Commentary

Is the GOP Budget Revolution Lost?

By Stephen Moore
July 25, 1997

Throughout the Reagan years, Republicans never deviated from the party line: if they had control of Congress, they would cut the fat out of the budget in ways that the Democrats had shown they could not. Republicans have controlled Congress for almost three years. Has the GOP budget revolution fulfilled its promises?

Republicans are not without fiscal accomplishments. In 1995 Congress enacted the first credible welfare reform package since Lyndon Johnson launched the War on Poverty 35 years ago. The 1995 farm bill, while still deeply flawed, was the most market-oriented overhaul of the system in many years. The Republican Congress is also poised to pass the first federal tax cut since 1981 —although it will save taxpayers less than one cent on every dollar they send to Washington.

Arguably, the most impressive achievement of the congressional Republicans and President Clinton has been the dramatic decline in the budget deficit. In just three years, the 104th and 105th Congresses and the White House have slashed the deficit by two-thirds. Most of that reduction has been due to continued reductions in post-Cold War defense spending and a surge of revenues in the past two years.

But for fiscal conservatives, the real test is whether the size and scope of government have been cut since November 1994. The unfortunate answer is: not by much. In fact, congressional Republicans have now approved three budgets in fiscal years 1996-1998. Amazingly, over that period, total nondefense expenditures will have surged by $183 billion, or $31 billion more than in the three years before the GOP took over Congress.

The trend is in the direction of fiscal slippage. In 1996 Republicans increased spending by $48 billion; in 1997, by $63 billion; and now the 1998 budget will rise by a minimum of another $70 billion. Domestic spending rises by 5.4 percent in 1998, or twice the inflation rate, under the bipartisan budget deal. That’s hardly a starvation diet.

To have a balanced budget in five years, spending could rise by $70 billion in 1998 but by only $32 billion in 2002. Republicans in the 105th Congress have promised that future Congresses (and a future president) will exercise a level of fiscal restraint that they themselves will not exercise right now. In defense of the Newt Gingrich-led Congress, it is true that expenditures on social programs would have been about $20 billion lower this year and next, had Bill Clinton not vetoed market-oriented changes in Medicare and Medicaid two years ago. Republicans cannot single-handedly rein in spending on so-called “entitlement” programs. To change the law on public benefits requires the president’s signature — as the GOP painfully discovered in 1995 when Clinton torpedoed their Medicare agenda. On the other hand, Republicans have voted to expand existing entitlements and to create new ones. For example, the budget deal permits at least $16 billion in new government health care programs for children through 2002.


Many areas of the budget that Republicans once sought to cut are actually now expanding. Congress now intends to spend $245 billion more from 1996 to 2002 than was promised in the Contract with America budget.


House Budget Committee chairman John Kasich of Ohio gamely defends the Republican budget record by showing that total federal spending as a share of national output is falling — and is expected to continue to fall over the next five years to its lowest level since the mid-1970s. But that progress is solely because of a continuing sharp decline in military spending. Total outlays will have fallen from 21.1 to 20.6 percent of gross domestic product between 1995 and 1998. That decline is entirely attributable to defense cutbacks. Domestic spending has actually grown at a slightly faster pace than the U.S. economy over the past three years.

Many areas of the budget that Republicans once sought to cut are actually now expanding. Congress now intends to spend $245 billion more from 1996 to 2002 than was promised in the Contract with America budget. Two years ago the budget resolution called for the elimination of the Department of Education. This year Republicans approved a 1998 budget giving education programs a hefty 11 percent funding increase. Two years ago the Energy Department was to be shut down. This year the GOP will allocate more than $15 billion for energy programs.

The story is the same when it comes to federal subsidies to corporations. In 1995 House Republicans pledged to “wage a sustained attack against corporate welfare in the budget whenever and wherever they could find it.” Last year spending on 55 of the most egregious cases of corporate pork increased by 1.5 percent. A few Republicans in Congress — including Sens. Sam Brownback of Kansas, John McCain of Arizona and Fred Thompson of Tennessee and Reps. John Kasich of Ohio and Dan Miller of Florida — have crusaded to get business off the dole. Unfortunately, few others have shown much interest in eliminating the Export-Import Bank, the Department of Commerce Manufacturing Extension Partnership, sugar and peanut subsidies and the hundreds of other programs that provide taxpayer subsidies to corporations.

So far, the 1990s have witnessed one of the largest buildups in domestic spending in American history. Despite a decline of almost $100 billion in military expenditures (in real terms) since the peak of the Reagan military buildup, the total budget (adjusted for inflation) has still grown by more than one-third. This vast expansion of social programs occurred with Republicans controlling the White House and Democrats holding Congress. It is now happening with the parties’ roles reversed.

The problem is not that the GOP Congress cannot cut spending. It is that it will not. As in the Reagan years, Republicans — at least for the moment — seem to have concluded not that big government is good, but that trying to cut its size is politically futile. To fiscal conservatives, that is gravely disappointing.

Stephen Moore is director of fiscal policy studies at the Cato Institute.