Nanny state lives on in Clinton's new budget

0 Comments | Insight on the News, March 9, 1998 | by Stephen Moore

Bill Clinton's 1999 budget message sage released in late January began with a reassuring sermon about balanced budgets and fiscal restraint. He pledged not to allow anyone in Washington recklessly to spend the emerging federal-budget surplus. But imbedded in this more than 1,000-page document -- twice the size of the Bible -- are hoards of new spending proposals covering everything from federal baby-sitting subsidies to the further federalization of education to the most expensive expansion of Medicare in a decade.

One wonders whether there is a single problem in the United States that Clinton thinks cannot be solved with a new government program. The total amount of spending that the White House has requested for 1999 is $1.73 trillion. That's $80 billion more than the government spent last year and $150 billion more than the year before that. And no matter what kind of new math one might try to employ, this isn't the smallest federal government in 35 years; not by a long shot. Thirty-five years ago the federal budget was $120 billion. Even adjusting for inflation, the budget is about three times larger today than 35 years ago.

The president's budget offers big chunky pieces of red meat to many of his left-wing constituencies. The Department of Education's budget would increase by 11 percent; the Commerce Department, which this president has converted into a wholly owned fund-raising subsidiary of the Democratic National Committee, would see its budget balloon by 12 percent; and the Environmental Protection Agency's budget would climb by almost 13 percent. The total price tag for the new White House initiatives stretches to $200 billion across five years. No wonder special-interest groups have been seen doing cartwheels down the halls of Congress in response to this new budget.

Entitlements are what have busted the budget for the past quarter-century, so, naturally, this budget launches new ones. Medicare will now go to 55-year-olds, meaning that many seniors in this age of longer life expectancies now will live off of government health care for 30 to 40 years. There also is new welfare for immigrants, and $22 billion in child-care subsidies.

Clinton commits the United States to the role of the world's economic rescue agency -- an international 911 (see Symposium, p. 24). Tb stem the Asian-flu financial crisis, the White House now wants to divert $18 billion in new taxes to the International Monetary Fund, or IMF The president never mentioned that the IMF has a dreadful track record in helping turn around the economies of the nations it is supposed to help, or that the IMF often is the instigator of the very currency and economic crises it is supposed to alleviate.

Yes, this budget could lead to the first balanced budget in 35 years. That's the good news. The bad news is that we have managed to balance the budget by imposing the highest tax burden (20.3 percent of gross domestic product) on Americans since the end of World War II. We are imposing wartime tax rates and burdens, but we're not in a war anymore -- hot or cold.

Meanwhile, as defense spending shrinks to its lowest share of the budget in U.S. history (15 percent), social spending now costs $1 .5 trillion a year. Nondefense outlays consume 17 percent of national output -- that's up from 15 percent in the seventies and 13 percent in the sixties. By the end of Clinton's second term -- assuming he finishes it -- total federal domestic outlays will be nearly $400 billion higher than when he first took office.

No, Virginia, the era of big government is not over.

Republicans should declare all of Clinton's budget busters dead on arrival. They should then match the administration's call for new spending with a $200 billion reduction in supply-side tax rate reductions in order to repeal the record high federal tax burden facing American workers today.

But so far, many congressional Republicans simply have responded to the Clinton budget offensive by proposing enormous spending programs of their own. Republicans are debating among themselves whether to bust the expenditure caps in last year's heralded five-year budget deal. Rather than drawing stark distinctions with the White House, the GOP is in danger of returning to its posture of me-too Democrats. But it is futile to think they can outspend Clinton.

What Clinton has unveiled is not the fiscal agenda of a moderate New Democrat. It is the era of big government come back with a vengeance.

Stephen Moore is director of fiscal policy studies at the Cato Institute in Washington.