Economist slams GOP spending levels

SAN FRANCISCO — Economist Milton Friedman, a strong supporter of President Bush’s tax cuts, says the past four years of Republican spending increases are “disgraceful” and a betrayal of the party’s principles.

“I’m disgusted by it,” the winner of the 1976 Nobel Memorial Prize in Economic Sciences told The Washington Times recently.

“For the first time in many years, the Republicans have control of Congress. But once in power, the spending limits were off and it’s disgraceful because they went against their principles.”

Federal spending as a share of the entire economy was 18.4 percent when Mr. Bush took office in 2001. Since then, the government’s annual spending levels have grown by $610 billion or to 20.2 percent of the economy, according to figures compiled by the Heritage Foundation.

The sharp increase in spending has alarmed Mr. Bush’s conservative supporters, including many of his outside advisers at the Hoover Institution, where Mr. Friedman is a senior fellow. Some worry that the Republican Congress has lost focus and seems incapable of passing the rest of the president’s agenda.

“This is not a happy time for fiscal conservatives. We have had way too much spending,” said Hoover economist John F. Cogan, who has been a frequent adviser to the Bush White House.

John Taylor, another Hoover economist and undersecretary of the Treasury during Mr. Bush’s first term, said: “We have to do something about federal entitlement spending. The longer we wait, the worse it is going to be.”

Interviews with these and other economic analysts at Hoover elicited concerns that the Republican Congress has lost its political momentum after a failure to act on the president’s Social Security reform plan.

“Republicans have lost their focus. There has been little momentum to make the tax cuts permanent or to extend the capital gains and dividend tax cuts,” Mr. Cogan said.

The House, after passing a bill to reduce the alternative minimum income tax yesterday, was preparing to take up legislation today to extend Mr. Bush’s tax cuts, though its prospects in the Senate remained uncertain.

But the Hoover economists universally praised Mr. Bush and the Republicans for the tax cuts on incomes and investment, which they said had lifted the country out of a brief recession.

“I give Bush very good marks on the tax cuts and for appointing a tax reform commission that came up with very good proposals,” Mr. Friedman said.

Others said there was too much hand-wringing over the budget deficits, which has been cut by nearly $100 billion in the past year because of increasing tax revenues.

“I don’t see the deficits as being a serious economic problem if steps are taken to rein in spending,” Mr. Cogan said.