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February 20, 2004

The other National Security threat

“The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.” –Thomas Jefferson

“Year after year in Washington, budget debates seem to come down to an old, tired argument: on one side, those who want more government, regardless of the cost; on the other, those who want less government, regardless of the need. … Government has a role, and an important role. Yet, too much government crowds out initiative and hard work, private charity and the private economy. Our new governing vision says government should be active, but limited; engaged, but not overbearing. And my budget is based on that philosophy.” –President George W. Bush in his first address to the Joint Session of Congress, February 27, 2001.

The Patriot Post has written at great length about the exceptional performance of President George W. Bush as Commander-in-Chief in the conduct of our very difficult war with Jihadistan, that borderless nation of Islamic extremists with global reach, inhabited by al-Qa'ida and other Islamists who are relentlessly targeting the U.S. President Bush’s military record in this most significant of military roles deserves very high marks.

But The Patriot Post’s editors view the emerging domestic fiscal crisis as an equally ominous threat to our national security. Though some of our analysts estimate George Bush – if he gets a second term – plans to cut the bloated central government’s duplicated services in areas like the combined Department of Homeland Security, he has exhibited little leadership in fiscal restraint in his first term.

President Bush’s proposed fiscal year 2005 budget includes estimated deficit spending of $541 billion, though he proposes to cut the annual federal budget deficit in half by 2009. To put that in perspective, next year’s deficit almost exceeds the total federal budget of $600 billion proposed by Ronald Reagan in his first year as President. Concurrently, Congress is endeavoring to legislate a balanced budget by 2014. The feasibility of both these goals is dependent on the rates of growth in both mandatory and discretionary spending, and, of course, the strength of the economy.

Mandatory spending has increased by an average of 7% per year over the past five years, while discretionary spending has grown an average 10% over the same period. The Congressional Budget Office, the body responsible for making budgetary projections, has estimated an annual growth rate in mandatory spending of 6% over the next decade.

At the same time, the CBO’s best projections for a balanced budget by 2014 show that, in almost every scenario, increases in mandatory spending must not exceed 4% annually. Alas, under the current system of federal entitlement programs, especially Social Security, Medicare (replete with its new, mammoth prescription-drug entitlement), and farm subsidization, the feasibility of a balanced budget by 2014 is virtually nonexistent.

While discretionary spending – namely, the plethora of pork-barrel spending projects that often amount to nothing less than officially sanctioned corruption – generally receives the brunt of conservative scorn (and rightly so), it is non-defense-related mandatory spending that inherits the lion’s share of federal tax dollars. Though pork-barrel spending has increased, according to the Heritage Foundation, from 2,000 pet projects five years ago to a record 9,362 for FY2003, these expenditures (however ludicrous) still constitute less than 1% of the federal budget. However, discretionary spending is a good barometer of spending restraint – or lack thereof. (See – https://patriotpost.us/reference/federal-discretionary-spending-1988-2002/)

While such bold-faced wastes of taxpayer dollars as $725,000 for Philadelphia’s Please Touch Museum, and $360,000 for “Citrus Waste Utilization” in Winter Haven, Florida, may be convenient targets, they amount to little more than anecdotes of the greater problem of central-government expansionism and the culturally ingrained mentality of dependence on the welfare state. The true task ahead for constitutional constructionists and fiscal conservatives is a radical overhaul of the federal government’s mandatory spending budget, beginning with the entitlement system in all its manifestations.

In the final analysis, the CBO’s estimates indicate that a reasonable chance at balancing the budget by 2014 will require modest (which is to say, modest by any standard other than that currently in place) cuts in mandatory spending to less than a 4% annual increase (some estimates say less than 3%), and increases in discretionary spending held to 3% annually, for the next decade.

At present, mandatory spending amounts to 11% of the gross domestic product, or $11,144 per U.S. household – a record high for any time in our nation’s history. Likewise, total government spending now exceeds $20,000 per household, the highest level of spending as a percentage of GDP since World War II.

In his most recent State of the Union Address, President Bush vowed to hold discretionary spending to 4% annual growth – not nearly enough. Almost in the same breath, the SOTU address lauded the administration’s behemoth new entitlement: Medicare prescription drug coverage (read: socialization) for seniors.

In a time when essential increases in defense spending are matters of national security, the administration’s domestic-spending priorities are mysterious, to say the least. These include prescription-drug entitlement, manned missions to the moon and Mars (estimated to cost as much as $1 trillion), the now-defunct International Space Station, and expensive bureaucratic expansions such as the Pension Benefit Guarantee Corporation and the Millennium Challenge Corporation. Further, these priorities include the surrender of traditional conservative agenda items such as Social Security privatization, school vouchers, dismantling the Department of Education (instead, DOE funding has increased by an unprecedented 65% since 2001), and failing to promote free trade and Third World growth and stability through tariff reductions and removals.

How far from the Reagan Revolution of the 1980s and the Gingrich Revolution of the 1990s have we strayed?

Just as Democrats, when in power, usurp Republican initiatives (NAFTA and welfare reform under the Clinton administration, for example) to consolidate their hold on power, so now are Republicans guilty of adopting Democrat initiatives to the same end. To wit, spending under President Bush has increased twice as fast as spending under President Clinton – with less than half of these increases coming from national security and defense-related spending increases in the aftermath of 9-11.)

By contrast, Ronald Reagan inherited a terrible recession from the Carter fiasco, and, with a Democrat Congress, managed to hold spending to a total increase of 6.8% in his first three years, while rebuilding our military. Even Bill Clinton, who inherited a booming economy, held spending (with help from a Republican Congress and military downsizing) to just 3.5% in his first three years.

The 2003 deficit soared to $374.2 billion – twice that of 2002 – and next year’s estimated $541-billion deficit exists despite a rebounding economy. In Mr. Bush’s efforts to spend his way to consensus, we once warned him that he can’t outspend Democrats. We are now revisiting that admonition, as Mr. Bush has certainly outspent Mr. Clinton. He has not yet pulled his father’s supremely nescient “read my lips” flip-flop, but the current deficit spending may bite him just the same. Our sources in the White House suggest that Mr. Bush has a macro strategy, using his first term to combine major sectors of government (for example, the Department of Homeland Security), and using his second term to downsize the duplication in those sectors, cutting or transferring many programs to the states. We still believe this is the administration’s strategy.

While the President constantly reminds the American public, and rightly so, that we are a nation at war, his FY2005 budget reflects anything but. Indeed, unlike budgets during the Second World War and the Korean War, the present War on Terrorism has seen massive increases in non-defense spending, rather than the expected substantive decreases. One is reminded of the spending toward Lyndon B. Johnson’s Great Society at the height of the war in Vietnam.

Politically, the tax issue is hot – not only in the race for the White House but in contests for the executive mansions in Kentucky and Mississippi, where Republican candidates who took pledges not to increase taxes defeated their Demo opponents. One substantial difference is that unlike the central government, most states are constitutionally required to have balanced budgets. That is why The Patriot has advocated, for two decades since it was first proposed by Ronald Reagan, an amendment to the U.S. Constitution requiring a balanced federal budget. Flag, marriage and other amendments notwithstanding, a balanced-budget amendment is the most critical and worthy modification we can make to our Constitution.

It is our opinion that the line in the sand must be drawn with the new Transportation Bill, now being reconciled between the House and Senate versions. If President Bush fails to wield a promised veto – the first of his administration – in response to massive congressional excesses above and beyond the White House’s already bloated threshold, the likelihood of future fiscal restraint (much less responsibility) will be essentially nil.

One final note on the FY2005 budget: If you were inclined to give the administration’s budget the benefit of the doubt, given the necessity of increased defense expenditures, think again. The proposed budget doesn’t actually include any of the costs for continued operations in, and reconstruction of, Afghanistan and Iraq; this will require a separate spending bill altogether.

President Bush’s performance as Commander-in-Chief notwithstanding, he and most Congressional Republicans have disappointed – to say the least – their core-constituency of fiscal conservatives, and undermined the administration’s credibility in the process. Unmitigated government growth (and the resulting historic deficits) is the Bush administration’s Achilles’ heel in its bid for another term. Given the enormous growth of central-government spending under Republican-controlled executive and legislative branches, one is left to ponder if the tension created when those two branches are controlled by different parties is necessary to contain government growth.

Quote of the week…

“Two years ago this month, I signed into law the No Child Left Behind Act, the most important reform of public education in a generation. … In 2003, we provided $234 million to assist the lowest-performing schools that need the most improvement. In 2004, we plan to more than double that amount. We have increased federal funding for elementary and high-school education from about $25 billion in 2001, to more than $33 billion in 2003, an increase of about 36 percent, and the highest level ever. We’ve committed $1.8 billion in grants to help train tens of thousands of teachers to use effective reading instruction methods and materials.” –President George W. Bush Memo to Mr. Bush: No Federal Spending Program Left Behind?

On cross-examination…

“Never mind that George W. promised to reduce federal spending: The fact of the matter is that he has not done so. What he has reduced is the use of the veto, reduced it to zero.” –William F. Buckley

“We as Republicans have exploded the number of earmarks [pork-barrel spending]. We seem to have no shame.” –Rep. Jeff Flake

“The Republican Party could be fairly criticized for not having the discipline in spending we should have. But we’re the best game in town. Compared to the Democrats, we’re great.” –Sen. Lindsey Graham, Republican from South Carolina, speaking on the mammoth increases in discretionary and non-defense spending in the federal government Memo to Mr. Graham: When did Democrats become the standard for comparison?

Open query…

“Virtually everything that the government does costs more than when the same thing is done in private industry – whether it is building housing, running prisons, collecting garbage, or innumerable other things. Why in the world would we imagine that health care would be the exception?” –Thomas Sowell

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