Capitol Ideas / The Spending Is Killing Me
Bethell, Tom
The Spending Is Killing Me by Tom Bethell T oday is our budget lesson, I'm afraid, so put on your mortar boards, and class will come to attention. I only hope the editors didn't use the b-word in...
...In order to see by how much, just read horizontally along any line...
...So they are grandstanding about small differences...
...T he budget reached $100 billion when Kennedy was president, $500 billion under Carter...
...In 1945 total federal spending, adjusted for inflation, was only about 60 percent of what it is today...
...They reflect the spending decisions being made now, and may affect the next election...
...Two years ago, when I last looked at the figures, the year in which budget outlays in billions of dollars were projected to exceed the number of the year, anno Domini, was 2000...
...thought that federal spending would be $1,427 billion by 1994...
...In February, as we see, Clinton proposed to spend $1,612 billion...
...This year, however, the rhetoric escalated...
...The trillion-dollar "cut" was arrived at by reducing the totals in the out-years...
...but then he cut this back to $1,599 billion...
...No doubt the practice still continues...
...That is one thing we have to try to keep straight, class...
...But if that is to happen, there is only one way it will happen: slowly...
...The GOP Congress only went out seven years, and that's why they could only find $898 billion in "cuts...
...The talk in Washington was of "trillion dollar cuts...
...In real-dollar terms, corrected for inflation, we are now spending about as much on defense as we did in 1942, the year after Pearl Harbor...
...The chart puts us in the right ballpark...
...It would, too...
...In the chart, various estimates of the spending totals for the next few years are tabulated (for the first time, I suspect...
...Sizable differences between the GOP and the Democrats don't show up until the out-years...
...B y the time you read this, my staid statistics will no doubt seem a little pass...
...Political horizons are always short for that reason...
...Military spending for 1996 will be $242 billion, or a little more than 15 percent of the budget...
...It seems he threw away his "no new taxes pledge," and his presidency, for nothing...
...The actual total turned out to be $1,460 billion...
...Notice, however, that defense spending is still quite high, given that we are not at war, and not even allowed to defend the country against missiles...
...Look at the top line of the chart, giving Bush's 1990 estimates...
...T he totals that politicians are really interested in are the ones for this fiscal year-1996...
...Spending has turned out to be $40 billion or so less than estimated...
...Both the earlier Bush and Clinton deals were said to be "$500 billion deficit reduction" packages...
...Government reorganization takes top prize...
...If so, many will have turned the page and skipped class...
...Like the Fabians of a century ago, although moving in the reverse direction, we are faced with the inevitability of gradualism...
...and journalists all have an interest in persuading us that spending really is being cut in the everyday sense of that word...
...I only hope the editors didn't use the b-word in the headline...
...One reason spending fell below projection was the decline of interest rates...
...If you look at line 3, Clinton's regular 1996 budget, you see planned spending of $1,822 billion for 1999, for example...
...beyond that was fantasy...
...It's not as though editors think the budget is too arcane to merit space...
...But the actual totals—hardly ever...
...All incumbents tend to benefit from continued spending, however, and this will probably quietly drive the numbers in the Clinton direction...
...I would like nothing more than to see it return to the fraction of GNP that it consumed in 1929, which was three percent...
...When the budget for the next fiscal year is published (fiscal years start on October 1, by the way, so we are now in fiscal year 1996), the budget people include estimates of how much they will be spending in the following years,sometimes called "out-years...
...And revenues are very close to the predicted level...
...It deceptively suggests spending reductions but in practice means tax increases...
...So there were estimates of how much would be spent in 1994, 1995, and 1996...
...But there, as we have seen, nothing is real, and today's pols may no longer even be in office...
...But at least I am sure that you won't yet have seen the figures in my chart below...
...Deficit reduction," by the way, is a Beltway term of art that seems to have gone out of style now that we have a Democrat in the White House...
...At that time, Darman & Co...
...If Gingrich signs on to the Clinton numbers, it would be "business as usual" in Washington...
...So both sides have an incentive to appear to stand firm...
...There are other ways, which I shall come to...
...But is it...
...was still paying off debts from the Revolutionary War...
...As far as the fiscal health of the country is concerned, the difference between 1586 and 1599 is surely not important, but that doesn't resolve the political contest...
...Like perspective, it vanishes with distance...
...Therefore we would expect government spending totals to grow, too...
...But in June the Clinton people went out ten, right out to the middle of the next decade...
...Look at the rhetoric, first of all...
...I'm told that Dan Rostenkowski and others deliberately inserted phony increases in the out-years so they could take them out again and take credit for "cutting the budget...
...So, using this admittedly imperfect method, there are some grounds for thinking the Clinton budget people have done a better job of forecasting than the Bush people...
...Recall, for example, George Bush's 1990 budget compromise: the fateful moment when he agreed to raise taxes in exchange for (future) spending cuts...
...Gingrich & Co...
...I haven't included these more distant totals in thechart because they are basically fictitious...
...10 20 The American Spectator November 1995...
...Yet, when you look at the numbers (marching off to the right), they continue to increase by $50 or $60 billion or so a year...
...As a percentage of outlays, however, defense spending peaked in 1945, when it was 90 percent of the federal budget (and $888 billion in 1993 dollars...
...Far more obscure charts showing, for example, "percent change from baseline projections" are published in places like the New York Times...
...That is one way of telling what is going on with the budget...
...The next line to look at is the fourth, Clinton's plan in June 1995...
...Then they added up all these "cuts," and came up with the trillion-dollar figure...
...1990 Bush: "$500 billion deficit reduction" June 1993 Clinton: "$500 billion deficit reduction' June 1995 1GOP House-Senate compromise: "$898 billion budget savings" 1427 1470 1540 15151 1574 1625 1690 1781 1612 1684 1745 1822 1599 1667 1719 1782 1460 1530 1586 1625 1660 1716 Feb...
...It seems that Republicans, Democrats, Tom Bethell is The American Spectator's Washington correspondent and a visiting media fellow at the Hoover Institution...
...Reading vertically down any given year gives different estimates, made at different times, of that year's spending...
...They prefer to give the deficit, or the difference between spending and revenues...
...Hey, a $40 billion cut...
...Former deputy budget director John Cogan tells me that this last happened in the years following the Civil War, and before that, in the years 1792-1806, when the U.S...
...Journalists regale us with barely intelligible changes in estimates of future spending...
...Chris Matthews of the San Francisco Examiner once warned me that "budget" is the second dullest subject a journalist can cover...
...More important, I kept a file of the old budget estimates, so that I could compare them with the new...
...The deficit these days is projected as a series of shrinking numbers, descending a comforting glidepath and landing at "zero" seven years hence...
...Budgeting used to go out five years and no more...
...What about this year's outlays...
...What we can do, then, is compare how much they said would be spent with how much we know was spent (or soon will be...
...As a percentage of the overall economy, then, a slow reduction of federal spending does seem to be taking place...
...This was then cut back to $1,782...
...Of course, spending totals don't tell us everything we need to know, by any means...
...If the GOP version of the budget prevails, government spending as a percent of GDP will decline from 21.7 percent this year to 19.9 percent in 1999...
...All talk of a balanced budget, a $500 billion deficit reduction, or a trillion dollar cut, disguises the point...
...He made the mistake of relying on experts rather than his own political judgment...
...Still, you cannot really know what is happening with the budget without the numbers...
...When it was signed, we were told how much money the government would be spending and collecting, not just in 1990 but in the years ahead...
...Spending totals keep right on increasing...
...Are the actual numbers higher or lower than the estimates...
...For some reason, journalists rarely print actual budget totals...
...I suppose the truth emerging from this little exercise is that government spending, although increasing in nominal dollar amounts, is by other measures slowly decreasing...
...Now look at the next line, Clinton's 1993 budget deal, and compare the estimates with what later happened...
...Why are they not printed...
...The unacknowledged community of interest between incumbents of both parties makes it unlikely that anything very disruptive will happen...
...A trillion dollar cut shows up, year to year, as a $50 billion increase...
...The headlines will be full of default scenarios, train wrecks, debt-ceiling showdowns...
...So I dutifully called the Office of Management and Budget and the House and Senate Budget Committees...
...By the time you read this, the numbers will have changed, but not by much...
...This is the first time in the twentieth century that interest on the debt has exceeded defense spending...
...He estimated $1,395 billion, but the reality in 1994 was $1,257 billion...
...If Clinton accepts the GOP trims, he will be accused of capitulating to the advocates of greed and selfishness...
...The dwindling deficit conceals the point, which should be of some interest, that the overall outlay and revenue totals continue to increase...
...So Bush did not get FEDERAL BUDGET: 1994-1999 Budget Outlays (in Billions of Dollars) Date Estimated THE SPIN 1996 1997 1998 1999 1994 1995 Nov...
...Still, things are looking up...
...There, they were "cutting" over a hundred billion dollars from each year...
...Outlays may be increasing in nominal terms, but so is the population and the gross domestic product (estimated at $7 trillion in 1995...
...Here endeth the budget lesson...
...Dick Darman, Bush's OMB director, was also far too optimistic on the revenue side...
...One Congress is not bound by its predecessor, and we can be sure that ten years from now these numbers will be of archival interest only...
...Or perhaps they just got lucky...
...The trillion-dollar budget came under Reagan in 1987, and it looks as though we will get to two trillion by 2003...
...The national debt—the accumulation of all annual deficits—is now up to the "debt ceiling" of $4.9 trillion, and in 1996 the interest the federal government will have to pay on its accumulated borrowings will be $250 billion...
...He already took a lot of criticism for his June compromise, which you will see exactly split the difference between 1612 and 1586...
...want a little less—$1,586 billion...
...1995 Clinton's regular '96 budget 1460 j 1539 June 1995 Clinton: 1460 j 1537 "cuts spending by $1.1 trillion" 18 The American Spectator November 1995 either the revenues or the spending cuts he was promised...
Vol. 28 • November 1995 • No. 11
