Damn The Deficit, Full Spending AheadPaul Craig Roberts
A few days before Thanksgiving, President Clinton succeeded (by a three-vote margin) in killing the bipartisan deficit-reduction spending cuts he promised last summer in the heat of his battle to raise taxes. The effort to cut a paltry $90 billion out of projected federal spending of more than $8 trillion over the next five years, led by Representatives Timothy J. Penny (D-Minn.) and John R. Kasich (R-Ohio), was defeated by fierce White House lobbying.
Representative Penny, who had delivered more than a dozen pivotal Democratic votes for Clinton's tax increase (which passed by two votes), was so exasperated by the White House's duplicity that he told the press: "It's almost enough to make me vomit."
Only four months ago, the Clinton Administration and the Democratic congressional leadership assured the country that nothing was more important than deficit reduction. There would be a "shared sacrifice," beginning with higher taxes on the rich and moving on to spending cuts. Once the tax increase was in the bag and spending was on the block, however, President Clinton decided that deficit reduction was no longer a good thing. In that short span of time, deficit reduction metamorphosed from essential to the economy's health to a threat to its recovery.
With a riot of red ink and an annual budget deficit more than $100 billion higher than where Reagan left it, the Clintonistas have decided that we need to spend more. The new policy, in their words, is "carve and spend." Laura D'Andrea Tyson, Clinton's chairwoman of the Council of Economic Advisers, has redefined "budget savings" to mean intrabudget transfers to fund new programs. No real "carving" occurs.
DOUBLE STANDARD. Under this approach, the prospect for deficit reduction is nil. The Congressional Budget Office's latest report on the budget outlook says: "The underlying trend of growing deficits has not been reversed." Yet no alarms are being sounded. Lest we forget, Reagan's deficits, which averaged $167 billion, were blamed for deindustrializing America, bringing on the trade deficit, making us dependent on foreigners to finance extravagant consumption, depleting our savings, crowding out investment, threatening higher interest rates and inflation, and impoverishing our grandchildren.
In contrast, Clinton's deficits--projected by the White House itself to average $220 billion--are said by Deputy Budget Director Alice M. Rivlin and other top Clinton aides to be necessary to keep the economy from stalling. Moreover, the government is actually contemplating adding $100 billion annually to the deficit with an unfunded national health program, while simultaneously complaining that Medicare is too expensive.
What are we to make of this deficit double standard? One inference is that the Democrats and Bush Republicans really meant none of the things they said about the "Reagan deficit." It was just an excuse used by the Washington Establishment to excoriate and discredit a popular President who favored private enterprise over government welfare. But the welfare locomotive is now back on track, and government is about to gobble up one-sixth of the economy with "health reform." And Clinton officials told The Washington Post that it's time "to put the deficit fight behind us."
RAZORBACK PORK. By 1996, Clinton will have added $1 trillion to the national debt, and the accumulated indebtedness as a share of America's gross domestic product will have risen from 51% to 54%. Despite this, the CBO forecasts low long-term interest rates. In other words, deficits don't matter unless they are President Reagan's.
As Representative Dave McCurdy (D-Okla.) observed, "the wild charges and the fear-mongering" that were the stock in trade for the attacks on the Reagan deficit were redeployed to sink the Penny-Kasich attempt to cut the larger Clinton deficit. Defense Secretary Les Aspin sent the Navy to Capitol Hill to threaten members of Congress with the loss of naval facilities in their districts if they supported Penny-Kasich. Even 18 Republicans joined the defense of big spending, with Appropriations Committee heavyweights Jim Lightfoot (R-Iowa), Joe Skeen (R-N.M.), and Hal Rogers (R-Ky.) sending letters threatening to strip projects out of the districts of members who voted for the spending-control measure.
Watching the sausage being made, Representative Kasich said the process was "an absolute outrage." Republican campaign adviser Ed Rollins could have learned something about walking-around money from watching Clinton and the House leaders buy votes against Penny-Kasich with favors and threats. But Kasich is a fighter. "We're coming back," he promises. "We're coming square after the Washington Establishment."
Let's hope he brings bigger spending cuts with him. When all is said and done, Penny-Kasich attempted to reduce the growth in new federal spending by only $18 billion a year. Even if the attempt had succeeded, the government would still be spending more each year than ever before. And we would still be paying more taxes and piling higher debts on our grandchildren.
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