Out-of-sight government growth

On Jan. 23, 1996, Bill Clinton told the nation, “The era of big government is over.” If so, it sure didn’t last very long. Today, the era of big government is back with a vengeance, ushered in by a massive new prescription drug entitlement, a pork-laden energy bill of grotesque proportions and a trade war with China.

What few people, including myself, ever thought would happen was that this new era of big government would be implemented by Republicans controlling both Congress and the White House. It makes me long for the good old days of gridlock.

In his new book, “In an Uncertain World,” former Treasury Secretary Bob Rubin extols the Clinton administration’s fiscal record. He correctly notes that the federal budget deficit was close to $300 billion when Mr. Clinton took office and had a surplus of more that $200 billion when he left. Nowhere in the book, however, does he credit the Republican Congress, which was elected in 1994, for the turnaround.

On the contrary, Mr. Rubin’s book is filled with disdain for Republicans, especially Newt Gingrich, who blocked Clinton administration initiatives at every turn. And of course, Mr. Clinton returned the favor by blocking Republican initiatives, with the notable exceptions of welfare reform in 1996 and a tax cut in 1997.

Yet it was the combination of the two — a Democratic White House and a Republican Congress — that was really responsible for the budgetary turnaround. Each side was checked from enacting new spending programs. The result was that the budget was virtually on automatic pilot for most of the Clinton administration. In other words, we have gridlock to thank for the fiscal turnaround, not Mr. Clinton’s leadership, which mostly involved sticking his finger in the wind to see which way the polls were blowing.

Mr. Rubin would also have us believe that the Clinton administration’s fiscal policy is what led to the economic boom of the 1990s, primarily by bringing down interest rates. But the record tells us that rates did not really fall until Republicans took control of Congress. In that month, long-term interest rates actually were higher than they had been when Mr. Clinton took office. The Treasury’s 30-year bond rate was 7.34 percent in January 1993 and 8.08 percent in November 1994. It was while Democrats and Republicans cohabitated in running the federal government that we really saw rates decline and the economy take off.

This is not surprising, given that Wall Street has long favored gridlock. Indeed, a number of economic conservatives suggested in 2000 that the best electoral outcome for growth and the stock market would be Al Gore as president with Republicans continuing to control Congress. As financial columnist Daniel Kadlec wrote, “The Dow has fared best when one party has controlled the White House and the other has controlled Congress, the optimum formula being a Democratic president and a Republican Congress. That combo has produced Dow gains, excluding dividends, of 10.7 percent a year.”

Voters also have demonstrated a preference for gridlock time and again. Since World War II, we have had divided government almost two-thirds of the time. And according to what they tell pollsters, this has been a conscious, deliberate action. In the latest survey by Hart/Teeter for the Wall Street Journal and NBC News, 62 percent of Americans said they preferred Congress and the presidency to be controlled by different parties. Only 29 percent said that it would be better if one party controlled both.

The only people who really oppose gridlock are political scientists and party activists, who decry it as a barrier to “getting things done.” A new book by Brookings Institution scholar Sarah Binder, “Stalemate,” lays out the case against gridlock on these grounds.

The problem is that getting things done is usually a bad thing. All of our nation’s entitlement programs, for example, were enacted when one party controlled all the elected bodies of the federal government. Social Security came under Franklin Roosevelt and a Democratic Congress in the 1930s, Medicare under Lyndon Johnson and a Democratic Congress in the 1960s, and now a prescription drug entitlement under George Bush and a Republican Congress. Our grandchildren’s grandchildren will be paying higher taxes for this latest elderly vote-buying scheme when everyone who supported it is long dead.

The simplest way of restoring gridlock would be to elect a Democrat as president next year. Unfortunately, the one most likely to get the nomination, Howard Dean, is doing everything he can to turn off conservative voters disgusted with Republican budgetary profligacy and trade protection. Last week, for example, he proposed re-regulating the economy. Sadly, with most political analysts forecasting continued Republican control of the House and Senate, the prospects for a return to gridlock look dim.

Bruce Bartlett is senior fellow with the National Center for Policy Analysis and a nationally syndicated columnist.

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