TCS Daily

So Many Missed Opportunities

By Veronique de Rugy - June 22, 2005 12:00 AM

The time has now come for fiscal conservatives to publicly admit the truth: the Republican complicity in the great spending spree of the early 21st century has placed our agenda on life-support. By failing to cut spending while implementing tax cuts and fighting a war, we now find ourselves in a predicament. The beast has not been starved, the deficit has once again become a political issue, and the chances of acceptable Social Security reform, overhaul of the tax code, and the permanence of the previous tax cuts are all in jeopardy.

This dismal situation harkens back to events in the 1990s. Throughout the mid-1990s, the Republican Congress did a good job controlling spending. Combined with pro-growth policies like welfare reform and a capital gains tax cut, an environment of rapid revenue growth and limited spending growth emerged. The net result was a budget surplus. But this was not the fiscal Promised Land. Like hungry children who happen upon a bag of candy, Congress just couldn't control itself once there was extra money on the table, and the Clinton White House certainly was not interested in exercising adult oversight. Why worry about downsizing government when the days of deficit are over?

Sadly, the victory of President Bush in the 2000 election did not change that trend. Any hope that the Bush administration would steer the "Republican Revolution" back on course was dashed almost immediately. First there was the enactment of the President's education bill, No Child Left Behind. Since when do Republicans stand for federal spending on Education? Yet, in four years, President Bush increased spending at the Department of Education by 98.6 percent. However, instead of being ashamed, Republicans see the increase as an accomplishment.

Then, there was the farm bill. This bill is best characterized as a bipartisan orgy of special interest politics. It makes a mockery of the Freedom to Farm Act signed in 1996 by President Clinton. Today, old subsidies have been increased, new subsidies created and the budget of the Department of Agriculture is up 40 percent. Finally, the Republicans are responsible for the biggest expansion in Medicare since 1965.

It is well known that national crises -- particularly war -- always result in an expansion of government. The tragic events of September 11, 2001 were no different. In addition to the massive run-up in spending for the war effort, airport security was nationalized, the Department of Homeland Security was created, an intelligence bureaucracy is being formed, and foreign aid continues to skyrocket. Also, instead of seeking concomitant reductions in nondefense areas of the budget, Congress has sent spending across the board shooting through the roof.

To be sure, President Bush never pretended to be a Goldwater or a Reagan Republican. His campaign promised a new "compassionate conservatism" and a desire to "change the tone in Washington." Today, we know that compassionate conservatism is really just big government and changing the tone means his veto pen is buried under the ground.

The last four years, total spending has risen 33 percent -- a figure larger than Clinton's two terms combined. Adjusted for inflation, one would have to go back to Lyndon Johnson to find a larger increase. Moreover, real discretionary spending increases in FY2002, FY2003, FY2004 and FY2005 are 4 of the 10 biggest annual increases in the last 40 years.


Source: de Rugy's calculations based on Budget of the U.S. Government FY2006. Covers FY1966 to FY2005. FY2004 and FY2005 are estimates.

To his credit, the President's latest budget proposes to cut funding for Amtrak, to reign in Medicaid, and to eliminate or reduce 150 programs. Under other circumstances, applause would be in order. But in the context of continuing major expenditures for the war, the need to fix the Alternative Minimum Tax, the desire to make the tax cuts permanent, the need to reform Social Security, the looming crisis in entitlement spending, this budget does not come close to getting the job done.

Besides, the President's recent threat to veto any congressional attempts to roll back the Medicare prescription-drug benefit indicates that the White House isn't serious about fiscal restraint. Freezing non-defense, non-homeland security discretionary appropriations is nice. But this category only represents one-sixth of the total budget. Cutting or eliminating 150 programs for annual savings of $20 billion is nice, too. But this figure pales in comparison to the $724 billion estimated cost over the next ten years of the drug bill.

The GOP leadership in Congress capitulated a long time ago. The appropriators in both Houses wield a tremendous amount of power over the make-up of the budget, and will fight like cornered animals when their territory is challenged. And now "moderate" Republicans are siding with the Democrats for increases in taxes as a way to address the budget deficit. In other words, like during the Reagan years when the Republican-controlled Senate did more to frustrate the president's budget cutting crusade than the Democrat-controlled House, the Republican-controlled Congress is to blame for the lack of spending control.

Ronald Reagan was a master of presidential symbolism. On November 23, 1981 he exercised his veto and shut down the federal government to demonstrate his determination to cut government spending. It was a grand gesture and good politics, too. If Republicans don't want to see their opportunity to achieve long-standing goals slip through their fingers, they should start to change their behavior and change it now. But can politicians really change their ways?


TCS Daily Archives