Commentary

How Much Reform Can Taxpayers Afford?

This article originally appeared in the Washington Times on September 11, 2002.
The current food fight between Republicans and Democrats over who is doing the most to “save” the Social Security surplus may be a bipartisan plan to avert attention from the more important budget issue: the excessive spending growth projected for many programs that seems to be of little concern to either party.

The highest growth rates are projected for those programs that are being “reformed.” The president’s education reform plan, for example, would add $43 billion over 10 years to this traditionally local spending responsibility. Education spending would increase 7.9 percent a year under his plan during the next five years, compared to an expected inflation rate of 2.5 percent.

And yet last week the president urged that “Congress must adjust its spending attitudes” and not “go hog wild” with spending. Mr. Bush talks the talk. But his actual policies signify that going hog-wild is OK if it is under the pretext of reform.

Consider Medicare. Here the administration plans to “modernize” the program with a massive injection of $190 billion over 10 years for prescription drug benefits. That figure is up $37 billion from the administration’s April forecast.

Still, taxpayers would get off easy under this plan: Congress has allowed for a $300 billion Medicare reform plan in its 10-year budget resolution.

That level of spending would push the cost of Medicare from $218 billion this year to $497 billion in 2011, a 128 percent increase. By comparison, incomes are expected to rise just 68 percent during this decade, indicating that the average burden on workers paying the bills for this health program will rise substantially.

Spending on its sister program, Medicaid, is set to rise from $130 billion this year to $301 billion in 2011, a 132 percent increase. Taxpayers had better hope policymakers don’t try to “modernize” this program, as well, else spending will rise even faster.

Congress is also going hog wild with farm spending. On top of the just passed $5.5-billion farm supplemental bill, it is working to reauthorize subsidy payments that channel billions of taxpayer dollars to farmers who produce a few major crops, such as wheat and corn. When farm programs were last “reformed” under the 1996 Freedom to Farm Act, subsidies were supposed to transition down to $4 billion per year by 2002. Instead, subsidies have exploded to more than $20 billion per year the past three years, up from an average $9 billion a year in the early 1990s.

The House Agriculture Committee passed its version of the new farm bill in July. It would spend $168 billion over the next 10 years on farm subsidies, or $74 billion above baseline spending levels. Ranking committee member, Charlie Stenholm, Texas Democrat, had the chutzpah to call the bill a “good deal for taxpayers.”

On national defense, the Bush administration has not so much promised “reform,” but a “review.” So far the review has found that “unmet needs” require $197 billion in new spending during the decade. Mr. Bush has included these funds in his new budget estimates and promised further reviews, so expect the final taxpayer tab to be even higher.

Perhaps increased defense funding levels are appropriate. But isn’t it time for the administration and Congress to come up some major reforms that actually save taxpayers money? Until that time, taxpayers should be suspicious that policymakers use high-sounding reform rhetoric to cover up a lack of will to make the tough budget choices.

Chris Edwards is director of fiscal policy studies at the Cato Institute.