The fiscal 1991 budget proposed by President Bush totaled some $1.2 trillion. This prodigious amount, larger than the entire Gross National Product of twenty years ago, is considered a “tight budget” in Washington. Politicians complain that they cannot find enough money to finance programs, while the hunt has been on to find programs to cut to keep the total down. The situation is so bad that Washington has invited Japan into such vital geopolitical arenas as Panama and Poland to provide the financial support the U.S. can no longer afford— a strategic development that may come to rank with Britain’s abdication in favor of the U.S.

The budget has also been in deficit for a quarter century, and the national debt has doubled since 1984. This despite the fact that the federal government collected $330 billion more in taxes in 1989 than in 1984. Though there has been widespread concern about these continuing deficits, some economists have dismissed them. Paul Craig Roberts, for example, claims that during the 1980’s “statistics show that the United States enjoyed one of the smallest deficits and slowest growth of public debt as a share of GNP in the world.” There are problems with Roberts’ argument, not the least of which is he may not have looked inside his aggregate figures. He asks, “If weaker countries can continue to carry on successfully with proportionately higher deficits, why do our smaller deficits doom us?” But his examples, Canada, Italy, and the Netherlands, are not Great Powers vying for global preeminence.

Nevertheless, Roberts makes a valid point in the abstract. Taking on debt is not always bad. It depends on the use to which the money is put. If it contributes to the expansion of the economy or of the nation’s influence in world affairs, then it can be seen as an investment. Japan has a higher debt/ GNP ratio than the U.S., most of it undertaken in the last fifteen years. Japanese debt has served to support rapid growth and to mobilize the nation’s large pool of savings. In contrast, the U.S. has squandered its public funds like a Third World debtor regime.

Until the Vietnam War ended, the national debt could be justified as having been necessary to meet the nation’s needs during wartime. However, the debt has tripled in the last fifteen years, during which there have been no wars. Measures of emergency war finance have now become standard peacetime operating procedures. This suggests the question of what the government would do if faced with an actual emergency.

The real budget problem is entitlement spending. Nearly half of the 1991 budget will consist of payments to individuals. The federal budget explicitly works to redistribute 12 percent of the nation’s personal income in ways that are philosophically dubious but politically expedient. The battle of the budget has been fought mainly between promoters of these open-ended social programs on the left and defenders of the Pentagon on the right. There is, however, another sector which has been hard hit, a sector whose waning strength from malnutrition is slowing down the entire economy: public infrastructure.

The cutting in half of the rate of American labor productivity growth (from 2.5 percent during 1948-69 to only 1.1 percent during 1969-87) sparked a wave of studies of private investment. Government investment, however, has been largely overlooked. Of the nation’s capital stock, 36 percent is in the public sector. The 1987 breakdown was 7 percent military; 18 percent core infrastructure (highways, ports, power plants, water supply and sewage systems); 8 percent for public buildings (schools, hospitals, prisons, courthouses, police and fire stations); and 2 percent for conservation and development projects.

Before the welfare state, such public investment was a major function of government, second only to the duty to provide for national defense. It is still the most important contribution to economic growth that the public sector can provide. Yet public works have been squeezed out of government budgets at all levels by the explosion in social spending over the last twenty years.

Investment in core infrastructure during 1969-87 grew at 1.3 percent while all other areas showed a meager 0.3 percent. Total federal investment gained 1.1 percent (down from 2 percent during 1948-69) while state and local investment increased only 0.9 percent (down from 4.7 percent during 1948-69). The large drop in state and local investment reflects the fact that the welfare state is not just a federal phenomenon. In 1970 state governments spent slightly less on welfare than on highways. By 1987, the states were spending more than twice as much on welfare as on highways.

Infrastructure investment has not been keeping up with the needs of the economy. As a result, not only are public services less available (schools and prisons are overcrowded, emergency services and utilities are inadequate) but roads, bridges, railways, and public buildings are wearing out. This generates a drag on the entire economy.

The deep inroads that foreign competitors have made in America’s economic position have often been blamed on the preference Americans show for consumption in the present over investment for the future. Whether true as a general indictment, it is valid for government policies. Politicians believe that voting billions more for income transfers and social programs will garner more support than building power plants, jails, or waste disposal facilities. Until this perception is changed, the term Big Government will be a misnomer. Big it is, but it is failing to perform the duties of a government.