Will Terror Attacks Revive Big Government?

0 Comments | Insight on the News, Oct 22, 2001 | by Jamie Dettmer

The watering holes of Capitol Hill along Pennsylvania Avenue had a hard time of it in the immediate days following the Sept. 11 terror attacks. Business was off, parties were canceled and, for those near or within the newly extended security zones around Congress and the White House, foot traffic was nonexistent.

Some owners wondered whether they could stay in business. That worry was misplaced. Their customers are back -- flashing the corporate plastic, gnawing lobster and swilling the more expensive champagnes and wines with lawmakers, congressional staffers and administration officials, their usual marks.

With an anxious government opening the federal wallet wide once again, a prolonged overseas conflict in the offing and plenty of federal dollars to be had, the lobbyists and Beltway bandits have returned in force as they scrap for the spoils of war even before the battle has been joined.

A few years back even a reluctant Bill Clinton had to acknowledge that the era of big government seemed to be over. Some conservatives and libertarians now worry that he spoke too soon and that a reflexive "government-knows-best" mind-set has, in the aftermath of the terrorist attacks, returned and will result in a dramatic increase in micromanaging regulations, bigger government and overspending.

As political notebook was going to press, lawmakers were busy crafting a massive "economic-stimulus package" over the objections of Treasury Secretary Paul O'Neill and Federal Reserve Chairman Alan Greenspan. They pleaded for restraint, arguing that a wait-and-see approach is needed before there is any further economic intervention.

While no one on Capitol Hill begrudges disciplined increases in defense expenditures, the feasting of the lobbyists and the congressional urge to subsidize anything that "walks and talks," in the words of one Republican wag, has prompted fears among fiscal conservatives that years of federal-government profligacy now loom.

They are anxious that the hard-won victories of the past to rein in big government will be retroactively negated in a knee-jerk congressional burst of hyperactivity aimed at reassuring Americans that all is well with Uncle Sam and that their safety is guaranteed.

"I'm not sure this administration entirely understands how Washington is geared to spend money and grab more power," said a Republican congressman. The baby is being thrown out with the bathwater, critics warn. "The initial responses have been stupid," a bleak Fred Smith of the Competitive Enterprise Institute tells political notebook. He cites the congressional approval given to the long-stalled free-trade agreement with Jordan that was passed on a nod with Democratic labor and environmental provisions included. "That linkage of labor and environmental conditions with free trade will now serve as a precedent for future deals," he warns.

Smith says he remains stunned by the lack of conservative response on the Hill at the prospect of the Federal Aviation Administration (FAA) being given greater powers. "Governments tend to adopt the nanny approach during a crisis, and we've seen that with the FAA introducing a bunch of silly rules since Sept. 11. What beats me is why we should reward a bureaucracy that a fortnight ago proved to be utterly incompetent. What we need is to throw the emphasis more on the airlines and the airports."

The prospect of an overly intervening government also worries Ed Crane of the Cato Institute. "Nothing that's happened takes away from the arguments for smaller government," he says. While outlining the reasons for further cuts in income tax and the elimination of the capital-gains tax, Crane sees a danger of government reaching too far into the nooks and crannies of American life and ignoring more-efficient market responses to some of the problems highlighted by the disastrous events of Sept. 11.

Like Smith, Crane disapproves of the government bailing out the airlines and possibly taking on the insurance cover. "The market response is to have different rates and lower rates should be rewarded to airlines that provide a higher quality of security," he maintains. "If we bail out airlines and the insurance industries, we create a moral hazard," he says.

Crane isn't arguing for no government at all. He believes that more money is needed for the intelligence agencies and to shore up the Immigration and Naturalization Service. And while concerned about threats to civil liberties from a nervous government, he argues that there should be another standard for noncitizens: "If a noncitizen fits (dare I say it?) a profile, we should be able to take a closer look. We are in a war and we didn't invite Germans to come over as tourists during the Second World War."

Administration aides say that they now are governing in radically altered circumstances and that most Republican congressmen are ready to put on hold long-cherished beliefs about the appropriate size and role of government. They also insist they have not turned their backs on their commitment to smaller government or other principles they espoused during the election campaign.