Commentary

The Era of Big Government

Reprinted from The Wall Street Journal © Dow Jones & Company, Inc. All rights reserved.
Today President Bush will issue his new federal budget. As many taxpayers already know, we can expect to see a fourth year of government growth under a Republican president. Fiscal conservatives are fed up, and the president has promised some last-minute restraint. Nonetheless, in the past three years the Bush administration, with Congress’s OK, has increased non-defense discretionary spending 23%.

In his State of the Union address, Mr. Bush promised to “cut wasteful spending and be wise with the people’s money.” But the president will likely punt on installing any substantial spending reforms before the November election. One might think that the record deficit of nearly $500 billion would raise the overspending crisis to a red alert in the White House. Yet spending continues to rise as the president finds new ways to be compassionate with taxpayers’ money.

Clearly, the White House believes that big spending is good politics. But it is short-term politics, and it will backfire. In particular, the huge deficit will make the Bush tax cuts a target for repeal by the next occupant of the White House. Even Ronald Reagan buckled to tax increases under constant pounding on the deficit.

Let’s review the math. By 2009, the deficit will be $400 billion if all current tax cuts are extended. If Mr. Bush wants his tax-cut legacy to last, he can’t leave such a big deficit to the next president, who will face intense pressure to raise taxes and close the budget gap. In addition, the economy crucially needs the Bush tax cuts to be made permanent to maximize growth as the nation faces the rising costs of baby-boomer retirement later in the decade.

That leaves only one other option: large spending cuts. Significant cuts are unlikely in an election year. But fiscal conservatives in Congress can start laying the groundwork for major reforms next year. They can install new budget procedures designed to eliminate failing programs. The White House budget office already has a system in place that grades the performance of programs, finding that many are “ineffective.” Congress should adopt a new rule to require stand-alone votes to terminate any program that flunks the budget office’s review three years in a row.

Congress needs to get serious about the need to “sunset” all federal programs on a rotating basis of every eight years. Programs would be automatically terminated unless specifically reauthorized. A sunset commission would review each program before its renewal date to determine whether it could be terminated, streamlined, privatized or better handled by the states. More than a dozen state governments successfully use sunsetting provisions now.

The challenge is to change the dynamic of a federal-budget process that has delivered endlessly expansive spending. Congress needs to buck our big spending president and find new tools to carry out President Clinton’s State of the Union promise in 1995: “We have to change the way the government works. Let’s make it smaller, less costly and smarter.”

Mr. Edwards is director of fiscal policy at the Cato Institute.