Where's the Fiscal Outrage?

We have just closed the books on fiscal 2003, and all that can be said is: Good riddance. This was one of the worst years for fiscal conservatives in many moons. The federal budget grew by more than $150 billion-more than twice as much as any year that Bill Clinton was in the White House-and deficit spending eclipsed $300 billion, a 10-year high.

This Republican Congress is spending at a faster pace than any Congress since before the days of Woodstock and the Miracle Mets.

Milton Friedman, the revered Nobel Prize-winning economist, declares that this unbridled spending “is the single greatest deterrent to faster economic growth in the United States today.”

Another Nobel Prize economist, James Buchanan, worries that by allowing government to grow so rapidly ahead of the pace of the private sector, we are “killing the goose of free enterprise that lays the golden eggs.”

And Republicans are joining Democrats in the slaying.

A new Institute for Policy Innovation report chronicles the budget orgy. “What we have in Washington today,” it glumly notes, “is a bipartisan fiscal cop out. No one in Congress or the Executive Branch has insisted that federal tax dollars be spent judiciously.” Yet, examples of waste and fraud in the federal budget have reached gargantuan proportions. Here are some recent examples that incite only yawns from Washington policymakers:

  • The General Accounting Office (GAO) recently found that the Pentagon “reported an estimated $22 billion in disbursements that it has been unable to match with corresponding obligations.” In other words, the Pentagon somehow lost track of what happened to the money.
  • An audit of Medicare discovered the federal government made $12.5 billion in erroneous payments in FY2001.
  • The Department of Agriculture provides subsidies to farmers with operating incomes of more than $1 million. Most farmers receive none of the $50 billion a year doled out in crop subsidies.
  • The Department of Commerce spent tens of millions on Advanced Technology Program grants to just ten companies from 1990-96. These firms had combined profits over that period of $31 billion.

Government agencies ought to have a natural life cycle, just as private firms do. Private companies are launched; (hopefully) go through a phase of rapid growth and profitability; and eventually enter a period of retrenchment and demise. The fact Congress never puts government agencies through this last phase of life is a major reason public agencies are so bulky and unproductive. They become money-sucking vampires that just won’t die.

For example, Amtrak was supposed to be made financially self-sufficient, no longer requiring taxpayer subsidies, by 2002. In 2000, it only reduced its budget gap by $5 million, leaving it $281 million short of paying its own bills. Last year, it was technically bankrupt. By law, Amtrak’s assets should have been liquidated over a year ago, but it keeps rolling along, burning tax dollars along the way.

Runaway entitlement programs created America’s budget crisis, so naturally Congress wants to create new ones. The Medicare prescription drug benefit that President Bush requested in his 2004 budget would cost $400 billion over the next 10 years-almost double the price tag Bill Clinton recommended. Yet, Democrats are arguing that the Bush plan is too skimpy. They are pushing for a staggering $700-billion plan and threatening to vote against final passage because it spends too little!

Washington has become the logic-free zone.

Republicans have almost all of the levers of power in Washington. They have half the equation right: They’ve proven they can cut taxes. But they have also proven incapable of cutting fat out of the budget and of setting spending priorities. Instead we get more-of everything. Conservative Republican Rep. Mike Pence of Indiana recently complained: “I came here to Washington to get the government under control. But every vote we’ve had has made government bigger. We rarely if ever vote to make government smaller.”

Republicans need to realize Milton Friedman is right that the GOP’s profligacy is the biggest danger to our economy. It is also the greatest danger to the GOP’s political survival.