“If you had asked me, years ago, I would have said that the combination of war, record deficits and the largest public debt in the country’s history would constitute a sufficient perfect storm to break us out of this spending addiction – and I would have been wrong.” – Arizona Sen. John McCain
For a while this month, it looked like Hurricane Katrina might be that sufficiently perfect storm.
But the ruling Republicans have now splintered over how to fund the estimated $200 billion needed to rebuild the Gulf Coast. President Bush has ruled out any increase in taxes, and House Majority Leader Tom DeLay has pronounced the federal budget as lean as lean can be.
So all is normal on the Potomac. There is lots of talk about “spending cuts” that may realize some savings down the road, but basically we will pay for Katrina the way we pay for other things around here:
We’ll borrow the money from Asian bankers, and leave our kids the bill. Consider this:
To fund the Iraq war, Gulf Coast reconstruction and the biggest increases in federal spending in 40 years, Congress will soon vote to add another $781 billion to the U.S. legal debt limit, hiking it to $9 trillion.
The Heritage Foundation, a conservative think tank, took the Bush administration’s rosy deficit projections and added a few realistic touches – like the predictable costs of the war and hurricane rebuilding – and concluded that the annual budget deficit “would top $500 billion in 2008 and reach $873 billion by 2015.”
The highway bill passed this summer contains, by one count, 6,371 pork barrel projects known as “earmarks.” A Congressional Research Service study has concluded that the number of earmarks added to the budget by members of Congress grew by 156 percent – to 10,600 – between the 1994 and 2002 budgets, as the price tag for such measures swelled by 60 percent, to $46.6 billion.
“Runaway government spending reduces economic growth,” the Heritage analysts noted, and “increases the likelihood of major tax rate increases.”
A few blocks down Massachusetts Avenue, the libertarian CATO Institute was just as critical.
“Once upon a time, the Republican Party frequently made the case for smaller government and occasionally backed up the rhetoric with action,” said CATO. Today, “most Republicans in Washington … have shown that they are more interested in expanding government than in scaling it back.”
The objections raised by conservative think tanks like Heritage and Cato, and voiced by politicians like McCain, are evidence of the division in Republican ranks.
Most of the country’s ruling party wants to forge ahead and make several of Bush’s first-term tax cuts permanent, including a package for business depreciation, inheritances, dividends and capital gains.
But others contend that, with the Iraq war and Katrina claiming billions of unanticipated dollars, and Congress showing no ability to control its spending habits, extending the tax cuts will add to the national debt.
A hardy group of House conservatives has arrived at a third solution: a trillion-dollar package of spending cuts, mostly in programs that help the elderly and the poor.
The conservatives have targeted the Medicaid health care program for poor and working families, and suggest that seniors give up the scheduled increase in Medicare benefits for prescription drugs. They also want to eliminate Bush’s “Millennium Challenge” program of foreign aid to Africa.
Piecemeal schemes are in vogue. Leasing the Arctic National Wildlife Refuge to oil and gas companies could bring in $2.4 billion. Accelerating the shift to digital TV might raise cable television bills but free up segments of the analog spectrum for the government to auction off.
The highly-anticipated (at least among billionaires) repeal of the federal estate tax has been postponed, but more for reasons of political embarrassment than fiscal discipline. It would be “unseemly” to give the Paris Hiltons of the world a whopping $750 billion tax cut, Senate Finance Committee Chairman Charles Grassley, R-Iowa, told home state reporters, at a time when the TV news was marked by footage of floating corpses in the streets of New Orleans.
The foes of the estate tax will use the delay to plot new strategies for full repeal and to try and snuff attempts at a compromise, which would raise the amount of an estate exempt from the tax to $5 million or $10 million.
The House conservatives have advanced one good idea: they propose that Congress repeal the $25 billion worth of earmarks in the highway bill.
Take the Ketchikan, Alaska, bridge, for example. The $315 million span from Ketchikan (pop. 14,000) to Gravina Island will open the island to development, and ease access to the local air strip, which now is reached by a scenic ferry ride.
“Guess how many people live on the Gravina Island?” asks McCain. “Fifty; five-zero.”
But the sponsor of the Ketchikan bridge, Rep. Don Young, R-Alaska, laughed at suggestions he postpone the project in Katrina’s wake, telling the Fairbanks Daily News-Miner that critics can “kiss my ear.”
And so it is business as usual in Washington. “What it is going to take to make the case for fiscal sanity here?” McCain wondered, as the highway bill, with its 6,371 earmarks, passed the Senate.
The Arizona senator had to abbreviate his remarks. His colleagues were urging him to shut up and sit down, so they could rush home and claim credit for bringing home the bacon.
