Guns, butter, and hubris
By Mortimer B. Zuckerman ‑ Editor‑in‑Chief
U.S. News & World Report: Feb. 2, 2004
How do you stop a runaway elephant? If words could
do it, particularly words from the Republican camp, there might just be
a sliver of hope of reining in what the Wall Street Journal describes
as "the most profligate administration since the 1960s." Reaching back
to his Navy days for a more colorful metaphor, Sen. John McCain says,
"I've never known a sailor, drunk or sober, with the imagination this
Congress has." The omnibus appropriations bill just approved, covering
seven of the 13 spending bills Congress was supposed to complete months
ago, is well and truly dubbed "a pork‑laden monstrosity" (by Club for
Growth, a political action committee). "Grotesquely stuffed with pork,"
echoes the Washington Post. The federal budget, declares the investment
firm Goldman Sachs, is, quite simply, "out of control." And the beat
goes on.
What we have here is nothing short of fiscal disaster.
America has gone from a $280 billion surplus when George W. Bush was
inaugurated to $500 billion annual deficits as far as the eye can see.
And those deficits would be $100 billion higher if the government
wasn't raiding the Social Security surpluses now treated not as a
lockbox but a candy jar. These numbers understate the scale of the
spending binge because historically lower interest rates have sharply
cut interest costs on the $3.9 trillion federal debt.
Disarmament. Most critically, the $5.6 trillion
surplus once estimated for the first decade of this century is now projected to be a $5 trillion deficit. So
what? Vice President Cheney is reported (by former Treasury Secretary
Paul O'Neill) as saying that President Reagan proved "deficits don't
matter." They do. And they will do just what they did back then, which
is to crowd out private investment, raise interest rates, and slow
economic growth to the point where our legacy to our kids will be lower
living standards.
President Bush, who has not vetoed a spending bill in
three years, has fractured the fragile bipartisan consensus of the late
1990s to dedicate the surplus to reducing debt. Now there is no
pretense of fiscal discipline. We do not choose between guns and
butter; we have guns and butter and tax cuts. This is the first war
where the president and Congress seem totally unwilling to sacrifice.
It is the equivalent of fiscal disarmament, and it will compromise our
ability to respond to problems at home and abroad.
The Bush team defends the excesses by pointing to higher
productivity (hardly the result of the Bush years) and increased
profitability, as well as the higher stock market, all of which will
increase federal revenues. But their claim stands economics on its
head. Why? Because
larger long‑term deficits can lead only to reduced private capital
spending, higher interest rates, and increased indebtedness and
interest costs to foreign creditors.
In happier times, the GOP was the party of hard money,
balanced budgets, and a shrinking public debt. Back then, it was
Democrats itching to prime the pump with deficits while blithely
ignoring the size of the debt. Now the roles are reversed. And the
public has noticed. In a Wall Street Journal/NBC News poll last year,
64 percent disapproved and only 29 percent approved of tax cuts as the
best way to improve the economy. In a CNN/Gallup/USA Today poll last
September, 74 percent said a candidate's position on the deficit would
be taken into account this year. By a whopping 60 to 21 percent,
Americans said they would reduce the deficit by canceling some tax
cuts, rather than spending less on health and education. And now, in a
Pew Research Center poll this month, 51 percent call the deficit a top
priority for Bush and Congress. All of which would seem to give
Democrats a major issue, especially as Bush proposes to make the tax
cuts permanent, at a cost of $1.7 trillion added to the deficit over
the next decade.