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Shadow Elite: Why Sarah Palin's Really Selling Big Government

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Sarah Palin was supposed to blast some fresh Arctic air into the Tea Party movement last Saturday, but the breeze I felt seemed awfully stale. Far from "going rogue," Palin became the latest in a long line of politicians to trot out a tired establishment mantra: that America needs to rein in "big government." On Fox the next morning, as Palin made clear she would consider a presidential run, she told Chris Wallace she was concerned about a "government .... takeover of the private sector."

This is not just GOP boilerplate. It's an insidious belief that is pushed by both parties. Like motherhood and apple pie, the "small government" mantra is something both tea partiers and mainstream America easily endorse. But this mantra, long misleading, has in the last two decades been exposed as flat-out deceptive. It's the "private" sector -- namely, companies that do the work of government -- that increasingly has been taking over federal government, not the other way around. "Shadow government" has spiraled; the cost of services alone it sold to government has more than doubled since 9/11. The shadow government not only lacks the accountability that democracy demands, but it often doesn't even deliver on the efficiency that business is supposed to offer. Failing to see this, or perhaps willfully ignoring it, politicians like Palin push a sham on Americans that only allows the government -- the shadow one -- to get bigger and bigger and to deplete traditional government of the personnel, information, expertise, and institutional memory it needs to function.

Here's how that sham works: in an ostensible effort to keep government small, caps have been put on how many civil servants government can hire. But no matter what, regular Joe still wants his interstate potholes filled, his tax refund in on time, his prescription drugs proven effective and sound, and his homeland safe. To get out of this impossibility, administrations both Democratic and Republican over the years have been busily enlisting more and more contractors (who often, in turn, hire subcontractors) to do the work of government.
 
Because they aren't counted as part of the federal workforce, it looks like government is being reined in. Like the "Potemkin village" of Russia and the Soviet Union constructed to make the ruler or the foreigner think that things are rosy, the public is led to believe they have something they don't. This sham lets Americans have their tea ("smaller government") and drink it too (the government services they expect and demand.)

Sarah Palin is yet another politician peddling or perhaps even oblivious to the myth of small government. In my book Shadow Elite, I relate an anecdote involving well-known conservative thinker and publisher Alfred S. Regnery (Regnery Publishing put out the book Unfit for Command, kicking off the infamous Swift Boating of presidential candidate John Kerry.)  He had just given a book talk on the importance of limiting the size of government. I asked him what he made of the fact that three-quarters of employees doing the work of the federal government are now government contractors, and that the federal budget for contractors' services increases by the day. He was taken aback. It was immediately apparent that the subject was not on his radar.

While the GOP is best known for touting small government, this is not just a Republican sham. Democrats have also embraced the political expediency in selling the idea that government should get leaner and meaner. (Remember Al Gore aiming to "Reinvent Government"?) And under their watch too, the (shadow) government has only gotten bigger and messier, with more and more contracts given to "private" companies whose tendency is to have the worst qualities of government minus the best qualities of the private sector.

And it would be one thing if these companies were just filling interstate potholes, but their role, and largely unchecked power, has now gone far beyond the simple housekeeping politicians (incorrectly) think big business can do better than government. They have encroached into a whole host of functions that the government itself deems so important and sensitive that only federal employees should carry out.

That includes the attempt to clean up the calamitous results of the run-away influence of unaccountable Wall Street on government-- influence Sarah Palin went after Saturday and rightly so. For instance, contractors manage--and more--taxpayer money doled out under the stimulus plans and bailouts. With regard to the fall 2008 $700 billion bailout, better known as the Troubled Asset Relief Program or TARP, the Treasury Department hired several contractors to set up a process to disburse the funds. 

And consider the case of BlackRock. The government enlisted the money manager to help advise it and manage the rescue of Bear Stearns and the American International Group (AIG). BlackRock also won a bid to help the Federal Reserve, a vastly powerful institution which itself combines state and private power, to evaluate hard-to-price assets of Freddie Mac and Morgan Stanley. 

As the Wall Street Journal noted,

BlackRock's multiple hats put it in the enviable position of having influence on setting the prices of both the assets it is buying and selling.

Enviable for BlackRock perhaps, but not for American taxpayers who deserve transparency.

And yet the government has become utterly dependent on private contractors to carry out many of its mission-critical functions. Even the Acquisition Advisory Panel, a contractor-friendly task force (made up of representatives from industry, government, and academe) concluded that this trend "poses a threat to the government's long-term ability to perform its mission" and could "undermine the integrity of the government's decision making."

If Sarah Palin were truly to "go rogue," to defy establishment "wisdom" of both parties, she'd take on big bad (shadow) government and stop parroting the mantra of "small government." She would actually go after the corrosive effects of this sham that regular Joe's, the people Palin claims to champion, pay for in more ways than one.

Edited by Linda Keenan