The Problem of Government Expansion

By: Laura Adelmann



As General Motors entered bankruptcy to trim its girth in the hope that it will survive to build happy environmentally friendly cars that no one wants, President Obama claimed 60% of the shares of GM stock for the government. Obama described this move as temporary and expressed, yet again, his reluctance to insert the government into the day to day decision making of America’s automotive industry. But, is this reluctance sincere, or the first step in Obama’s plan to grow government’s control over our lives?

First they came for the banks. Banks were forced to take bailout money and all the strings those came with, namely the government’s desire to control wages and determine bonuses for executives. Banks who received bailout funds are now limited in their ability to attract talent with financial incentives.

Then they promised stimulus, but it came with conditions. States who accept stimulus funds have to agree to the conditions that are wedded to those funds. For example, California is facing a budget crisis and needs to make deep cuts after a ballot measure to cut the deficit failed, but if they cut too deeply, they can lose access to stimulus funds they desperately need. So, they have to spend money they don’t have to get money?

Government Motors? Will Obama be hands off as he claims? Doubtful. First he fired GM CEO Rick Wagoner and replaced him with Fritz Henderson. Then Obama’s team pushed GM to drop a few brands. Finally, they pushed them into bankruptcy. Whether this was the best decision for GM (and I believe this should have happened earlier and without wasted bailout funds and attempts to salvage the company) or not, this all came at the behest of our leader. Obama forced bond holders to take huge losses, but required minimal bending from the United Auto Workers. Obama states that GM will be governed by its board of directors, not by him or by Congress. However, with Obama’s team selecting all but two of the new members of the board of directors the difference is negligible at best. Obama’s hands-off approach also seems to include a command to produce environmentally friendly, low emission compact cars. No, he’s not involved at all.

Finally, Obama is now rubbing his hands together at the prospect of going into the healthcare business. After all these successful maneuvers to bloat government, why not one more? Obama will likely build on Medicare, which is a wasteful mess, creating a similar program for those under 65 years who do not qualify for Medicaid or SCHIP and do not have private insurance (or are not satisfied with their coverage). Launching the government further into the insurance business creates a new entitlement which will inevitably become permanent and will surely grow.

President Obama continues to deny that he wants government to run the banks, run GM, run healthcare, but his actions speak louder than his words. As government expands, so does it’s control over our lives, breeding dependence and wasteful spending. Criticism of Obama is coming from the Right as expected, but as time passes and these temporary interventions become permanent, hopefully Americans will remember their small government roots and call for the government to get out of our lives and our businesses.

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State Governments Continue to Step on Business as They Beg for Bailouts

The United States economy has hit a road block in the last year. Day by day, we continue to watch industries step up to the coffer with their hands held out high. Today, we watch in horror as to whether President Bush will bypass Congress and hand out money to the auto industry. Standing in the shadows quietly waiting for their "we're too big to fail" loans are now the state governments.

The biggest state asking for help is California. Anyone who has ever lived, worked, or been in a human resource position responsible for California should not be surprised by their record economic troubles. California is not a business-friendly state. The Government of California has imposed more rules and regulations on it's business community than most other states in the union. It is for that reason that business is flooding quickly out of the state and the tax dollars they are draining have a huge impact on California's budget short falls.

While most of the focus on the economy is currently being paid to the Federal Government, state governments continue to shoot themselves in the foot with already struggling economies. For example, in October of this year, Pennsylvania's state government led by Governor Ed Rendell passed the Energy Conservation Bill. What's the big deal about this bill? It calls for energy companies to reduce consumption by 1% in 3 years, and up to 4.5 by 2013. I am not saying we should be against energy conservation, but for a state to tell an industry to cut it's business by law is more than ridiculous.

Today, news came out that New York Governor, David Paterson is looking to raise $404 million for the state by increasing taxes on such things as hospitals, insurance policies and yes a disturbing "obesity tax" on non-diet soda. It is interesting that in a deep economic hardship the first thing some of these state governments see as a solution is to raise taxes on citizens who are already struggling to make ends meet.

If we are now going to impose an obesity tax on soda, where does this craziness end? Will he be taxing chocolate makers or candy makers in general? How about New York pizza parlors? I'm sure with all of those slices New Yorkers eat each year are bound to put on some of their extra weight? Why not just increase taxes on food in general?

With all of the intelligent people we have running these states, do you really wonder why companies head over seas? I know the instinct right now is to watch all of the loan bailouts the Federal government is dishing out, but I'd be keeping a careful eye on your local and state governments. They will have a much quicker impact on your paycheck and your wallet.