- The Washington Times - Sunday, May 15, 2005

The House recently enacted a $2.6 trillion budget for fiscal 2006. There was much chest-thumping about the fiscal restraint imbedded in this budget blueprint — mystifying since federal outlays will grow well more than $100 billion in 2006. when the cost of the war in Iraq is added to the equation. Just this year’s budget increase equals what it cost NASA to put a man on the moon.

But our real budget crisis in America— and what Newt Gingrich aptly calls the “crisis in conservatism” — is the worrisome longer term trend in federal spending as calculated by the numbers crunchers at the Congressional Budget Office (CBO). To summarize the forecast bluntly, Uncle Sam is swirling around in foamy waters in a canoe, without paddles, and we’re headed toward Niagara Falls.

Here are the depressing numbers in brief. Today, we spend about 20 percent of our total economic output on the federal government. That percentage will rise to a record 25 percent of output in 2025 and then to 34 percent in 2040.

I should emphasize these numbers do not include spending by state and local governments. Today states and cities swallow up roughly another 12 percent of our paychecks. The new CBO numbers tell us America is wedged into a path toward government taking 46 percent of all output. We will be half private ownership and control and half government ownership.

Let’s not mince words here: This is a path toward socialism—albeit in slow motion. Walter Williams, the brilliant economist at George Mason University, has a special talent for putting these foggy numbers in terms we can all easily understand. He says if slavery meant someone else owning all another man’s output, 50 percent government as a share of GDP means all Americans ae half slaves and half free. Depressing but true.

The economic effects of this spending path are not hard to envision. We know what happens when nations become half socialist. They begin to look like Old Europe — France, Germany, Italy and the like. These nations with their obese welfare states, confiscatory tax systems, government ownership of industry, and stifling regulations, are in an economically catatonic state. They are not growing; they are not creating jobs; there is no innovation. They are rusting. They have twice the unemployment rate we have in the U.S. now.

These latest budget forecasts have hardly caused a peep of concern from our political class. Some budget hawks — like Jeff Flake of Arizona and Tom Coburn of Oklahoma — have taken up pitch forks. But they are treated by their colleagues as the proverbial skunks at a garden party. And, of course, the Democrats, behind their new philosophical torchbearer, Hillary Clinton, want accelerated health care, child care, pension, transportation and energy policy socialism.

From where will the government growth come? Almost all the future explosion of government spending and debt is due to Social Security and Medicare, with Medicare the primary future borrower.

The prescription drug benefit bill from last year alone added more than $10 trillion in government outlays with a stroke of the pen. I recently asked Congressional Budget Office Director Douglas Holtz-Eakin about the total long-term unfunded liability for the prescription drug bill. His answer: “It is infinite.” This Republican bill may have been the most financially irresponsible legislation of the last 30 years.

John Goodman, president of the National Center for Policy Analysis, finds if we don’t slam on the brakes of big government, within 25 years all our federal revenues will go to pay for hospitals, doctors and retirement checks to senior citizens. There will be no federal money left for roads, military weapons, soldiers, schools, courts, the FBI or the air traffic control system, let alone pork items like the Cowgirl Hall of Fame and honey bee subsidies.

Standard & Poors’ bond raters recently declared if we don’t change our fiscal eating habits in Washington, one day during our children’s working lives, Uncle Sam’s credit rating will be junk bond grade — where Argentina’s is today.

President Bush has taken one enormous step toward fiscal sanity by trying to fix Social Security’s long-term crisis. Democrats are floating around on the planet Pluto when they say “there is no crisis” to fix. Mr. Bush’s plan would lower by half the long-term liabilities of Social Security — and that will help fix the leaks in our ship of state.

The next logical step is one President Bush won’t be so enthusiastic about, but it must be done. The financially catastrophic Medicare prescription drug bill must be repealed immediately before seniors get hooked like opium users on this new feature of American-style socialism. Once they do, there’s no taking the benefits away.

The slow road to socialism is a path to tyranny and economic decline, as F.A. Hayek warned us 50 years ago. That is why Mr. Gingrich is right that the conservative movement has arrived at a crossroads. For 25 years, the conservative strategy has been to elect Republicans to rein in big government. But the beast has escaped and is back on a rampage — on the GOP’s watch.

We need a new generation of Ronald Reagan Republicans who, instead of making a separate peace with big government, will fight a containment policy that concedes not another inch of territory to the socialist agenda.

Where that leader is now is anyone’s guess. But it’s doubtful he or she will be found in Washington.

Stephen Moore is an economist at the Cato Institute.

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