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Press Release

Washington Wants Your Money


Last month, President Bush submitted to Congress the administration’s proposed budget for Fiscal Year 2003. The events of last year have placed new strains and burdens on federal priorities, and the new budget again places the budget in deficit. The budget proposal includes increased expenditures on homeland security and the war on terrorism and an overall 6.5 percent increase in discretionary outlays. Despite the increased spending levels and the return to deficits, many in Congress are calling for even greater spending while criticizing President Bush’s tax cuts as being fiscally irresponsible. Yet recent history suggests that it is Congress’s profligate spending habits that need to be curbed.

The president’s budget submission to Congress is only the first step in the government’s budget cycle; both the Senate and the House must now develop their own budget resolutions and then come to agreement on a concurrent resolution. Once adopted, the various appropriations committees allocate resources for specific agencies and programs. When all is said and done, be assured that spending levels will be edging even higher. This year provides an interesting twist, however. With control of the Senate, Democrats will be forced to do more than criticize the Bush budget proposal. Committee Chair Kent Conrad(D-N.D.) must craft his own budget, which will provide insights as to whether Democrats will defend tax cuts or abandon them in favor of more government spending.

Historically, Congress has favored spending to tax cuts, and spending patterns suggest that money in Washington does not lie idle. In the wake of the Cold War, the peace dividend dissipated as domestic spending grew while military spending wound down. And despite mandatory caps, discretionary spending has increased by more than 38 percent since 1996. Emergency supplemental bills and accounting gimmicks have allowed Congress to evade efforts to reign in spending. It reached the point where the “emergency” spending bill was greater than nine of the 13 regular spending bills.

Nonetheless, proponents of big government already are accusing President Bush of raiding the social security surplus to fund tax cuts. Yet there is no federal bank vault where this “surplus” resides. Any funds remaining after social security benefits are paid to current beneficiaries are transferred to the Treasury and placed in general revenues. The Social Security trust fund receives an I.O.U., while the government has more money to plow into federal spending. If anything, Congress is frittering away the resources needed to pay back the I.O.U. on new spending programs.

In this instance action speaks louder than words. Professing fiscal austerity and the need to reconsider tax cuts while moving forward with a $171 billion farm program, billions of dollars in highway pork projects, and a host of subsidies and targeted tax credits clearly suggests that this is not a debate over Social Security. Many in Congress have an ambitious agenda and they would rather Washington spend money than taxpayers and families.

Congress is already acting to dodge the fiscal austerity bullet. The House budget seeks to add billions to the president’s budget to cover programs that big spenders view as underfunded. When the Senate takes up the budget, Democrats plan an assault with amendments to boost programs across government that want to spend more money. Even more ominous, Budget Chair Conrad has mentioned the possibility of including a “trigger” in the budget that would force Congress to adjust spending and tax priorities once spending exceeds a given level. A trigger may be a convenient ploy to abandon last year’s tax cuts without leaving too many fingerprints. Congress can simply spend its way to the trigger, invoking an automatic review of tax cuts. Congress avoids the hard vote and finds a way to enhance revenues for more spending.

There are options for real reform, and the budget should be viewed as an opportunity to reign in excessive government spending. Prior to increasing spending, Washington needs to take a hard look at current spending. The president’s budget includes a number of management reforms to streamline government agencies. This is a good start. The president includes a management scorecard for the 26 main agencies and programs of the federal government evaluating performance in five different categories. Overall only one program in one category received a green light. The remainder of the report card is littered with primarily red lights.

Eliminating redundant and ineffective programs offers the potential for significant savings. The U.S. General Accounting Office (GAO) identified 22 “high-risk” areas in federal agencies in 2001. Any programs identified by the GAO should be reviewed with an eye toward eliminating waste, fraud, and abuse. Taxpayers cannot afford to waste billions of dollars on programs that are ineffective or redundant. Even beyond the “high-risk” areas, agencies must work to eliminate unnecessary spending. The Government Performance and Results Act was designed to streamline federal agencies and avoid unnecessary expenditures. Congress should review agency activities to ensure conformance with this act.

It is important to look beyond the rhetoric of the coming budget battle. This is not a debate about tax cuts vs. Social Security. It is a debate over who should spend the wealth of our nation, the government or taxpayers. Congress must show fiscal restraint in this year’s budget deliberations. This includes limiting new federal spending, eliminating spending on existing programs that are ineffective or redundant, and renewing its commitment to economic growth by protecting last year’s tax cuts and seeking every opportunity to make those cuts permanent.