Leaders Who Won't Choose - Fiscal Irresponsibility

Leaders Who Won't Choose by Fareed Zakaria

"Leaders Who Won't Choose
In Washington, it's business as usual in the face of a national catastrophe.
By Fareed Zakaria, Newsweek, September 26, 2005

"Adversity builds character," goes the old adage. Except that in America today we seem to be following the opposite principle. The worse things get, the more frivolous our response. President Bush explains that he will spend hundreds of billions of dollars rebuilding the Gulf Coast without raising any new revenues. Republican leader Tom DeLay declines any spending cuts because "there is no fat left to cut in the federal budget."

This would be funny if it weren't so depressing. What is happening in Washington today is business as usual in the face of a national catastrophe. The scariest part is that we've been here before. After 9/11 we have created a new government agency, massively increased domestic spending and fought two wars. And the president did all this without rolling back any of his tax cuts—in fact, he expanded them—and refused to veto a single congressional spending bill. This was possible because Bush inherited a huge budget surplus in 2000. But that's all gone. The cupboard is now bare.

Whatever his other accomplishments, Bush will go down in history as the most fiscally irresponsible chief executive in American history. Since 2001, government spending has gone up from $1.86 trillion to $2.48 trillion, a 33 percent rise in four years! Defense and Homeland Security are not the only culprits. Domestic spending is actually up 36 percent in the same period. These figures come from the libertarian Cato Institute's excellent report "The Grand Old Spending Party," which explains that "throughout the past 40 years, most presidents have cut or restrained lower-priority spending to make room for higher-priority spending. What is driving George W. Bush's budget bloat is a reversal of that trend." To govern is to choose. And Bush has decided not to choose. He wants guns and butter and tax cuts.

People wonder whether we can afford Iraq and Katrina. The answer is, easily. What we can't afford simultaneously is $1.4 trillion in tax cuts and more than $1 trillion in new entitlement spending over the next 10 years. To take one example, if Congress did not make permanent just one of its tax cuts, the repeal of estate taxes, it would generate $290 billion over the next decade. That itself pays for most of Katrina and Iraq.

Robert Hormats of Goldman Sachs has pointed out that previous presidents acted differently. During World War II, Franklin Roosevelt cut nonwar spending by more than 20 percent, in addition to raising taxes to finance the war effort. During the Korean War, President Truman cut non-defense spending 28 percent and raised taxes to pay the bills. In both cases these presidents were often slashing cherished New Deal programs that they had created. The only period—other than the current one—when the United States avoided hard choices was Vietnam: spending increased on all fronts. The results eventually were deficits, high interest rates and low growth‹stagflation.

Bush is not the only one to blame. Congressional spending is now completely out of control. The federal coffers are being looted for congressional patronage, and it is being done openly and without any guilt. The highway bill of 1982 had 10 "earmarked" projects—the code word for pork. The 2005 one has 6,371. The bill, written by the House transportation committee, is called the Transportation Equity Act: A Legacy for Users, or TEA-LU (in honor of chairman Don Young's wife, Lu). This use of public office for private whims would seem more appropriate in Saudi Arabia than America. Perhaps next year's bill will include a necklace for Mrs. Young.

The U.S. Congress is a national embarrasment, except that no one is embarrassed. There are a few men of conscience left, like John McCain, but McCain's pleas against pork seem to have absolutely no effect. They are beginning to have the feel of a quaint hobby, like collecting exotic stamps.

Today's Republicans believe in pork, but they don't believe in government. So we have the largest government in history but one that is weak and dysfunctional. Public spending is a cynical game of buying votes or campaign contributions, an utterly corrupt process run by lobbyists and special interests with no concern for the national interest. So we shovel out billions on "Homeland Security" to stave off nonexistent threats to Wisconsin, Wyoming and Montana while New York and Los Angeles remain unprotected. We mismanage crises with a crazy-quilt patchwork of federal, local and state authorities—and sing paeans to federalism to explain our incompetence. We denounce sensible leadership and pragmatism because they mean compromise and loss of ideological purity. Better to be right than to get Iraq right.

Hurricane Katrina is a wake-up call. It is time to get serious. We need to secure the homeland, fight terrorism and have an effective foreign policy to advance our interests and our ideals. We also need a world-class education system, a great infrastructure and advancement in science and technology.

For all its virtues, the private sector cannot accomplish all this. Wal-Mart and Federal Express cannot devise a national energy policy for the United States. For that and for much else, we need government. We already pay for it. Can somebody help us get our money's worth?

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