February 14, 2006

Bush’s fiscal policy: Spend, spend, spend

The President has made it perfectly clear that although he is a Republican he is not a conservative, and nowhere was this more apparent than in the recent budget proposal.

The first problem with Bush’s budget is that it is $2.77 trillion. The only thing more disturbing than the size of the figure is John Snow’s assertion that it “represents the President’s dedication to fiscal discipline.”

The number is not inherently unconservative. We are fighting a war, and wars are expensive. I would not cut a penny from what we spend to arm our troops. Ronald Reagan, the last conservative president, nearly tripled the national debt from $909 billion before he entered office to $2.6 trillion when he left. In 1983, he had a $208 billion budget deficit, which corresponded to 6 percent of the GDP. But that was okay—he was fighting a war.

It’s wise to save money in peacetime and borrow money in wartime. The credit market is huge, global, and resilient, and the phobia of “American debt being held by foreigners” is unwarranted. Conservatives’ fear of spending too much, however, is not.

Bush is acting like an engaged girl creating her bridal registry. You know who I’m talking about, the woman who goes into Crate & Barrel, is given a little scanner, and prances around, her bewildered fiancé in tow, beeping the crystal salad bowl here, the set of wineglasses there, and the vintage ice cream maker she absolutely cannot live without. And by this time her man is standing in a corner twirling the mango pitter because he cannot for the life of him figure out what it is. In other words, Bush is spending like a liberal.

Liberals spend from the top down. They first make a list of things they absolutely need, and then they get around to finding out how much it will cost. The dot product of this necessities list and the price list is sometimes called a “budget,” but this number is usually three times an equally important number: “income.” The liberal will then cross off a couple of items, end up with a budget only two-and-a-half times his income, and be immensely proud of his frugality.

Conservatives, on the other hand, do not appreciate the concept of “need.” A conservative president will decide, say, to spend $200 billion on funding health care. He will see how far that money goes, and when it’s out, it’s out. A conservative president realizes that America’s wealth is not infinite.

The problem with Bush’s budget is the concept of “mandatory” spending, a product of the top-down approach. Mandatory spending comprises lists of programs that must be funded no matter what they cost, not according to dollar amounts or percentages of income. In mandatory programs—Medicare, farm subsidies, and more—the government has promised to provide benefits to all who qualify. Bush is seeking to cut spending on these mandatory programs—$36 billion in Medicare, $4.9 billion in Medicaid, and $5 billion in farm subsidies—but the costs of these programs are ballooning as “necessities” grow. The only solution is the conservative one—a bottom-up approach—which takes a hard look at income and spends what it can afford, not what it can’t.