Faced with A potential liberal rebellion in his party, Johnson declared a War on Poverty–and built his Great Society–while ramping up the war in Vietnam. By 1966, he was presiding over a vast expansion of federal power and spending on social problems-and over a war with 500,000 American troops. The long-term result was inflation, deficits and a country all too vulnerable to the Arab oil embargo of 1973. But the ’60s were a can-do-must-do-time, when anything seemed possible, and pieces were for picking up later.
Politically, budgets aren’t about arithmetic, they’re about attitude: attitude toward government, toward the future, toward the challenges the country faces. Bush’s attitude, as expressed in his budget plan, is positively Reaganesque: a defense buildup to take on a new Evil Empire, tax cuts in the name of spurring the economy–and fuzzy math to obscure the fact that pursuing those goals will inevitably lead to a fat balance due on the national credit card.
That was Reagan’s script: To dispel the malaise and national self-doubt of the Nixon-Ford-Carter years (the ’70s were a truly awful decade), we had to believe again in our own future, even if that meant creating a river of red ink. He was right. Reagan’s defense buildup (plus his alliance with the Vatican and Margaret Thatcher) finally convinced the Russians that we would spend the Soviet generals into oblivion. Tax cuts ignited a fire of growth at home.
Of course the deficits exploded, too, but the political and economic impact didn’t really hit until Reagan was safely back in California. It was George W.’s father who paid the price, when the budget had become such a driving issue that he felt forced to raise taxes halfway through his term as president.
Bill Clinton made a virtue of necessity, turning the Democrats into the party of balanced budgets–a theory of how to win elections the GOP had for the most part abandoned. Clinton eased the inflation fears of the bond markets by raising taxes and by countering some of more extreme spending wishes of his own party. Federal spending rose throughout Clinton’s terms (especially in the last year or two), but since the economy was roaring along (and tax revenue was flooding into the Treasury) he could play Hero of the Bottom Line.
By pledging allegiance to balanced budgets, Clinton was also able to do something else: leave it to his successors to “touch” Social Security and Medicare.
Now comes Bush. The family memory of the “read my lips” catastrophe haunts him. Just as LBJ was afraid of the Democratic left wing, Bush is always worried about his own Republican right flank. (“We don’t spend much time worrying about the Democrats,” one top White House aide told me the other day. “What amazes me is how much time we spend worried about our own conservatives.”)
Bush can’t satisfy them on everything, but he will try as best as he can on taxes. So not only is he sticking with the 10-year $1.35 trillion tax cut Congress enacted at his behest last year, he now wants to make it permanent. He’s expanded the pledge: there will be tax hikes “over my dead body.”
At the same time, Bush II is launching the biggest expansion of the military since the start of the Reagan era. It’s not enough, the Pentagon brass insists (natch), but popular even with Democrats in the aftermath of 9-11. The likelihood of tough oversight of Pentagon spending plans is low. Everbody’s going to be for everything in this understandable time of “give them what they want.” Every member of Congress will demand a piece of the defense-spending pie for his or her home district–and will certainly get it.
It will be left to Democrats to play accountant, and declare that the numbers don’t add up. Senate Leader Tom Daschle, son of a bookkeeper, did just that in an interview with me the other day. “Who is going to pay?” he kept asking. He noted in a later interview that the administration this year put forth a five-year plan–not the usually 10-year plan–“because they don’t want to talk about what the numbers look like” that far into the future, when the real impact of the tax cuts hits. We’ll be forced to “raid” Social Security and Medicare trust funds, Daschle said–the Democrats’ most familiar battle cry.
Daschle and others will argue that Bush is pursuing, irresponsibly, a new form of guns and butter: fighting an expensive but this time, popular war, while insisting on his own version of the Great Society: in this case one built on lower taxes, faith-based social-welfare programs and, eventually, private investment of Social Security tax funds. Daschle, a patient man, thinks that if he waits long enough, Bush’s wish list will collapse on itself in an Enron-weakened economy.
But there are problems with that strategy. Now that Bush has said that deficits are OK, what discipline will there be in Congress? In a closely divided House and Senate, the competition to bring home the pork will be especially intense–and the Democrats will be eager to spend just as much as Bush. As for the president, he’ll have to be wary about vetoing spending bills, especially since they’re likely to include many domestic items his own Republicans want.
It’s another can-do-must-do-era. We’ll rely on the national credit card, and hope for the best. It’s the American way, and, overall, it’s worked pretty well so far.
