The Case Against Despair
BARNES, FRED
The Case Against Despair It’s not impossible to shrink the federal government. BY FRED BARNES The safest of all assumptions in Washington is that year after year federal spending will rise....
...Even nondefense spending dipped in 1986 and 1987...
...More people had more money to spend on their own health, education, and welfare, presumably enabling the government to spend less for such purposes,” he wrote...
...It could happen this year, now that President Bush has, at long last, jumped on the limited-government bandwagon...
...Few conservatives supported him...
...Polling on investment accounts is mixed, but more favorable than not...
...While pessimism is understandable, the truth is that spending can be curbed signifi cantly...
...Polling on individual medical accounts is skimpy...
...We know how competition among providers has worked with the new Medicare prescription drug benefi t. Average fees are far less than expected and the program came in $4 billion under budget in 2007...
...The lesson here is that bipartisan commissions are to be avoided if spending restraint is the goal...
...Those who choose such accounts must agree to a smaller Social Security benefi t when they retire...
...It dropped again in 1987 as his military buildup began to ebb...
...But it’s also a simple one: Have individuals (and not the government) decide how to spend their retirement and health care funds...
...tions Committee with strict orders to curb spending...
...Then there really will be reason to despair...
...And the larger point would be to get insurance companies to compete, both on price and breadth of benefi ts, for Medicare and Medicaid business...
...We could really change Congress [on spending] with a strong president who really wanted to do it,” Coburn told me...
...I don’t pretend that success would be easy, but it’s hardly impossible...
...I don’t think a president ever loses” if he takes the case of reducing spending to the American people...
...As the years moved forward,” Armey told me, “the appropriators chafed under that discipline...
...Not at all, Armey insists...
...When that exists—and probably only when that exists—spending can be curbed...
...Republican Tom Coburn, the Senate’s leading hawk on spending, believes presidential leadership is the key...
...Eventually, investment accounts should be politically marketable, though the president failed to sell the idea to Congress or the public...
...In other words, individual choice is the answer...
...Once the Cold War ended, military spending was downsized from $320 billion in 1991 (in infl ation-adjusted dollars) to $266 billion in 1996...
...Going back a half century, a study by William Niskanen of the Cato Institute found that “the only two long periods of fi scal restraint were the Eisenhower and Clinton administration, during both of which the opposition party controlled Congress...
...But most of them should come out well ahead financially, given the consistent rise of the stock market over time...
...But health savings accounts (HSA’s) are increasingly used in the private sector...
...Maybe so...
...But if conservatives don’t take up the fi ght, spending will be a lot less limited...
...They are on a spending path to bankruptcy...
...He appointed a “bipartisan commission” to decide how to bail out Social Security in 1983...
...The reductions occurred despite the parochial interests of the members of Congress who have defense contractors and military bases in their districts,” says Cato’s expert on spending and taxes, Chris Edwards...
...It’s often a thankless task...
...Over the past 25 years, spending increased 84 percent in real, inflationadjusted terms as the population of the United States rose 30 percent...
...I suspect a version of HSA’s would be popular with Medicare and Medicaid benefi ciaries, too...
...It always does...
...But partial privatization in the form of voluntary investment accounts is an inescapable element in any scheme to keep Social Security solvent...
...President Bush made a valiant effort in 2005 to reform Social Security by creating personal investment accounts...
...In the case of discretionary spending, it happened when Ronald Reagan was president in the 1980s and then when Newt Gingrich was House speaker a decade later...
...He failed miserably...
...The details vary from one proposal to another, but the general approach is clear...
...Putting them on a more sustainable course requires a different strategy...
...A widely read essay by William Voegeli in the Claremont Review of Books noted that the economic boom of the past quarter-century created the perfect environment for restraining spending...
...Discretionary spending at least can be sharply controlled...
...The relentless rise in spending, unstopped even when Republicans controlled the White House and Congress, has thrown conservatives committed to limited government into despair...
...Any money left over could be used for uncovered medical expenses, giving consumers an incentive to shop for medical services...
...In both cases, the central factor was strong leadership...
...My guess is that the popularity of these accounts will grow signifi cantly since younger people, most with 401(k)s, have more experience in investing and are likely to prefer to channel some of their payroll tax into the market...
...Reagan made one big mistake on spending...
...Even conservative voters “aren’t that concerned about spending,” Ramesh Ponnuru lamented in National Review...
...The commission’s remedy was to raise taxes and increase the age of eligibility but not to hold down the growth of benefi ts or impose any reforms...
...When Republicans captured Congress in 1994, Gingrich and his allies waged a vigorous, if brief, war on spending...
...Divided government— Congress controlled by one party, the White House by the other— is a boon to limiting spending...
...Meanwhile, we don’t have to wait to curb discretionary spending...
...And it fi nally broke down...
...That’s nothing to brag about...
...The struggle to curb federal spending is never ending...
...The strategy is really quite simple: Repeat what worked in the past...
...When was spending actually curbed...
...Gingrich made Bob Livingston the chairman of the House AppropriaFred Barnes is executive editor of THE WEEKLY STANDARD...
...But is spending restraint hopeless...
...Serious reform of entitlements with cost savings in mind may be too diffi - cult to achieve in our current political climate...
...Individuals could be given a tax credit or a lump sum and allowed to buy their own health insurance...
...Spending per capita grew 41 percent...
...A Gallup Poll in 2005, for example, found that 53 percent of adults would choose the investment option...
...Personal accounts in one form or another also make sense for Medicare and Medicaid...
...And though President Bush is now trying to curb spending, the federal budget crossed the $2 trillion mark and is likely to exceed $3 trillion during his presidency...
...Under Reagan, discretionary spending fell (in real dollars) in 1982 after he pushed a package of spending cuts through a Democratic Congress...
...Recent experience is not encouraging...
...Conservatives blew their best chance...
...There’s a political advantage in this, namely that Americans tend to like choice...
...Their view, fashionable at the moment, is that nothing can be done to limit spending to any signifi cant degree...
...The result: Nondefense discretionary spending decreased in real terms in 1996 and grew only slightly for the next two years...
...Two other points...
...It’s hopeless...
...Entitlements such as Social Security and Medicare are another story...
...We had enormous discipline,” says Dick Armey, then majority leader...
...Now let’s turn to entitlements, where making the case for slowing the growth of spending, much less cutting it, gets considerably harder...
...But rather than recede, the public sector grew faster than the private...
...The easiest spending to cut, it turns out, is defense spending...
...But the political climate will change...
Vol. 13 • December 2007 • No. 12
