His borrow-and-spend budget even shortchanges some of his alleged priorities. Money for medical research is flat-lined, barely keeping up with inflation. Funding for his “No child left behind” education bill is scaled back. Other assistance programs in Africa are raided to pay for Bush’s pledge to fight AIDS in Africa. Add to this the states that are looking to Congress for help, and it’s a very sobering time for Democrats and Republicans alike. “You don’t have to be a deficit hawk to be worried,” says a Senate Republican aide.
The first casualty will be Bush’s dividend-tax-relief plan, which will be reduced drastically if not killed altogether. Bush reportedly has been warned by Federal Reserve Board Chairman Alan Greenspan to put the brake on tax cuts before gigantic deficits drag down the economy.
President Ronald Reagan, who ran up the government charge account, took a what-me-worry attitude, declaring jovially, “The deficit is big enough to take care of itself.” Reagan wasn’t hurt politically, but the sea of red ink his administration created caught up with his successor, the first President Bush. Now, the younger Bush has overtaken his father, who previously held the record in deficit spending.
Deficit doves point out that today’s deficits represent a smaller percentage of the gross national product than during Reagan’s heyday, but that is no consolation to Kent Conrad, ranking Democrat on the Senate Budget Committee. Poring over Bush’s budget documents in his Capitol Hill townhouse one evening this week, Conrad couldn’t believe what he was seeing: mushrooming deficits that peak just when the baby-boom generation begins to retire. That means government spending on Social Security and Medicare will increase when government debt is at its highest.
“It is nuts, stone-cold nuts,” Conrad said in an interview with NEWSWEEK. “And they’re not nuts, and they’re not stupid. They’re smart people, and they know what we know, that the deficit will explode when federal expenditures peak. And that’s when I had this revelation: the only rationale for what they’re doing is that they plan to fundamentally gut Social Security and Medicare.”
Republicans are used to Democrats accusing them of heartlessness, of wanting to throw old people out in the snow and deny hungry children a meal. Democrats don’t have any new ideas of their own, Republicans say, so they resort to the old, tired charges. But Conrad represents one of the red states that Bush won by a large margin, and he’s never been a typical liberal. He was North Dakota’s tax commissioner before he was elected to the Senate, and he knows his numbers. His idea of fun is to watch a baseball game and calculate in his head how each player’s turn at bat changes his batting average.
Conrad is convinced that the debt Bush is piling up will threaten the country’s long-term economic security, and that Social Security and Medicare will not survive. Privately, Republicans say Conrad is right, but with a caveat. Social Security and Medicare cannot survive in their current form. Under the guise of reform, both programs will have to adapt to the budget realities.
Conrad’s prediction: That it will be reforming by cutting benefits. He has charts to illustrate the choices government will face if Bush’s tax cuts proceed as planned. They range from bad to worse. Record deficit spending means government borrowing crowds out entrepreneurial investment and hurts economic growth. To sustain benefits and keep the social contract as is would require an unprecedented tax increase to 30 percent of GDP (it’s now 20 percent). “Or we’ll have to eliminate the rest of government as we know it,” says Conrad. “This is breathtaking; this is radical, radical stuff.”
Unlike the senior Bush, who put his political career on the line to raise taxes and begin the long climb out of the deficit hole, this President Bush has shown no inclination to back down. Just as his foreign policy can be summed up in two words–Get Saddam–his domestic policy is all about tax cuts. First, the administration said tax cuts were needed to spend down the surplus. When the surplus disappeared, tax cuts were needed to get the economy out of recession. Now, tax cuts are billed as the way to balance the budget by growing the economy, an idea the elder Bush once called “voodoo economics.”
A decade after Texas billionaire Ross Perot made the deficit a campaign issue against Bush the father, Bush the son has plunged the country back into the red. He’s poised to spend billions toppling Saddam while launching a crackdown on eligibility for poor children for federally subsidized meals in school. The Reagan administration tried to classify ketchup as a vegetable and caught hell. But Bush doesn’t have to explain or defend his priorities. He has a one-size-fits-all answer that so far has provided him Teflon coating thicker than Reagan’s. “The war,” says Conrad, “overwhelms everything.”
