But there is no mystery as to what accounts for the decline: The Cold War ended. Military spending as a share of GDP is now at its lowest level since the late 1930s. The defense budget has been halved from 6 percent of GDP in 1967 to 3 percent today. Meanwhile, social spending has climbed to 18 percent of GDP, near its highest level ever. (See Chart 1.) This is the first postwar period in American history in which "peace dividend" savings have not been passed back to taxpayers through tax cuts. Instead, those defense savings have been diverted to honey bee research, Lawrence Welk museums, kiddie care, International Monetary Fund bailouts, and all of the other civilian programs crammed inside the 2,200-page budget. Of the $81 billion in new spending this year, virtually every penny will be deposited in domestic agencies.
Republicans are correct in complaining that Bill Clinton has been a tireless defender of the size and scope of government and a hindrance to every budget cut they have tried to make. For example, the latest White House budget contains 1,001 ideas for expanding government into every conceivable nook and cranny of domestic life. But in 1997, after belittling Clinton as a spenda-holic, Republicans proceeded to send to the Oval Office a budget that somehow managed to spend $4 billion more than the president requested. The truth is, Sen. Phil Gramm (R-Tex.) noted last year, "Some of our Republican members routinely want to outspend Clinton."
A lesson of the Reagan years was that in order to genuinely downsize government over the long run, it's simply not enough to prune back agency budgets. They have to be pulled up by the roots, and salt needs to be poured on the soil. If any part of a program's infrastructure remains intact, it will soon grow back to its original size, if not even larger. This was a lesson Republicans said they understood back in 1995. Newt Gingrich declared shortly after his elevation to the speakership that "Republicans will prove to the American people that we can get rid of programs, not just create new ones."
In the early days of the Republican "revolution," it seemed this proclamation would be carried out. Back in April 1995 the House Republicans--inspired by the libertarian-leaning class of 72 GOP freshmen--passed a courageous budget based on the Contract with America. By Washington standards, it was an unprecedented blueprint for governmental restructuring. It slated more than 300 indefensible federal programs and three worthless cabinet agencies--Commerce, Education, and Energy --for the scrap heap. Some of these programs, such as the Legal Services Corporation, bilingual education funds, and Bill Clinton's army of Americorps "volunteers," were little more than political slush funds for left-wing constituencies. Others--like the Tennessee Valley Authority and the Rural Electrification Administration--were so antiquated that Barry Goldwater pledged to shut them down some 35 years ago when he ran for president. Most of the rest were simply hopelessly ineffectual: the Economic Development Administration, Amtrak operating funds, federal transit grants, the Appalachian Regional Commission, and maritime subsidies.
In its audacity, the original Contract with America budget was reminiscent of the first Reagan-Stockman budget back in 1981. Unsurprisingly, it met with much the same fate: When Clinton vetoed the GOP budget and the government shut down, the GOP panicked and resurrected almost all of the condemned agencies. Last year I asked House Appropriations Committee Chairman Bob Livingston of Louisiana for a list of the programs that actually have been terminated. I received an impressive-looking, four-page list of canned programs. I am happy to report that we no longer spend tax dollars on the Cattle Tick Eradication Program, the U.S. Travel and Tourism Administration, the Rural Abandoned Mine Program, and the Women's Educational Equity Act. Similarly, a House parking lot, warehouse, and barber shop have all been privatized. Good riddance to bad rubbish.
But the good news ends there. All but a handful of the 297 programs on Livingston's list had price tags of less than $1 million--not even a rounding error in our $1.8 trillion budget. The total annual savings amounts to $3 billion--a microscopic 0.017 percent of federal largess. Sure, that's $3 billion more than the Democrats ever saved. But all the big fish got away.
In fact, it's worse than that. Spending has actually risen by 1.3 percent for the 38 biggest programs once slated for termination. (See Chart 2.) For instance, the budget for Americorps was $4.3 million when the Republicans took Congress. Now it's $504 million. The Goals 2000 program--"free money" for education that some states have actually rejected because of the strings attached--has roughly tripled in size over the same period, from $231 million to $668 million. In the 1997 appropriations, funds for bilingual education rose by 35 percent, for the Appalachian Regional Commission by 6 percent (even Clinton wanted to freeze this agency), and the World Bank by one-third. Republicans even gave a 10 percent raise to the Internal Revenue Service.
The single program that has become a fiscal litmus test for the GOP is the National Endowment for the Arts. The House narrowly voted to kill the NEA last year, but it was resuscitated by GOP senators. In fact, Sen. John Chafee (R-R.I.) was so incensed by the recklessness of the young turks in the House that he proposed increasing the NEA's budget by 70 percent. The compromise struck was to cut the $100 million arts budget to $99 million. As the Heritage Foundation's Marshall Whitman quipped, "We're on a 99-year glide path to kill the NEA." Sadly, that's far more progress than we're making with most obsolete and unproductive federal programs.
For advocates of minimal government, this refinancing of programs that Republicans have railed against for 30 years is excruciating to witness. Cutting nonentitlement domestic programs is something Republicans have the power to do unilaterally. If the GOP truly wanted to end the NEA, it could cancel the funding tomorrow. The president cannot appropriate a dime of money for the NEA--or any federal nonentitlement program. Only Congress can. True, the president can whine and moan--and even shut down the government via his veto power--but he can never force Congress to spend money it doesn't want to spend. As Appropriations Committee Chairman Livingston pointed out in the GOP's headier days of 1995, "If the president vetoes a zero, he's still left with zero." During the Reagan years, Republicans argued (unconvincingly) that the president cannot downsize the government, only Congress can. Now with the parties' roles reversed, many of these same Republicans seem to be saying, "Congress cannot cut the budget; only the president can."
The Republican retreat from cutting programs related to health care, education, and the environment is somewhat understandable, given President Clinton's 1996 presidential campaign. In large part, Clinton's platform was built around promises to save such programs from any budget cutting. But Republican leaders are now reluctant to target even programs with little or no public support. What, for instance, could possibly explain the GOP's refusal to board up the last vestige of the oil crisis, Jimmy Carter's Department of Energy? We have a national energy policy that is working extremely well for consumers nowadays: It's called the free market, and it has helped deliver historically low prices on gasoline. On top of that, Hazel O'Leary, Clinton's first-term energy secretary, was a poster child for wasteful, unnecessary government spending: She used the DOE as her passport to travel first class around the globe at taxpayer expense and created a Nixon-style "enemies list" of free marketeers who want to privatize energy policy. Yet to repel the budget cutters, DOE officials staved off unwelcome GOP scrutiny by wisely forming an alliance with Western Republicans such as Rep. Dan Schaefer of Colorado and Sen. Pete Domenici of New Mexico, each of whom has national laboratories and other energy pork within his borders.
Republicans also continue to pour hundreds of millions of taxpayer dollars directly into the coffers of Planned Parenthood, the National Council of Senior Citizens, the Children's Defense Fund, the National Education Association, and trial lawyers. This is not merely a sign of cowardice--it also represents monumental political stupidity. The GOP has chosen to continue to fund the very advocacy groups that have declared a holy war against the Republican Party. Even after the unions spent an estimated $35 million against GOP candidates in 1996, Republicans continue to replenish their coffers through odious programs like the Davis-Bacon Act, an obsolete New Deal-era law which requires union wages on federal contracts, pumping tens of millions of federal dollars straight into the AFL-CIO political war chest. The Legal Services Corporation still receives $200 million a year to finance leftist legal activists dedicated to undermining the free market agenda.
Stockman used to preach about a budget reduction strategy that targeted "weak claims, not weak claimants." The corporate community in Washington that feeds at the federal trough each year has the weakest of claims but the deepest of pockets. The federal government spends nearly $70 billion a year on welfare for such impoverished companies as AT&T, General Electric, and Chevron, helping them to rig markets, stave off competition, and fatten their bottom lines. The results of such handouts are indefensible. For instance, the General Accounting Office estimates that price supports for sugar gouge consumers out of some $1.4 billion a year through higher food prices. Archer Daniels Midland, the $12.7 billion conglomerate that claims to be the "supermarket to the world," derives more than $200 million of its annual profits from the production of its government-protected high-fructose corn syrup.
Here's another weak claim: Under the late Ron Brown and now Bill Daley, the Clinton administration has converted the Commerce Department into a $5-billion-a-year, wholly owned subsidiary of the Democratic National Committee. The department is now used to shake down Fortune 500 companies for campaign contributions in exchange for millions of dollars of pork-heavy, high-tech grants and sweetheart deals with foreign governments arranged during trade missions around the globe. It is at the epicenter of the Clinton fund-raising scandals. In 1995 Brown created in his office a taxpayer-financed war room of government employees whose full-time job it was to save the department. This is a bureaucratic agency whose sole mission in life is self-preservation--the sort of dragon smaller-government Republicans should be able to slay in their sleep.
Then there's the Agriculture Department's Market Access Program, which subsidizes foreign sales by U.S. corporations. Every year American taxpayers cough up $100 million to help advertise the Pillsbury Dough Boy, Dole pineapples, Purina Puppy Chow, the dancing California raisins, and Napa Valley Cabernets on TV and radio in Europe and Asia. "Why can't Pillsbury spend its own money on advertising?" Kasich asks. Why, indeed. This program is an affront to American voters' sensibilities. But instead of terminating the program, Congress has kept the dollars flowing to the corporate looters. The only concession won by budget hawks has been a "time limit" for the aid. Ironically, while the welfare bill imposes a two-year limit on mothers receiving AFDC and food stamps, corporate welfare queens are permitted five years on the dole before they are tossed out of the safety net.
Funding parasitic corporations only reinforces the public's general suspicion that the GOP is the party of the rich, the privileged, and the corporate lobbyists. After witnessing the full funding of one corporate welfare program after another, I have to say the public's suspicions may be correct. (The Clintonite New Democrats, unfortunately, are no better.) The mercantilist policies of the Commerce and Agriculture Departments are the antithesis of the free market policies Republicans say they espouse--and, since they're extensions of a hostile Democratic administration, it's hard to understand why they continue not merely to exist but to flourish. Corporate handouts create a constituency of statist businessmen who have joined forces with politicians and bureaucrats to lobby for ever-expanding government. "If you can't push AT&T and G.E. off the dole," Silicon Valley venture capitalist Tim Draper told the Senate Government Affairs Committee in March, "how can we ever expect to get farmers, unions, artists, and seniors to give up their subsidies?"
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