Expanding power

In the United States, President Barack Obama and his administration are calling for more aggressive and temporary fiscal and monetary intervention on a federal level, believing that a larger role for government and deeper intervention in every aspect of expenditure can help get a grip on an economy seemingly out of control. DW-WORLD spoke to two experts – Piotr Kaczynski from the Center for European Policy Studies in Brussels and Nick Witney from the European Council on Foreign Relations in Paris – about the concept of Big Government and whether it would be an option for Europe.

DW-WORLD: When the Americans talk about expanding the government's power and reach and creating "Big Government," what does this really mean?

Kaczynski: The model of Big Government is linked to the social system of governance and is linked to the 1930s when we had an increased role of the state in the economy. Big Government in the US context means an expansion of power to cover healthcare, to finance public infrastructure, to improve schooling and to support investment. It means the federal government is much more involved in the economy than it was before.

Witney: There are two levels in this concept: one which is quite familiar to Europeans and that is just how much of the national income the government takes in the form of taxes and then spends. The percentage of gross domestic product (GDP) and the tax take is a good measure of the relative size of government. In the States, there is a second dimension to this which is not so prominent in Europe, which is this moral sense that government should be restrained from becoming over-large. This is a country which was founded on the idea of getting away from oppressive governments in Europe, founded on the pioneer culture, founded on the idea that every individual should support himself and be rewarded according to his own efforts and founded on the idea that this was the union of 50 states with lots of power reserved for the states. So there has always been an American discourse as we've moved from the New Deal*, which was Big Government, to the Reagan era which was against that, and there's always been this moral debate as well as the one about who can spend the extra tax money.

The point of any government is to provide the citizens of the country with those things they cannot provide for themselves. Whether you're an ideological believer in small or big government, everyone believes that defense should be provided centrally by the state; then there is a spectrum of opinion as to what more should be provided by the state – policing, yes, education and health to a certain extent. The more you believe that these and other services should be provided by the state, the more you believe in Big Government.

*A complex package of economic programs President Franklin D. Roosevelt initiated between 1933 and 1935.

The Obama administration appears to be using the current economic crisis to create a bigger role for government throughout the economy, from education and health care to banking and energy, in a bid to get the crisis under control. Can Big Government drag the US out of the crisis?

Kaczynski: Whether Big Government can help the US out of the financial crisis, no-one can say but it is a way of trying to solve the crisis. One way of doing this is to increase public spending, but by doing that the state has to balance that with the cutting of private spending. I think this is where President Obama may find difficult obstacles to overcome.

What is the likelihood that the European Union could adopt a similar approach and adapt the concept of Big Government on a supranational scale to help the EU out of the current crisis?

Witney: First of all, the EU is not the direct equivalent of the US. The US is a collection of states with significant state power but it is a federation, it is one country, and the EU absolutely is not. It's a bloc of 27 sovereign countries who have chosen to pool certain aspects of their sovereignty but some of the things they've chosen not to pool are some of the things that have been talked about in connection with Big Government: healthcare, education, taxes – these have nothing to do with the EU but are member state prerogatives. So while some people like to rage about the power of Brussels there are big chunks of government activity that the EU has no bite on at all. The same can be said, in effect, for defense and foreign policy as well. These are national issues which are increasingly coordinated in Brussels, but people coming together to talk about how to coordinate things is a lot different from actually transferring power to Brussels. I don't think you can say that Europe is headed in a Big Government direction.

Kaczynski: In the European Union, various member states have very different perspectives. Over the last few years, the opinion has been to liberalize the system and to limit the spending of the governments in relation to GDP. Germany went down from over 48 percent in 1997 to less than 44 percent in 2008. This is not much but it is a stable decrease over eleven years. A more radical example would be Lithuania where they went down from 50 percent to 33 percent in 2006 but moved back up to 37 percent in 2008. But in general across the EU, the levels of public spending are reasonably high, much higher than those in the US. Most range between 40 and 50 percent of GDP. The figures from the US in 2006, the last available data, the US government on all levels had 36 percent of GDP, almost a third, where in countries like France and Sweden it's over half.

Could the EU consolidate its power in Brussels to dictate the levels of public spending over the bloc in a Big Government way in a bid to stop Europe hemorrhaging cash?

Kaczynski: For the EU to centralize the control of public spending across the whole bloc it would require the creation of a High Representative for Monetary Union, something we don't have right now but there is a temptation to do so in the future. And this may not be such a bad idea as it would coordinate the expenditure. But we already have the Growth and Stability Pact which sets the limit of an annual budget deficit at no higher than three percent of GDP and punishes governments that exceed that. Also, it's unlikely that individual governments would cede that much power to one office.

Is the possibility of centralized economic power an issue in the coming European elections?

Kaczynski: I don't think this is an issue in the elections. I don't think this is a topic that is being discussed in the campaign although it should be given the state of the economic crisis.

Interviews: Nick Amies

Editor: Sonia Phalnikar