Wednesday, October 26, 2005

Perhaps no issue, outside of Supreme Court nominee Harriet Miers, has angered conservatives more than the growth in federal spending during George W. Bush’s presidency.

Granted, Mr. Bush began his tenure by effectively slashing more than $1.4 trillion from the government’s 10-year revenue projections through his tax cuts.

Few of his critics see this as a spending cut, but if those tax cuts had not been passed, that money would have been spent, instead of remaining in the private sector where it fueled investment, job-creation and economic growth.

That growth has paid off handsome dividends in the form of increased tax revenues that this year shrank the federal budget deficit by $100 billion.

Still, there is no getting around the fact that spending has risen over the last five years, in many areas dramatically. But are the increases excessive or is there a reasonable justification for much of it?

Senate Majority Leader Bill Frist is circulating a memo that defends the increases, arguing that much of it is due to the war against terrorism — a claim that Mr. Bush’s fiscal critics say is a gross exaggeration, if not a coverup.

Drafted by Bill Hoagland, a senior Frist adviser and a warrior in many budget wars, the memo does not deny that there has been “unnecessary and wasteful spending” by the Republican Congress. “In a $2.5 trillion budget, how could there not be?” Mr. Hoagland says.

But he says “the case can be made that government spending over the last five years has not been profligate,” given the geopolitical threats we have faced since the terrorist attacks on September 11, 2001.

In defense of the spending levels, Mr. Hoagland points to two catastrophic events of the last half-decade that forced the government to act and to spend hundreds of billions of dollars.

First, the September 11 attacks and the ensuing wars in Afghanistan and Iraq to topple two terrorist regimes and the larger global war on terrorism that has cost $290 billion thus far, plus the $50 billion in this month’s Senate-passed defense bill.

Second, Hurricane Katrina, “the worst natural disaster in this country’s history” that has already cost $71 billion and will likely consume tens of billions more in the months to come — though nowhere near the hysterical $250 billion estimates that immediately followed the storm.

(Understandably, fiscal conservatives have demanded spending offsets to Katrina’s costs and the House is now in the process of putting together a bill that would do that.)

Then throw in the estimated costs of the Medicare prescription drug bill and pretty soon, in the words of the late Illinois Sen. Everett Dirksen, “you are talking real money.” Though Mr. Hoagland maintains in his memo that “the actual spending from that legislation, let alone the benefits to be derived from it, have only now begun.”

So, totaling it up, annual spending since 2001 has risen to $2.5 trillion a year. “A large number obviously,” Mr. Hoagland says, “but in the context of the largest and strongest economy in the world — a $12.3 trillion economy — no other industrial nation’s centralized government spends less than the United States measured as a share of their economy.”

Federal spending as a share of the entire economy’s gross domestic product represents about 20.2 percent of GDP, less than the 22.2 percent of GDP that federal spending averaged in the 1980s under President Reagan and less than the 20.7 percent average during the 1990s under President Clinton.

Mr. Hoagland argues that spending for the war on terrorism, including all homeland defense spending, too, “has been the most significant driver these last five years, not highway bills, not energy bills, nor a Medicare drug bill. “Were it not for the defense increases since 2000, total federal spending would be a low 19.2 percent of GDP, well below the previous two decades,” he says.

But in a point-by-point rebuttal to Mr. Hoagland’s memo last week, Heritage Foundation budget analyst Brian Riedl says it showed “that congressional leaders still do not grasp the depth and consequences of their historic spending spree.” All of Mr. Hoagland’s mathematical gymnastics cannot disguise the fact that there has been a 33 percent expansion of government since 2001 “that has pushed federal spending to nearly $22,000 per household — the most since World War II,” Mr. Riedl shot back.

Defense costs have risen, but that accounts for less than one-third of the $610 billion increase in spending since Mr. Bush took office, while spending on education, housing, commerce, international programs, community development, health care and other domestic initiatives has skyrocketed.

Many presidents have sought to rein in spending and lost. Reagan, who fought waste, fraud and abuse, saw his budgets grow by $400 billion over his presidency.

Mr. Riedl and the GOP’s other critics are right to keep the heat on Congress to curb spending, but in the end — as Mr. Bush has shown — tax cuts are the most effective weapon in this fight. When you take away their money, they have less to spend.

Donald Lambro, chief political correspondent of The Washington Times, is a nationally syndicated columnist.

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