Why Business Depends on Big Government

Photo Credit: Joseph Sohm / Shutterstock

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One of the most telling statements of our political era was made by Republican Dick Cheney in a Vice Presidential debate with Democrat Joe Lieberman on October 5, 2000, 20 years ago this month. Lieberman jibed that Cheney, the Republican nominee, had profited handsomely from the job he had recently departed as CEO of the Dallas-based government contractor, Halliburton Corporation. But Cheney shook his head and replied: ”I can tell you, Joe, the government had absolutely nothing to do with it.”

It was a misstatement, one that opened a window into the place of government in our political imagination. The reality as Lieberman knew, was that Cheney had grown rich on government contracts paid for by billions of tax dollars and guarantees. As Bloomberg News pointed out the day after the debate, it would not be an exaggeration to say that the government had quite a lot to do with Halliburton’s profitability. 

That night, however, amid the audience’s laughter, Lieberman backed away, chuckling good-naturedly and joking about joining the private sector himself. And few journalists followed up. Following the debate, most media analysts focused on what the New York Times called Cheney’s “avuncular self-confidence” but, like Lieberman, they largely passed over that the soon-to-be vice president’s statement was a whopping lie, not just about his own fortune, but about those made by others in his party. 

Many newspapers highlighted this moment for its drama. The Palm Beach Post singled it out, without commentary, as the “best exchange” of the debate. Some commentators gave the nod to “both sides” by calling it a “misstep” akin to Lieberman’s describing a Democratic proposal for a tax credit for “stay-at-home” moms, without noting that it was only for a year. 

But why did Cheney’s statement, easily disproven and central to Republican economic policies, go unchallenged? Granted, the debate took place before the modern era of media fact-checking which has now flourished during the presidency of Donald Trump. Part of the blame also lies in tired political rituals that are not expected to produce new information, only “zingers” like Cheney’s well-delivered one-liner. 

But Cheney’s lie, and his two-faced relationship to government spending, was also satisfying to many because Americans believe, in equal parts, that government is bad and good. They want to be helped by the state—but they don’t want to be constrained by it.

Conservative strategists have inveighed against so-called “big” government for generations. At the time of the debate, Cheney had been the beneficiary of that campaign, both as a politician and as a businessman, championing tax cuts for the wealthy, privatizing government services, and cutting social welfare programs. This dynamic has reached new heights in our current political moment, as Donald Trump and the Republicans label moderate Democrat Joe Biden’s proposals to expand the Affordable Care Act and to develop a government program to fight global warming as “socialism.” 

Conservative think tanks, politicians, and pundits depict dollars spent on public welfare in almost entirely negative and inaccurate terms. Among other things, public spending is portrayed as a drag on the economy and a threat to freedom. From this perspective, government is the problem, as President Ronald Reagan famously put it in his first inaugural address. To conservatives—except for the military budget—government spending is always wasteful, while federal programs are at best mediocre, and at worst, dangerous manifestations of the “nanny state.”

This negative view of government also requires an alternative American history, one which privileges a free market economy that has never existed. It is now a conservative cliché to praise what Reagan called, in his 1961 attack on President John F. Kennedy’s proposed Medicare plan, “our traditional free enterprise system,” and to describe all battles against government intervention in the economy as a return to the venerable American custom of laissez-faire economics. 

The idea that the free market is an American norm and state intervention a recent, and dangerous diversion from tradition, is false, as is the notion that Americans have historically resented the state. Ever since Federalists described the Constitution as “a revolution in favor of government”—one that would vigorously protect national interests—many Americans have recognized that the state has a positive and essential role to play in promoting economic dynamism and political freedom. 

In fact, the Revolutionary generation promoted internal improvements. Nineteenth century Republicans supported public spending on railroads, land-grant universities, and the democratic experiment of Reconstruction. Twentieth century progressives endorsed antitrust legislation, while the New Deal rescued both the economy and our democracy, not just with government spending, but with what the historian William Leuchtenberg called “striking ingenuity in meeting the problems of governing.” 

True, robust markets have been the wellspring of economic growth in the United States, but the government’s role in creating and maintaining them has been obscured. As President Barack Obama noted in his “you didn’t build that” speech, “There are some things, just like fighting fires, that we don’t do on our own,” a sentiment echoed more recently by Senator Elizabeth Warren. From the Erie Canal to the Interstate Highway System, the Tennessee Valley Authority, and the internet, American business has flourished through government policies. Land grants, tariffs, copyright, and consumer protection laws also provide an infrastructure for markets to operate, choices to proliferate, citizens to consume, and businessmen to profit.

Yet Dick Cheney’s zinger also reveals, if not the truth about economic history, a longstanding ambivalence about the government’s role in United States economic development. The same state that promoted business did so by enforcing chattel slavery and Native American dispossession. Nineteenth century workers detested key elements of the state they viewed as increasingly European, in that it protected the privileges of the powerful and enabled the wealthy to further enrich themselves. This was the critique of crony capitalism offered by Adam Smith made famous in his book usually (and mistakenly) seen as the progenitor of free market economics, The Wealth of Nations (1776).

Americans also feared the standing armies and the co-mingling of military and civil government that characterized Old World regimes. But this meant that they condemned precisely the kind of arrangement that Cheney and Halliburton profited from, that Donald Trump’s presidency embodies today; and what, in his farewell address, President Dwight D. Eisenhower called the “military-industrial complex” and critics now call “corporate welfare.” Such fears did not reflect a uniform disdain of federal power, however, but rather fear of a state that would entrench the power of insiders and elites.

Cheney’s lie about the nature of his own success is even more relevant today than it was when he uttered it two decades ago. In the age of Trump, the use of government for the personal profit of government officials, family members, and cronies has reached crisis levels. Many politicians and pundits continue to deny the government’s proper and historic place in American economic development. They also minimize the dangers of government power that serves their interests: secrecy, the revolving door between business and government, and unscrutinized contracts handed out to private businesses like Halliburton. 

In the last two decades—from the Occupy Wall Street movement, to the campaigns of Bernie Sanders and Elizabeth Warren, to the growing popularity of President Obama’s Affordable Care Act and popular support for many other proposed government programs—we have seen the emergence of new visions about the role of the government in our political and economic life. In many cases, they are best understood as updating older values such as free education, affordable housing, infrastructure investment, and accessible health care. 

Such values are not socialism, but democracy. They presume that taxes and public borrowing are a legitimate means of raising funds for necessary collective endeavors. They imagine that federal regulation, such as the freedom to avoid toxic drugs and unsafe food, can promote the interests of the individual, and that the government can, as the Founders put it in the Preamble to the Constitution, promote the “general Welfare.” 

Simultaneously, these social movements can be critical of unchecked government power, and they can call attention to the dangers of a corrupt state that have become especially acute over the last few years. 

Twenty years later, we can say not only that the government had something to do with Dick Cheney’s windfall profits at Halliburton, but that it had everything to do with it. In the immediate aftermath of that boast, Joe Lieberman missed the opportunity to restart a national conversation about the historic and contemporary importance of government itself. A generation later we are living in a different era and are better positioned to understand the vital importance of government as an ally of economic development and social justice, as well as the dangers of a state that acts in the interests of the entrenched, and the powerful. 

Let’s not miss this opportunity again.

Lawrence Glickman is the Stephen and Evalyn Milman Professor of American Studies in the Department of History at Cornell University.