September 21, 2005,
The American family typically deals with unexpected crises in ways dramatically different than politicians. In Washington, a politician’s commitment to solving a problem is measured, as political scientist James Payne explained in The Culture of Spending, by the amount of money he or she is willing to throw at it. Families, on the contrary, see a crisis as a reason not to spend money.
For those raised on the idea of saving for a rainy day, the urge to splurge goes out the window in the face of an unexpected illness, a lost job, or some type of disaster like a fire or flood. A family has limited resources because it is, after all, constrained by the income of its wage earners. Government, because of its ability to tax and borrow, seems constrained by nothing at all.
In a perfect example of business as usual in Washington, Senate Minority Leader Harry Reid (D., Nev.) said he will “not consider offsets in the federal budget to pay for damage” caused by Hurricane Katrina until the president “agrees to roll back tax cuts.” This problem is not limited to one side of the aisle. Fiscal conservatives were surprised recently to hear from House Majority Leader Tom DeLay that all of the waste has been eliminated from the federal budget. They were surprised, of course, because the federal budget is as wasteful as ever.
Emboldened by a president unfamiliar with the veto pen, Congress has taken reckless spending to new heights in recent years. Real nondefense discretionary spending is already up more than 35 percent over Bush’s first 5 budget years, more than triple its total increase during all 8 years of Clinton.
Thankfully members of the Republican Study Committee are rising to the occasion with a detailed list of program cuts and terminations that will cover the costs of hurricane relief and reconstruction. The RSC members call their plan “Operation Offset.” The plan is based on the simple fact that there’s no such thing as a free lunch.
There are only three options to pay for reconstruction, the first of which is raising taxes. This already has been ruled out by President Bush, who correctly observed that raising taxes would derail our national prosperity and make it much harder to rebuild the hurricane zone. Rolling back the Bush tax cuts, which have proven themselves to be job creators and have sparked the economy to life, would have the same effect.
The second option, borrowing, is just a disguised form of raising taxes, while the third option is the most sound of them all (although it’s the most difficult politically): Cut spending to a degree that is equal to or greater than the cost of reconstruction.
At presstime the RSC had not released all the details of Operation Offset, but a good bet is that the first step will be to repeal the record 6,000-plus pork-barrel projects in the recent transportation bill. This idea, which has now been endorsed by the Wall Street Journal, the New York Times, and advocacy groups across the political spectrum, is simply common sense. It is indefensible to spend billions of dollars on unneeded projects elsewhere in the country when the most basic infrastructure of the hurricane zone needs to be rebuilt.
Another major source of offsets could come from a delay-implementation of the Medicare prescription-drug benefit. This program creates an unfunded obligation for the federal government larger than the entire Social Security financing problem. Delaying this program would not only save money needed for Katrina relief this year, it would also buy time to revisit and reform the structure of the program.
The president and Congress must recognize that the crisis is a reason for the government to tighten its belt so that we can spend what must be spent on reconstruction without imperiling our economic future.
Mallory Factor is chairman of the Free Enterprise Fund.