What has happened with fiscal policy since 1995, when Republicans took control of the House and Senate for the first time in 40 years? So far the Newt Gingrich-led Congress has failed to control the pace of social program expansions.
Certainly the revolutionary rhetoric of the early days of the 104th Congress established lofty expectations. The Contract with America called for a dramatic reduction in the size of government and a shift in spending priorities. Shortly after the 1994 election, House Speaker Gingrich triumphantly declared that Republicans would “radically transform the way government works by Easter.”
To be sure, the GOP did grind out some impressive accomplishments in its first year. Congressional Republicans cornered President Clinton into committing to a balanced budget by 2002. Congress enacted the first credible welfare reform package since then-President Lyndon B. 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. Moreover, since November 1994, the economy has accelerated and there has been a record bull market on Wall Street. The Republican Congress also is poised to pass the first federal tax cut since 1981.
Arguably, the most tangible achievement of the congressional Republicans and President Clinton has been the dramatic decline in the budget deficit since Republicans took control of Capitol Hill. But the deficit reduction is attributable almost entirely to reductions in defense spending. Social spending has actually accelerated under the GOP Congress.
The trend is in the direction of budget accommodation. In 1995 Republicans increased spending by $48 billion; in1996, by $63 billion; and now the 1997 budget will rise by a minimum of another $70 billion. And every year there are multi-billion-dollar emergency supplemental spending requests to help victims of floods, earthquakes, hurricanes, and other natural disasters.
Domestic spending rises by 5.4% in 1998, or twice the inflation rate, under the bipartisan budget deal. To camouflage the escalation of spending, Republicans have reverted to the deceptive rhetoric of current services baseline budgeting - a practice Republicans ridiculed as a farce when in the minority. The 1997 budget deal also resorts to the time-honored tradition of front-loading spending increases and back loading, several years later, spending reduction promises. Republicans in the 105th Congress have promised that future Congresses will exercise a level of fiscal restraint that they themselves will not.
Is the government smaller than it would have been if Democrats had retained power? The unsatisfying answer is “probably, but not by much.”
In defense of Republicans, it is true that expenditures on social programs would have been about $20 billion lower this year and next had President Clinton not vetoed market-oriented reforms in Medicare and Medicaid two years ago. Changing the law on public benefits requires the president’s signature. 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 healthcare programs for children through 2002.
House Budget Committee Chairman John Kasich, valiantly 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 again, this progress occurs exclusively because of a continuing sharp decline in military spending. 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 or eliminate are now actually expanding. This year Republicans approved a 1998 budget giving education programs a massive 11% funding increase. The GOP will allocate more than $15 billion for energy programs.
Republicans also refuse to end the scam of foreign aid. In March, House International Relations Committee chairman Ben Gilman convened a hearing on the future of foreign aid. Seven of eight witnesses selected to testify argued in favor of more funding. Six of them were direct or indirect beneficiaries of foreign aid: the American Israel Political Action Committee, the Irish National Caucus, Africare, World Vision, the American League for Exports and Security Assistance, and Bechtel Corp. As the Investor’s Business Daily reported, “The free enterprise viewpoint on foreign aid got a better hearing when the Democrats ran Congress.”
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 examples of corporate pork increased by 1.5%.
Republicans clearly have had important achievements, not least of which has been forcing both parties to commit to a balanced budget. But the critical question in assessing the Republican record on the budget is this: Is the government smaller than it would have been if Democrats had retained power? The unsatisfying answer is “probably, but not by much.” Next year the federal government will spend close to $1.7 trillion. If the Democrats had never lost Congress, next year the federal government would also spend close to $1.7 trillion.
The problem is not that Congress cannot cut spending, it is that it will not. As in the Reagan years, Republicans seem to have concluded, not that big government is good, but that trying to cut its size is politically futile. Thus the Republican budget revolution, so far, has fallen far short of expectations.