Libertarianism and Government Shutdowns

Jeffrey Miron

This article appeared on Substack on October 4, 2023.

What should libertarians think about government shutdowns due to Congressional failure to approve new spending bills? Libertarians oppose most spending affected by shutdowns, so one might assume they are on board.

That is not my view. While shutdowns suspend some government expenditures, the effect is temporary. Furloughed employees, for example, get back pay when the shutdown ends.

No evidence shows that shutdowns have slowed the path of government growth after reopening. Even the temporary reduction is small, since many discretionary programs continue, as does entitlement spending (which is more than half of federal expenditure).

The same caution applies to using tax cuts to shrink government. Milton Friedman famously argued that all tax cuts are good because they “starve the beast.” Even if Congress cuts taxes now, however, it can raise them later, which is what seems to happen in practice.

More broadly, process or institutional “fixes” to big government are unlikely to succeed. State balanced budget amendments do not seem to restrain spending, and requiring fiscal scoring from external agencies like the CBO leads to gimmicks that circumvent accountability. If the electorate wants more spending, politicians will find a way.

The only way to shrink government, significantly and sustainably, is to convince more people that smaller government is better.