Back to a Future of Tax and Spend

Comments | Insight on the News, Feb 21, 2000 | by Jennifer G. Hickey

If the spending packages President Clinton outlined in his final State of the Union address come to pass, the era of big government soon will make one hell of a comeback.

Is it over yet? Unlike the hypothetical line of all the world's economists laid end to end, Bill Clinton's final State of the Union address did, in fact, reach a conclusion. Salivating at the attention the press had been giving Bill Bradley, John McCain, George W. Bush and even Orrin Hatch, Clinton set out on Jan. 27 to ensure he had his own 105 minutes of TV attention. And Clinton's speech was eloquent in drawing the distinctions between the Republican and Democratic parties and what is at stake on Election Day.

Heading into the week of this annual performance, Clinton offered a glimpse of what was to come by announcing a proposal to expand the State Children's Health Insurance Program, or SCHIP, to parents of uninsured children at a cost of $110 billion over 10 years -- a sum equal to about four times the gross national product of the Dominican Republic, or twice the amount of deposits in every FDIC-insured bank and trust company in Indiana. "If you just look at what's going on in the election season this year, the public cares a lot about health care and [the presidential candidates] are talking a lot about it," Clinton said, with one eye on the polls and the other on his legacy. "If enacted, this would be the largest investment in health coverage since the establishment of Medicare in 1965, one of the most significant steps we could take to help working families."

The president was on a bender, teasing virtually every constituency and interest group with a nibble from the federal pie. According to House Majority Whip Tom DeLay of Texas, in just one week Clinton "introduced 41 new programs costing over $100 billion" for fiscal 2001. But he wasn't through with new spending measures. A House Budget Committee analysis, seeking a total as of Jan. 20, missed a $2.8 billion increase in the "Twenty-First Century Research Fund," including a $1 billion increase for biomedical research at the National Institutes of Health; a further $93 million for research and development into bio-based technologies; and an 84 percent increase, or $227 million, in the government's investment in research and development in the fields of nanoscience and nanoengineering (to manipulate and move matter).

It is apparent, however, there is no need for a new study on how to move surplus dollars into the "spend" column. Despite his planned spending spree, Clinton says "the most important thing" for Congress "is to keep our fiscal discipline, to keep paying down the debt." Apparently, Virginia Democratic Rep. Virgil Goode didn't believe him, as he announced his intention to join the voting ranks of the Republicans, who largely were responsible for producing the budget surplus through fiscal restraint. House Republicans have proposed paying off the entire $3.7 trillion national debt by 2015, using 75 percent of all non-Social Security tax surpluses for debt relief with the remaining 25 percent going to small tax cuts and increased spending on education and health care. The details of the Republican plan are to be released April 15.

Happy to enter the bidding war, the Clinton administration declared it could achieve the same goal by 2013. The only thing complicating the bipartisan debt relief will be those Clinton demands to increase spending at unprecedented rates. Should the American people decide to retire Al Gore along with Clinton, it might just work. The nonpartisan Congressional Budget Office, or CBO, released new data Jan. 26 showing budget surpluses could amount to $1.9 trillion by 2010, which is more than double last year's forecasts. Appearing before the Senate Budget Committee, CBO Director Daniel Crippen asserted the surplus could reach $235 billion in the fiscal year that begins Oct. 1 and total $4.2 trillion during 10 years. But, to keep things in perspective, CBO estimates that, of next year's surplus, $69 billion will come from non-Social Security accounts.

Senate Budget Committee Chairman Pete Domenici of New Mexico quickly boasted that the new numbers show Congress indeed was doing what many on and off Capitol Hill had termed impossible: It was running the government without dipping into Social Security funds. "The Congressional Budget Office now says ... every single penny of it went into the [Social Security] lock box, was not spent, paid down the American debt, dollar for dollar," declared the proud Republican.

Speaking at the same press conference was Washington state Republican Sen. Slade Gorton, who warned "that while you will hear wonderful rhetoric from [Clinton], he will spend the great bulk of this non-Social Security surplus" if we don't stop him. But who will put that kind of backbone in Congress? Despite the desires of some, including House Budget Committee Chairman John Kasich of Ohio, there is little chance Congress will freeze spending at this year's levels for 10 years. Democrats already have called a 10-year freeze in spending unrealistic and they are pushing to allow increases at the rate of inflation. According to Crippen's testimony, if spending were to increase at the rate of inflation for 10 years, it would reduce the projected surplus to $3.1 trillion, with the non-Social Security surplus falling to $838 billion, a sum well short of what is needed to pay off the debt.