Why Spending Grows

January 2, 1956

The present proposals for still larger farm subsidies at the expense of the taxpayers are one more example of how Federal spending programs, no matter how huge or how harmful, tend to grow even greater.

The more than $7 billion worth of farm surpluses already piled up in warehouses and old ships are the direct result of the 90 percent of “parity” price-support program. This piling up of surpluses, with its drain on the Treasury, continues even under the “flexible” price-support program. Yet the Democrats are pressing for a return to 90 percent support, and the Administration feels driven to suggest still greater farm expenditures. On top of present price supports, it now proposes to recommend a “soil bank” plan. Under this, in the first year, the taxpayers would be called upon to hand out some $450 million more to induce farmers to put part of their acreage in soil-building grasses rather than in price-supported crops.

As the need for farm relief has grown less, farm relief itself has grown greater. In 1934, realized gross farm income was only $8.5 billion; in 1944, it had jumped to $24.4 billion; in 1955, it was about $32 billion. Yet over the same period government farm subsidies have steadily mounted.

A similar growth may be traced in unemployment insurance, old-age assistance, and other social-security programs. In 1949 Edna Lonigan wrote a study for the American Enterprise Association of Washington, D.C., in which she showed not only how welfare programs had been steadily expanded but how the concept of what constitutes “need” had been steadily raised. Such a study, brought down to date, would show the same expansion going on in the last six years. A similar secular trend can be traced in the various veterans’ programs.

Another dramatic illustration is the expansion of Federal grants-in-aid to the states and localities. More than 50 different grants-in-aid have been enacted so far. Roger A. Freeman, in his study of Federal aid to education that I referred to last week, tells us that these grants-in-aid have soared from $3 million at the turn of the twentieth century to more than $3 billion in 1955.

Another outstanding example is aid to housing. The various mortgage-guarantee programs and subsidies for public housing were originally enacted on the argument that they were needed to compensate for an abnormally low volume of private building. But these programs continue even during the greatest housing boom and the greatest general boom in our history.

In some respects the strangest of all examples is the foreign-aid program. Our government has now poured out more than $50 billion in foreign aid since the end of the second world war. All the arguments for the institution of the Marshall Plan in 1947 have now evaporated. The aid was to last only four years. But under constant changes of name and reasons in continues in heavy volume.

What causes this constant rise in expenditures for the benefit of special groups? Why are the forces acting in the opposite direction so weak? The general principle at work was once summed up by Elihu Root, a senator and onetime Secretary of State. “Minorities punish,” he said, “and majorities will not protect.”

That this should be so in the realm of public expenditure is not mysterious. To the beneficiaries of Federal aid (which include the bureaucracy hired to direct it) it makes a direct and substantial difference whether or not they get it. The tax burden, on the other hand, is spread over the whole nation, and no taxpayer can be sure precisely how much a given spending program costs him personally. Therefore the steady flow of organized propaganda is all on the side of continuing that spending program, while the arguments put forward against it are scattered, and much more abstract and disinterested. They seldom carry a threat to the political life of any congressman.

A cure for this ominous trend would not be simple. But one part of it would surely be to adopt a really responsible budget system.