What proposal simultaneously offends right-wing foes of big government, centrist and liberal deficit hawks, and the ambiguously-Democratic Clinton Administration? The answer is the bill for highway and mass transit spending currently being championed by Republican Rep. Bud Shuster of Pennsylvania. The bill's triumvirate of unsavory opponents commends it to our attention.
Under last year's budget agreement, spending in the category known as domestic discretionary was set to decline by about $40 billion in inflation-adjusted dollars in order to stay beneath the mandated caps. What's included in domestic discretionary spending? All the odds and ends most commonly associated with public services: law enforcement, disaster relief, disease control, civilian research, etc. By contrast, much the larger part of the Federal budget is for entitlements, defense, and net interest payments. Of special interest are two, partially overlapping components of domestic discretionary spending: grants-in-aid to state and local governments and public investment.
The ostensible purpose of the cap is to curb fiscal irresponsibility. The cap is denominated in nominal terms, which means that over time it is worth less in real, inflation-adjusted terms. It also means that spending under the cap declines as a share of the economy as a whole. The caps are not affected by the performance of the economy, nor by the current bumper crop of budget surpluses projected for the next fifteen years. Remember hearing that we couldn't have new public spending because the deficit had to be closed? Apparently, now we can't have any because of surpluses.
The caps are a monument to fiscal spite, and always have been. If spending limited by the cap had been allowed to grow since 1984 at the same rate as the economy as a whole, the deficit picture in the long run would be indistinguishable from the present situation. What would have changed is that the nation's public investment would not have suffered as much, and state and local governments might not have raised taxes since 1980 by about a percentage point of Gross Domestic Product.
If passed, the highway/mass transit bill would add another $20 billion to the existing $40 billion in cuts that are scheduled over the next five years. As things stand, these cuts will not be easy. Shuster's bill would make the cuts half again as difficult. That's why his bill deserves support. The bill would bust the caps by breaking Republican Party discipline on the Hill. If the patrons of highways and mass transit are indulged, can airports, canals, R&D, veterans, and nutrition be far behind?
House leaders Gingrich and Kasich are playing to their party's full-moon right, in anticipation of presidential primaries. Meanwhile, a working coalition of Democrats and sane Republicans could begin to consider the entire range of spending priorities on the merits, unburdened by shibboleths about big government. This year's budget is $1,700 billion. Would another $20 or $40 billion spread over the next five years make it intolerably large? Of course not. Given the current employment picture, where's the harm in the current size of government?
The caps should be busted and the charade ended. The caps distort fiscal choices and have negligible impact on the long-term deficit outlook. The latter is primarily a creature of health care spending.
The content of the highway bill is vulnerable to criticism on grounds of urban and environmental policy. But as long as the caps prevail, there will be no urban or environmental policy to speak of. There will be no money to spend. Any prospective harm implied by passage of the bill can be ameliorated later and is outweighed by the greater good of exploding the budget deal.
The Clinton Administration's touted initiatives should not distract us. The underlying truth of Clintonian activism is revealed by a public investment effort that declines in real terms for the foreseeable future.
Another circulating canard is that passage of the bill would jeopardize other programs under the cap, including programs for the poor. Some people forget that we've already screwed the poor by means of welfare reform. A non-zero probability for more cuts should be acknowledged, but on the whole we've come to this sorry point by the same strategy of defensive, rear-guard incrementalism. It's time to break china and turn over tables.
A better case can be made that an unbearable cap is the Democrats' briar patch. In this election year, Republican heads of appropriations committees are unlikely to gore their own oxen. The business is both unpleasant and time-consuming, and these guys want to go home and get reelected. For them, no news is good news.
If the Republicans retain their Congressional majorities, they revert to the position they held in 1996, while Democrats rallied to "E2M2" and nearly regained control of the House. The bad news is that domestic spending is very low. The good news is that, given such levels, when the conservatives try to sink them further they drift outside the public consensus on the tenable scope of government functions. They get into political hot water. If the Democrats regain control, they don't need the caps to run a fiscally-sustainable deficit policy.
If the U.S. sought to join the European Union, it would face a deficit constraint of approximately $240 billion this year. And here we are, in a period of budget surpluses, agonizing over an extra $20 billion over the next five years, or picking our way through President Clinton's land of legislative micro-enterprise. Good thing there's no Special Prosecutor with a mandate to investigate idiocy. That would be big government.
Max B. Sawicky (c) Copyright 1998