Monday, January 06, 2003

"Just Cut Spending" Is As Sincere As "The Check Is In The Mail"

My libertarian editor at the East Valley Tribune obviously has a different perspective than I do on this issue, which is why the headline really makes a different point than the article. But that's the op-ed business for you.

In case you're really interested, the Kaus article that triggered this piece is available here. It really is quaintly anachronistic to read it now, even though it's less than 2 years old, because G.W. Bush clearly is no better at actually cutting spending (instead of just talking about it) than his predecessors -- not that cutting spending actually makes sense, but it really is like civil rights in that Republicans so earnestly believe in the principle but just won't do anything about it in reality. (Not that there's anything wrong with that.) Also, it's quaint because Kaus has stopped writing about universal healthcare and job training and big ideas, and these days spends his time more concerned about whether The New York Times has published too many stories about the Augusta National Golf Club as part of some partisan liberal conspiracy.

Also, a call-out buried deep in the column to Dustin Nolte, whom I don't know, but who is the left-side Arizona correspondent for Political State Report, which is a collection of "bloggers" reporting on state politics collected on one website. I can't vouch for the quality of the commentary, but it's a good idea if it works and you might want to check it out to see if it's working.

Wielding the Ax
Presidents raised taxes and were re-elected, but no one has limited government's growth

East Valley Tribune, Jan. 5, 2003

In May of 2001, journalist Mickey Kaus disputed that Bush’s budget represented a long-term victory for anti-government conservatives and a nearly-irreversible defeat for liberals. Kaus argued that liberals should love Bush’s budget, because every dollar "saved" today is available for spending tomorrow.

Kaus based his argument on the fact that at the federal level, it’s hard to raise taxes, but cutting spending is harder. Taxes have been hiked without automatic political death. Reagan raised taxes in 1983, G.H.W. Bush in 1990, and Clinton in 1993. Bush lost, but the others won reelection easily. (As Kaus noted, when we weren’t looking, did somebody repeal "tax and tax, spend and spend, elect and elect"?)

But the history on cutting spending is pretty bleak. Neither Reagan or Gingrich could do it. Nobody has done it.

Democrats are dreadfully bad, but Republicans aren’t better. Both freely devote hundreds of billions to farm subsidies, socialized healthcare for veterans, and tax loopholes for specific businesses.

Kaus theorized that "budget bloat" for existing programs would swallow the resources needed for ambitious future priorities, like health care reform. Routine spending would eliminate any chance at robust, systemic changes like Medicare expansion, job training on demand, and comprehensive health care. But if Bush actually cut spending to pay for his tax cuts, then liberals would have four years to argue that such major programs are really more valuable.

If by 2006 Democrats couldn’t convince voters that health care and Social Security for everyone (which will cost plenty) are more valuable than those tax cuts for the rich (which are just as expensive), then clearly voters don’t want more affirmative government, and shouldn’t get it.

Kaus’s article is quaintly anachronistic now, because the war on terrorism and the forthcoming war in Iraq mean that the Bush administration isn’t cutting spending, either. Instead, we’re now funding new stuff somehow connected to “homeland” security (like bailing out airlines and insurance companies), spending the Social Security surplus and borrowing billions more. The administration is as serious about cutting spending as they are about civil rights: Devout believers, just don’t make them actually do anything.

But here in Arizona, we may see whether Kaus’s theory works. The state’s budget problems can’t be evaded by using trust funds or by running a deficit like the federal government. This year’s and next’s fiscal realities are extraordinarily grim, with a yawning $1 billion deficit in a $6.5 billion general fund budget looming -- and that after several previous rounds of spending cuts.

Gov.-elect Napolitano announced that she will not recommend tax increases in her budget plan due later this month. As noted by Dustin Nolte in Political State Report, that’s probably realistic; the new GOP-controlled Legislature was unlikely to raise taxes, which requires a supermajority vote anyway. But that means those same “no new taxes” legislators actually will have to cut spending by about 15 percent.

Eventually, the national economy will turn around and bring Arizona's along. Given our cyclically erratic tax system, which is adequate during good times and terrible during bad ones, heading into the 2006 election Gov. Napolitano probably won’t need any tax increases to have budget surpluses and revenues for bold new initiatives. There even might be enough money to overhaul our antiquated and highly-variable tax system.

Kaus was clearly wrong on the federal level, where we’re getting the worst of both worlds, wrongheaded and increasing spending and wrongheaded and increasingly regressive taxation. But the incoming Arizona Legislature has no choice but to cut spending, and they’re so conservative that they just might actually enjoy the job. Then, when the economic cycle turns, they will have unwittingly set the table for new Napolitano initiatives in 2005 and 2006.

That would be sweet irony indeed.

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