Government Spending

Blowing the Budget

Bush's budget means more spending, more government.

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If the president's annual budget can be accurately read as a statement of political values, George W. Bush values a much larger federal government—although one that he hopes will (someday, somehow) consist of only well-managed programs.

Bush's proposed budget for fiscal 2003 makes history—it's the first to break the almost unimaginable $2 trillion mark, spending roughly $20,000 on behalf of each American household. We're at war, so of course the military gets a huge 18 percent increase in outlays. But if Bush has his way, which he surely will and then some, even non-defense discretionary outlays will increase by 5 percent, with every department getting a boost. The budget not only picks the Social Security lock box (a short-lived but useful fiction) but also violates the deficit-spending taboo, which had been an even more useful restraint on spending.

If President Clinton had submitted this budget, right-of-center groups in D.C. would have pounced, slamming him for failing to make tough choices. This budget does, after all, throw more money at such once-scorned programs as AmeriCorps, whose chief virtue now appears to be its presence in numerous congressional districts.

Bush's budget, however, was met with laudatory press releases from such watchdogs as Citizens Against Government Waste and Americans for Tax Reform. William Eggers, a former Bush aide and senior fellow at the Manhattan Institute, took to the pages of The Wall Street Journal to declare the budget a "distinct departure from the Beltway practice of rewarding failure with more spending." Eggers and others, including Reason Public Policy Institute, the nonpartisan think tank funded by Reason Foundation (the nonprofit that publishes Reason magazine and this Web site), point to The President's Management Agenda as evidence that Bush is a man committed to better managed, if not necessarily smaller, government.

Not everyone is convinced. "This is the first Republican administration in eight years and they have really wimped out on the spending side," says Chris Edwards, the Cato Institute's director for fiscal policy. "If a program is failing it ought to be terminated or privatized, but there are very few terminations or privatization proposals."

But Bush is taking the long view. For this budget cycle, departments and agencies are rated with a traffic light system of red, yellow, or green, with select programs declared "effective" or "ineffective." The idea is to get program heads to commit to delivering specific, measurable results. If they fail, the programs will supposedly get cut or reformed—more likely simply renamed.This is the baseline year, so even though more than 85 percent of the agencies graded by the administration earned a red, many still got slated for funding increases. In Washington, later rarely comes–especially if it means cutting anything. It's not, after all, that we don't know certain departments and programs fail year in and year out. (The Department of Energy, Head Start, and Amtrak are three excellent examples.) It's that every program serves someone's interest, even if only that of the people operating it.

An alternative to using the war as an excuse to save the federal government from spending restraints would have been to use the need for defense spending combined with zero deficits as cover to make the tough choices and knock some real losers off the federal books. Instead, we get massive new spending, no real cuts, and a promise that with sophisticated management techniques, such beauties as the Drug Enforcement Administration, the Internal Revenue Service, and the Department of Labor will start delivering real results.

"I don't pay any attention to that kind of nonsense," says Heritage Foundation economist Daniel Mitchell when asked about the effort to improve federal management. "I shouldn't say nonsense because I'm sure there is something worthwhile in it, but it's one of these things where I don't want to manage government better, I want to shrink government."

It's doubtful that many on the Hill will pay attention either. The administration has "lost credibility," says Cato's Edwards, "because they say 'Congress has to control spending, except for all of these areas where we want more spending.'"

The same can be said of the tax side of the budget, which calls for tax simplification and promises a series of learned papers on the subject. But for now, this new budget further junks up the tax code.

"They have 30 new provisions, and 20 of them will complicate the code," says Edwards. "Solar power credits, credits for fuel cell cars, credits for teachers to buy supplies. You don't need a white paper to know that stupid tax credits complicate the code."

That is probably the point. Tax simplification is a wonderful product for Republican pols. But if they actually delivered on it, they could no longer sell it so profitably on the stump. The same holds for sending Congress a bloated budget with a rhetorical call to hold the line on spending. When Congress and the president agree to spend far more than Bush originally requested, he'll be able to blame the free-spending Congress, placing a special emphasis on the Democrat-controlled Senate.

As a political performance, this rates a green light. But it rates a red light for good governance and is clearly "ineffective," if the goal is a smaller, less intrusive government.