Not-So-Radical Republicans

Why the GOP budget revolution failed--and how it might succeed

Stephen Moore from the July 1998 issue

(Page 3 of 4)

Exactly. A handful of congressional Republicans do recognize that shrinking the corporate welfare safety net is simultaneously good policy and good politics. Sen. Sam Brownback of Kansas correctly insists that "cutting federal aid to business should be promoted as welfare reform, round two." He sensibly proposes earmarking savings from ending business subsidies to pay for a capital gains tax cut, small business tax relief, and other measures that will do far more to improve the overall competitiveness of U.S. industry. His one-man crusade against "welfare for the well-off" has been admirable, but so far he has lost to his corporate statist colleagues (who populate both parties) on nearly every vote. When I asked Newt Gingrich why the 105th Congress has not made a serious attempt to slice out corporate pork, he responded: "This really isn't one of our top priorities. And I don't like the term corporate welfare much anyway." You can lead an elephant to water, but you can't make him drink.

Similarly bizarre is the congressional Republicans' devotion to foreign aid programs. Every poll for the past 20 years has found that American voters loathe foreign aid. And for good reason: The economic evidence continues to mount that the $15 billion the U.S. government spends on the Agency for International Development, the World Bank, U.N. development programs, the IMF, and other forms of developmental assistance merely perpetuates poverty in Third World nations and underwrites corrupt regimes. As this is being written, congressional Republicans seem poised to extend an $18 billion federal line of credit to the corrupt IMF, as House Majority Leader Dick Armey fights a lonely battle against the international statists.

In March 1997, when House International Relations Committee Chairman Ben Gilman (R-N.Y.) convened a hearing on the future of foreign aid, seven of the eight witnesses testified in favor of more funding. Six of them were on the dole themselves: the American-Israeli Public Affairs Committee, the Irish National Caucus, Africare, World Vision, the American League for Exports and Security Assistance, and the nation's leading corporate welfare queen, Bechtel Corp. As Investor's Business Daily reported, "The free enterprise viewpoint on foreign aid got a better hearing when the Democrats ran Congress." In fact, Gilman's bill was so generous that a leftist organization called Interaction, a conglomeration of hundreds of groups that receive foreign-aid goodies, praised the Republicans for "passing a bipartisan bill that restores U.S. funding for international affairs." Gilman has circulated the letter to try to rally votes for his bill. This would be like Chicago's chief of police boasting of an endorsement from Al Capone.

For all intents and purposes the GOP's budget-cutting crusade ended with the 1997 budget deal--a negotiated settlement that would be more accurately described as the terms of budget surrender. With each passing day the extent of the victory for the pro-spending lobby becomes more apparent. Last summer, for instance, The Washington Post ran a front-page story aptly titled "Social Funding to Increase Significantly." "After years of assuming that a balanced budget agreement would inevitably entail deep cuts in domestic programs and catastrophic consequences for the neediest," began the story, "liberal advocacy groups and other analysts have found an extraordinary surprise: significant increases in funding for the elderly, the indigent, the college-bound, families with children, and immigrants." That covers just about everyone. To emphasize the point, the Post reported that funding for health, education, and welfare programs has soared by 29 percent since the Gingrich revolution was launched. Jubilant social welfare agency spokesmen proclaimed, "We got most everything we wanted."

The welfare industry's crown jewel in the 1997 pact was the $24 billion Kennedy-Hatch health insurance bill, which Kennedy touted as "a major step forward toward national health care." Steve Pollack, director of Families USA, a welfare-advocacy organization, praised it as "providing the most significant advance in funding for health care coverage since the Medicare and Medicaid programs were enacted 32 years ago."

Newt Gingrich and Trent Lott have been scrambling to try to convince their constituents (and themselves) that they have successfully tamed the budget. Ironically, to camouflage the torrent of new spending, Republicans have reverted back to the deceptive rhetoric of current services budgeting--a practice they lambasted when they were in the minority. The 1996 GOP platform trashed baseline budgeting as "a deceptive and reprehensible shell game." Now we have Republican leaders Pete Domenici, Newt Gingrich, and Trent Lott embracing the practice, applauding hundreds of billions of dollars of "savings" and "cuts" in a Republican budget that allows spending to grow by at least $75 billion. A shell game indeed, when the level of spending cuts promised in the Contract with America is compared with the actual level of spending. (See Chart 3.)

No single bill exemplifies the decisive rout of fiscal conservatism on Capitol Hill more than the 1998 highway bill. The first sign of trouble was the stampede of Republican House members pleading for a coveted slot on the Transportation Committee shortly after the 1996 elections. The committee ballooned to 73 members, making it the biggest spending committee in the history of Congress. The $214 billion bill, drafted by Chairman Bud Shuster (R-Pa.), represents a 40 percent, five-year increase; it's the most expensive public works bill in American history. The standing joke in Washington this spring was that because of his penchant for laying cement, no blade of grass in America is safe while Bud Shuster runs the committee.

The bill contains 1,467 white elephant transportation "demonstration" projects for bicycle paths, hiking trails, bus museums, parking garages, subway systems to nowhere, and university research. That's three slabs of bacon for every congressional district and 10 times more pork projects than in the Democrat-drafted highway bill Ronald Reagan vetoed a decade ago. It is $30 billion above the already generous spending caps set during the 1997 budget deal. Even President Clinton lashed out at the bill, rightly calling it "fiscally irresponsible."

In the Senate there was not a peep of protest against this fiscal travesty. The bill passed 96-4, with the only nay votes coming from the delegations of Wisconsin and Pennsylvania--which complained that their states were getting shortchanged in the spending sweepstakes. In the House, only a third of Republicans voted no. One who did, Rep. Chris Shays of Connecticut, a moderate, declared shortly before the House vote, "This bill is a dramatic sign that the Republican revolution is dead."

So what lessons should voters learn from the collapse of the GOP's budget-cutting agenda? The parallels with the disappointing Reagan budget revolution are striking. David Stockman concluded in The Triumph of Politics that the heretics in the 1980s were not Tip O'Neill, Ted Kennedy, and other liberals hell-bent on preserving the status quo. Rather, the real problem lay in Reagan Cabinet members who would wear their Adam Smith ties to meetings, only to plead for ever-increasing funding for their own agencies. Congressional Republicans during the Reagan years also quickly abandoned the idea of cutting the budget in favor of power, prestige, and thick slabs of pork. In the end, writes Stockman, the Republicans could not bring themselves to say no to "Social Security [cost-of-living adjustments], corporate protectionism, safety net programs, urban aid grants, and farm price supports."

Similarly, after four years of a Republican Congress, the downsizing agenda has itself been downsized, almost to the point of completely disappearing. The conventional explanation for the GOP's fiscal retreat is that the public backlash from the failed government shutdown episode has turned the Republicans into a bunch of Milquetoasts. But the truth is that even if Republicans had won that early battle with Clinton, they would still have made a separate peace with the pro-spending lobby by now. There are simply too many James Jeffordses, John Chafees, Al D'Amatos, and Bud Shusters in the GOP to sustain a credible small-government agenda.

Indeed, the big spenders' control of the party's fiscal agenda seems distressingly secure. Liberal House Republicans are now conspiring to elevate House Appropriations Committee Chairman Bob Livingston, big spender extraordinaire and the enduring symbol of the let's-make-a-deal school of politics, to the speakership. They may well succeed. And who will be the next majority leader to lead this fiscal revolution? Bud Shuster?

But Republicans have an even bigger problem confronting them. For 30 years they have dedicated themselves to the mantra of a balanced budget. To their credit, that objective has been achieved--though mainly through record tax increases and military downsizing. Without the demon of the deficit, Senate Republicans are content to preserve the status quo--and even to brag about spending surplus funds on new social programs. In the wake of the balanced budget accord, few are comfortable articulating the case for smaller government. And you can count on one hand the number of Senate Republicans who are comfortable voting for it. The 1998 Senate budget resolution passed in April was nothing but a resounding affirmation of the status quo. It specified zero program terminations.

There is a silver lining, though, in the House, where a few Republican budget hawks remain. They are mostly from the freshman class of the 104th Congress and include stalwarts such as Mark Neumann of Wisconsin, Mark Souder and David McIntosh of Indiana, Mark Sanford of South Carolina, J.D. Hayworth and Matt Salmon of Arizona, and Steve Largent of Oklahoma. There are perhaps 50 or so Republicans who have remained true to principle and have rejected the spendthrift mentality of the past two years. Within the GOP caucus, they are treated like tobacco lobbyists at a health care convention.

Given that, it's tempting to conclude that cutting the colossal federal empire in Washington is futile. That was David Stockman's disgruntled conclusion in 1985. It's also how many analysts are interpreting the 105th Congress's performance. Applying the public choice analysis of the late Mancur Olson, Jonathan Rauch, author of Demosclerosis: The Silent Killer of American Government, believes that the continued growth of government under a GOP Congress means that "conservative visionaries who still hope to radically reduce Washington's reach are today just as pie-eyed as liberal visionaries who hope to turn America into Sweden." Political writer E.J. Dionne of The Washington Post says politicians are simply "delivering all the government that the voters want." The Weekly Standard's Bill Kristol and David Brooks write of a need for the GOP to stop being "unfriendly to big government." Instead they believe that the American people long for Uncle Sam to serve as a vehicle for achieving "national greatness." Even though they're coming from different perspectives--Olson/Rauch as political economists, Dionne and Kristol/Brooks as ideological advocates--all agree that cutting the government is hopeless.