a simple
        equation: More taxes equal more government revenue.
        Thus all its calculations about how much total tax
        revenue needs to be raised to cover current federal
        spending, to reduce the federal deficit, and to
        anticipate future needs, are based on "static
        projections."
        
             Static projections presume that people do not
        change their behavior at all when they are confronted
        by tax increases. But people do change their behavior.
        They do not work as hard if they cannot keep the fruits
        of their labor, they do not risk capital or start new
        enterprises unless there is worthwhile profit
        potential, and they seek to shelter as much income as
        possible from taxation.
        
             It will not be long before Clinton's tax increases
        lead to sharp revenue collection losses. But,
        predictably, he will call for more of what caused the
        problem in the first place, i.e., more taxation. Look,
        too, for the economy to be damaged severely.
        Financially, the fourth quarter of 1992 was the best in
        our entire economic history, but in the first and
        second quarters of 1993, the figures dropped
        significantly, mainly because of the expectation of tax
        increases. Many investors who are normally willing to
        take risks and start new ventures in the marketplace
        are standing on the sidelines.
        
        
                      Believing in Ourselves Again
        
        We must restore our confidence in our ability to run
        our own lives and solve our own problems. In the 1980s
        we came a long way. It is now fashionable to denigrate
        the "Reagan Revolution," and the classic sneer heard
        most often inside the Beltway is: "All Reagan did was
        make people feel good about themselves."
        
             Well, I think that was no small accomplishment:
        When people feel good about themselves and about their
        country, particularly after suffering through a long
        period of doubt and self blame, it has a marked,
        positive effect on the behavior of many.
        
             We are once more proud to be Americans. We are
        once more steadfast in our conviction that the American
        system of limited self-government has made us the
        freest, most prosperous, most blessed nation in the
        history of the world. If that were indeed all Reagan
        accomplished, then he ought to be forever remembered
        and honored. He taught us to begin believing in
        ourselves again.
        
             Despite the return to big government under
        Clinton--indeed, perhaps because of it--I believe we
        can continue what Reagan began: We can come all the way
        toward the goal of restoring our confidence in our
        ability to run our own lives and solve our own
        problems.
        
             For one thing, Clinton's plans cannot succeed, and
        with the severe harm they are already inflicting on the
        economy, it will not be long before we see a political
        backlash against our return to the New Deal days of
        big, costly government, with mammoth, new programs like
        the proposed national health care plan, and with new
        federal spending and taxes.
        
             But even more important, people are starting to
        realize that the cost of big government is not all
        measured in dollars; it is also measured in terms of
        what big government can and does do to harm the human
        spirit and the cause of freedom.
        
             And as long as there are individuals and
        organizations willing to fight, as Hillsdale College
        does, against big government and for the cause of
        freedom, there will always be hope.
        
             ---------------------------------------------
        
        In May of 1993, Caspar W. Weinberger became the second
        chairman of Forbes Inc. Previously publisher of Forbes,
        the world's largest circulation business magazine, he
        also served as U.S. Secretary of Defense, U.S.
        Secretary of Health, Education, and Welfare, chairman
        of the Federal Trade Commission, and director of the
        U.S. Office of Management and Budget.
        
             His early political experience was gained as a
        California state assemblyman and director of finance
        for the state of California.  During World War II, he
        saw active military service as a U.S. Army captain,
        41st Infantry Division, and a member of General Douglas
        MacArthur's intelligence staff.
        
             In addition to heading Forbes, Mr. Weinberger
        currently is counsel to the international law firm of
        Rogers and Wells.
        
                                  ###
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