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Why Liberal Democrats Should Love Bush's Budget

Every dollar he saves today is a dollar we can spend tomorrow.


Posted Saturday, May 26, 2001

        Opinion leaders tell us that Bush's budget is a turning point--primarily because his large, back-loaded tax cut will deprive the federal government of the revenues Democrats want to spend on government programs. Under this prevailing theory, anti-government conservatives should be pleased that the Bush budget would hold down government spending--and they should rejoice at the trillion-dollar-plus tax cut that will soon become law. Meanwhile, Democrats--especially liberal Democrats--are supposed to fume and blame the Senate "centrists" who gave Bush the votes he needed.

        It seems to me this is the rare, prized bit of conventional wisdom that is almost completely wrong. In the current political circumstance, Democrats who see a need for ambitious new government programs (a group I claim to be in) should welcome Bush's budget--including its severe spending restraints and even its tax cuts.

        Why? Because the government expansion Democrats want (or should want) takes the form of a few big, systemic changes. We want to beef up Social Security. We want to expand Medicare to include prescription drug coverage. We want government to subsidize training on a grand scale. Above all, we want to create a comprehensive health system that offers affordable care (including access to fancy, expensive new treatments) to everyone, not just those old enough to qualify for Medicare or poor enough to qualify for Medicaid. These large, architectural expansions of the federal role can't be accomplished on a few dozen billion dollars a year. It will take hundreds of billions.

        The second notable thing about these changes is that they're not going to happen in the next three years--not with Bush as president and the Republicans controlling the House. If parts of the Democrats' agenda are achieved, they won't be achieved in the robust form Democrats desire. A prescription drug plan, for example, will probably be limited to the poor, rather than incorporated seamlessly into Social Security's majestic universal structure, as most Democrats would prefer.

        The best Democrats can hope for, in this situation, is a four-year holding period during which they can make the case for big new government expansions. If voters are convinced and Democrats retake the White House, construction can begin.

        What could stop the Democrats then? Well, conservatives argue, if the money's not there, big-ticket Democratic projects would have to be postponed. True enough. But the greatest threat, in this regard, isn't that the money will have been given back to the taxpayers in the form of Bush's rate cuts. It's that the money will have been spent, in a general, unstructured budget-bloat of the sort that (as Robert Samuelson and others have pointed out) was already happening in the final years of the Clinton presidency.

        After all, with Bush in the White House, congressional Democrats may not be able to achieve their large, architectonic national goals--but they're still quite capable of spending hundreds of billions on agricultural subsidies, housing programs, pay raises, education bureaucracies, the Export-Import bank, veterans' hospitals, and ten dozen other parochial sinkholes (including tax loopholes for business). Then, when they finally get a chance to achieve the ancient liberal dream of national health care, the surplus they've been counting on to finance such a system might be gone.

        Bush's plan prevents this disaster scenario, restraining the natural bipartisan impulse to fritter away trillions on a hodgepodge of mid-sized subsidies. It does this by imposing tight (4 percent or so) ceilings on the growth of domestic spending, and by sending much of the money that might otherwise be spent back to the taxpayers. Small-government Republicans value these features as desirable ends in themselves--but they also, perversely, help assure that when big-government Democrats get back in the money they need to expand the federal presence will be available.

        True, Democrats will probably have to raise taxes to get it. But is that impossible? The tacit assumption underlying this year's budget debate has been that it is--that the only modern way to find the money to fund government expansion is to ... well, to almost literally find it, lying around the Treasury in the form of surpluses. Democrats seem to have lost faith in their governing appeal. Whatever happened to "Tax and tax, spend and spend, elect and elect"? While no politician likes to cast a vote to raise taxes, it can be done. Taxes were raised in 1983 under Reagan, in 1990 under Bush I, and in 1993 under Clinton.

        The "back-loading" of the Bush tax cuts actually helps the Democrats here. Many of the big reductions don't take effect until 2006. Bush's enemies have denounced this as a deceptive way to disguise the ultimate cost of the cuts--but it is a self-punishing deception, because the delay also gives the Democrats time to prevent the cuts from ever happening. If Democrats can't convince the voters by 2006 that affirmative government is valuable enough to justify canceling future tax cuts--tax cuts for the rich, the Democrats can say, as against health care and Social Security for everyone--then maybe the voters just don't want very much affirmative government! In reality, of course, these Democratic priorities are quite popular, as the last election showed.

        Even those Bush tax cuts that do go into effect will increase the ability and willingness of taxpayers to be taxed later. In essence, Bush's budget takes the money Democrats will need and stores it with the taxpayers--for collection at a later date, when Bush is out of office. Yes, yes, it stores the money mainly with rich taxpayers. But that's OK. We know where they live.

        What's really difficult in federal politics, it turns out, isn't raising taxes. What's really difficult is cutting spending. Reagan couldn't do it, as Fareed Zakaria has noted. Newt Gingrich couldn't do it. Restraining spending is complicated. It's unpopular. Democrats are especially bad at it, and they should be delighted that Bush has taken on the dirty task. Every dollar he saves today is a dollar we can spend tomorrow!

        According to columnist (and former budget official) Matthew Miller, Bush's original plan, if actually followed, would shrink the share of national GDP absorbed by Washington from 18 percent to around 15.7 percent. That would give President Edwards--or President Lieberman, or President Daschle--2.3 percent of GDP to spend on the Democratic programs they successfully campaigned on. You can do a lot with 2.3 percent of GDP.

        At some point, when they're through denouncing Bush for putting government in a "fiscal straitjacket," honest Democrats will realize this, and be secretly grateful.

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Copyright 2001 Mickey Kaus.

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