Q: Can Republicans really be trusted to stem runaway spending in 2004? NO: The evidence shows that the GOP has become the party of big government

0 Comments | Insight on the News, Feb 2, 2004

Byline: Ted DeHaven and Chris Edwards, SPECIAL TO INSIGHT

Even before the release of the new federal budget President George W. Bush's budget chief, Josh Bolten, has begun the damage control. On one flank, the president is trying to ward off the increasing despair in his conservative base caused by his huge spending increases and big deficits. On another flank, the mainstream media are beginning to run front-page stories on the administration's fiscal irresponsibility.

Bolten took to the opinion page of the Wall Street Journal in December to defend the administration's fiscal record. His excuses for high spending and deficits are not very convincing. First, he says deficits have been caused by declining revenues from the sluggish economy. That was a good argument two years ago, but the economy is growing strongly again and the government should have made adjustments in response to the leaner revenue picture. When revenues fall, the government should cut spending to balance the books just as any business would do.

The administration's other argument is that spending has been driven by defense and national-security needs. That was also a good excuse for a while, but the administration should have been working on reform ideas to cut domestic spending and offset defense increases. Defense certainly is a high-priority spending area, but the administration has not identified low-priority spending areas that could be cut. Indeed, Bush has signed every spending bill that crossed his desk while his veto pen has collected dust.

Bolten argues that the president hasn't vetoed a single spending bill because "he hasn't needed to." It's more likely that the president hasn't vetoed any spending bills because he hasn't wanted to. Each spending bill that has come to his desk has represented a new vote-buying opportunity, whether it was the big education bill in 2001, the big farm bill in 2002 or the even bigger Medicare prescription-drug bill in 2003.

The prescription-drug bill is the largest entitlement expansion in 40 years. Its advertised price tag of $400 billion actually is a big understatement of the true cost. The Congressional Budget Office estimates that the bill could cost taxpayers as much as $2 trillion in its second decade because of the rapid increase in the number of elderly in future years. Besides, Sen. Ted Kennedy (D-Mass.) called it only a "down payment" for future drug-program expansions.

In stark contrast, the Republicans sought cuts to Medicare in the 1990s because they were rightly concerned that the program's cost would spin out of control when the baby-boomer generation retires. Unfortunately, today's Republicans, led by Bush, have made the coming elderly-spending time bomb much more explosive.

After increasing 24 percent in the last three years, the budget is in desperate need of cuts to get federal finances under control. But cuts are not a policy option that the current White House considers very much. At the time of this writing the new budget figures are not available, but it looks like the administration will request a 3 percent increase next year for nondefense, nonentitlement programs. In some years, 3 percent may seem like a reasonable increase. But we currently have a roughly $450 billion deficit. Shouldn't the administration be calling at least for a freeze in federal spending to get the giant deficit under control?

In addition, the White House seems content to call for cutting the deficit in half in five years. That is remarkably timid. In the 1990s, the Republican Congress battled against all deficits and forced President Bill Clinton to embrace a plan completely to eliminate the deficit over a period of years. Nonentitlement spending actual fell in 1996, a truly rare event in federal budgeting.

The administration's spin on today's fiscal situation is not very convincing. In the Journal op-ed, Bolten wrote: "In the last budget year of the previous administration (fiscal 2001), domestic spending unrelated to defense or homeland security grew by an eye-popping 15 percent. With the adoption of President Bush's first budget (fiscal 2002), that number was reduced to 6 percent; then 5 percent the following year; and now 3 percent for the current fiscal year."

The first thing to notice is that Bolten chose to exclude at least four-fifths of the federal budget from his statistics. Federal spending is of two basic types: discretionary and entitlements. Discretionary spending is determined annually through the appropriations process and amounts to about two-fifths of the budget. Defense accounts for about one-half of discretionary spending.

The other three-fifths of the federal budget is interest and entitlement spending, chiefly Social Security, Medicare and Medicaid. Bolten leaves entitlement spending out of his figures. Entitlements often are said to be on autopilot because it takes a law change to reduce spending on them. As a consequence, politicians often act as if they aren't responsible for the rapid spending increases that occur in entitlements. For example, Medicaid spending has grown at an average 11 percent per year the last three years while the administration and Congress have looked the other way. In truth, Congress can cut entitlement spending anytime it wants. After all, Congress just changed the law massively to increase Medicare spending for the prescription-drug bill.